Credible takeaways
- Federal unsubsidized loans are best for undergraduate, graduate, and professional students who don't demonstrate financial need.
- Unlike subsidized loans, you’re responsible for paying the interest on unsubsidized loans while you’re in school and during the grace period.
- Unsubsidized loans generally have lower interest rates than private student loans.
- Borrowing limits for unsubsidized loans vary depending on your year in school and dependency status.
If you need to borrow money for college, federal student loans are often the best place to start. Not only do federal loans come with generous borrower benefits, they also tend to offer lower fixed interest rates compared to private student loans.
Among the most common federal loans are unsubsidized and subsidized student loans. You’ll pay less interest on subsidized loans, but only undergraduate students with financial need can qualify for them. If you don’t qualify for subsidized loans, federal unsubsidized loans are your next best option for several reasons. Here's what you need to know.
What is a federal unsubsidized loan?
A federal unsubsidized loan is a type of Direct Loan offered by the U.S. Department of Education. You can use an unsubsidized loan for undergraduate, graduate, or professional school, and you don't need to demonstrate financial need to qualify.
Interest rates on unsubsidized loans are fixed. The interest starts accruing as soon as the loan is disbursed, but you have the option to defer payments until six months after leaving school or dropping below half-time enrollment. If you choose to postpone payments, keep in mind that interest will capitalize once repayment begins, meaning it’ll get added onto your principal loan balance.
As with many federal student loans, repayment options are flexible with unsubsidized loans, and loan forgiveness is possible in certain circumstances.
- Who qualifies: All undergraduate, graduate, and professional students
- Interest rate for 2023-24: 5.50% for undergraduate borrowers; 7.05% for graduate or professional borrowers
- Repayment terms: Standard, Extended, Graduated, and income-driven repayment (IDR) plans available
- Aggregate loan limits: $31,000 for dependent undergraduates; $57,000 for independent undergraduates; $138,500 for graduate or professional students
- How to apply: Submit the Free Application for Federal Student Aid (FAFSA)
Unsubsidized vs. subsidized loans
Both Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loan types intended to help cover the cost of tuition, but they have some key differences.
If you’re an undergraduate student with financial need, you'll generally find more favorable terms with subsidized loans. Unlike unsubsidized loans, the government covers all interest charges while you’re enrolled in school at least half-time, during your grace period, and during periods of deferment.
| | |
|---|
| Undergraduate and graduate students without financial need | Undergraduate students with financial need |
| 5.50% for undergraduate borrowers
7.05% for graduate or professional borrowers | |
| 1.057% for loans disbursed on or after Oct. 1, 2020 | 1.057% for loans disbursed on or after Oct. 1, 2020 |
| $31,000 for dependent undergraduate students
$57,000 for independent undergraduate students
$138,500 for graduate or professional students | |
| Interest rates are generally lower than private student loans | Government pays interest while you're in school and during periods of deferment |
Related: Subsidized vs. Unsubsidized Student Loans
Who qualifies for unsubsidized loans?
Unlike federal subsidized loans, eligibility for an unsubsidized loan isn’t based on financial need. To qualify, you need to be enrolled at least half-time in a school that participates in the Direct Loan program and that awards a degree or certification upon completion of requirements.
You also need to meet the general requirements for federal financial aid, which include:
- Be a U.S. citizen or eligible noncitizen.
- Have a valid Social Security number (note that there are some exceptions).
- Register for the FAFSA and sign the certification statement.
- Be enrolled in or accepted to a degree or certificate program.
- Demonstrate that you're eligible to obtain a college or career school education.
- Maintain satisfactory academic progress.
Borrowing limits
Federal unsubsidized loans come with annual borrowing limits each year you’re in school, and aggregate limits over the lifetime of the loan.
Here's a breakdown of how much you can borrow annually, depending on your year in school and whether you are a dependent or independent student. Note that the category of independent students includes dependent undergraduates whose parents can’t obtain PLUS loans.
Annual loan limits
| | |
|---|
First-year undergraduate annual loan limit | | |
Second-year undergraduate annual loan limit | | |
Third-year and beyond undergraduate annual loan limit | | |
Graduate or professional student annual loan limit | N/A (all graduate and professional students are considered independent) | |
Aggregate loan limits
Similarly, aggregate unsubsidized loan limits also vary depending on student status:
| |
|---|
| |
Independent undergraduate students | |
Independent graduate or professional students | |
Related: How Much Can FAFSA Give You?
How does repayment work?
If you have federal unsubsidized loans, you have the option to postpone payments for six months after graduating, leaving school, or dropping below half-time enrollment.
However, interest on unsubsidized loans starts accruing the day your loan is disbursed. So if you choose to defer payments, any unpaid interest will get tacked onto your principal loan balance at the end of your grace period, making repayment more expensive.
If you can afford to, it’s a good idea to pay off interest while you’re in school and during your grace period. This way you’ll prevent interest from capitalizing once repayment begins.
Repayment plans to choose from
Once repayment begins, you'll have a number of repayment options, including:
- Standard Repayment: Unsubsidized loans are automatically placed on the standard 10-year repayment plan unless you choose another option.
- Extended Repayment: The Extended Repayment plan offers more time, with fixed or graduated payments made over a period of 25 years. Note you must have more than $30,000 in outstanding Direct Loans to qualify.
- Graduated Repayment: Your monthly payment amounts start lower and gradually increase over time, usually going up every 2 years. The payoff timeline is 10 years.
- Income-driven repayment: Your monthly payments on an income-driven plan are based on your discretionary income and family size. For instance, you might pay 10% to 20% of your discretionary income each month, depending on the plan you're on. After a certain number of qualifying payments, any remaining balance is forgiven.
Forgiveness opportunities
In certain circumstances, it’s possible to have your unsubsidized loan balance forgiven. You may qualify for forgiveness if:
- You're on an income-driven repayment plan: It's possible to access loan forgiveness if you repay your unsubsidized loans under an income-driven repayment (IDR) plan. After making a certain number of payments over a period of 10 to 25 years, your remaining loan balance can be discharged.
- You're a teacher: Forgiveness for teachers is available for educators who meet certain requirements. For example, you can receive up to $17,500 in forgiveness as part of Teacher Loan Forgiveness.
- You're an employee of the government or a not-for-profit: Government employees, military service members, and those who work for qualifying not-for-profit organizations may be able to receive Public Service Loan Forgiveness (PSLF). Under this program, the remaining balance on your Direct Loan is forgiven after making 120 qualifying payments while working for a qualifying employer.
- You're a medical professional: Nurses, doctors, and other medical professionals can also be eligible for Public Service Loan Forgiveness if they work for a qualifying not-for-profit organization.
How to apply
To apply for an unsubsidized loan, the first step is to fill out the FAFSA. Schools rely on this form to determine how much federal financial aid you're eligible to receive.
You can fill out the FAFSA online at StudentAid.gov, or you can fill out the form manually and mail it in for processing. When completing the FAFSA, you'll need to provide information and documentation about yourself and your parents, such as your Social Security numbers and federal tax information. You’ll also need to provide a list of up to 20 schools you plan on applying to.
Once you submit the FAFSA, the schools you've sent it to will review your information and get back to you with a financial aid offer, which may include unsubsidized loans.
Other types of student loans
Unsubsidized loans aren't your only option. Other types of student loans to consider include:
- Subsidized loans: Subsidized loans are another type of federal Direct Loan specifically for undergraduates with financial need. Unlike unsubsidized loans, the U.S. Department of Education pays the interest while you're in school at least half-time, and for the first 6 months after you leave school and during any deferment.
- Direct PLUS Loans: Direct PLUS Loans are another option for graduate or professional students. This type of federal loan is also available to parents borrowing money for dependent undergraduate students. A credit check is involved, and you can't have a poor credit history.
- Private student loans: If you've tapped out federal loans and need more funds, you can turn to private student loans to help cover your costs. These loans are funded by lenders, like banks or credit unions, as opposed to the federal government. They usually involve a credit check, and tend to have higher interest rates and fewer repayment options.
Advertiser Disclosure$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers student loans for almost every type of degree program, with a range of repayment options, including a unique eight-year repayment term. Additionally, you can get extended grace periods of as long as 36 months on graduate, dental, and medical student loans.
It's also possible to get loan approval for multiple school years at one time. About 90% of undergraduates applying with a cosigner are approved for additional student loans. However, you must complete at least half of your repayment term before you can remove a cosigner for your loan. Some lenders allow cosigners to be released much sooner, after as few as one to two years of payments.
pros
- Rate discount of one-quarter of a percentage point for using autopay
- Does not charge origination or application fees
- May qualify for multiyear approval
- Grace periods between 9 and 36 months for graduate, MBA, law, dental, and medical school loans and 36 months
cons
- Parents borrowers are required to pay at least the interest while the student is in school
- Cosigners not eligible for release until at least half the repayment term of the loan is completed
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers the Smart Option Student Loan for undergraduate students and a suite of loans for graduate students. You can borrow up to your school-certified cost of attendance and apply just once annually to get the funds you need for the entire academic year. Plus, applying for a Smart Option Student Loan with a cosigner may help you get a better rate.
Through Sallie Mae, you can find a variety of loans designed for specific needs, including loans for MBA programs, law school, medical school, and health profession programs.
pros
- Can borrow up to school-certified cost of attendance
- No prepayment or origination fees
- Loans available to noncitizens with an eligible cosigner
- Cosigner release after 12 on-time payments
cons
- No parent loan options
- No option to check your rates through prequalification
- Loan terms not disclosed until after you apply
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
$1,000 up to cost of attendance
Overview
ELFI a division of Tennessee-based SouthEast Bank, offers private student loans and refinancing for undergraduates, graduates, and parents. Borrowers can take out loans starting at $1,000, with options up to the full cost of attendance at their school.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. Borrowers can choose from multiple repayment terms and benefit from competitive interest rates and support from a dedicated Student Loan Advisor. However, ELFI doesn't offer cosigner release or rate discounts, which may limit flexibility for some borrowers.
pros
- Receive support from a dedicated Student Loan Advisor
- Transparent credit and income requirements
- Flexible repayment terms
cons
- Must be enrolled in a bachelor’s degree program or higher
- Cosigners can’t be released from the loan
- No autopay rate discounts available
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Overview
While Ascent provides traditional student loans for undergraduate, graduate, and medical programs, it also stands out with some options that are uncommon among private student loan lenders. For example, its Outcomes-Based Loan, which doesn't require established credit or a cosigner, is available to juniors and seniors. When assessing your application, Ascent considers factors including your school, major, and GPA to determine if you're eligible.
Ascent also offers its Progressive Repayment plan to qualified borrowers. It allows you to begin with smaller payments at the start of the repayment term and then gradually pay more each month over time. If you borrow with a cosigner, they can be released after you make as few as 12 monthly payments. However, cosigners for loans for international students do not qualify.
pros
- Doesn’t charge application fees or origination fees
- Offers discounts of 0.25 to 1 percentage points when using automatic payment
- Can get a 1% cash-back reward after you graduate
- Grace periods from 9 months to 36 months
cons
- May find lower interest rates with some competitors
- International students don’t have option to release cosigners
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 to $350,000 (depending on degree)
Overview
Citizens Bank offers private student loans for undergraduate and graduate students, as well as parents. With its multiyear approval option, you can apply for a loan once, and as long as you qualify, you won't need to reapply each year. This means you can secure loans for future academic years without multiple hard credit checks.
Citizens borrowers can also take advantage of interest rate discounts. If you or your cosigner has an account with Citizens Bank, you can reduce your rate by 0.25 percentage points. Another 0.25 percentage points can be shaved off by enrolling in automatic payments, giving you the chance to lower your rate by up to 0.5 percentage points.
pros
- Multiyear approval lets you secure funding for future school years
- You can reduce your rate by 0.5 percentage points with autopay and loyalty discounts
- International students can apply with a qualified cosigner
cons
- Fewer repayment terms to choose from than some other lenders
- Long wait time for cosigner release
- Parents can’t defer payments while student is in school
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens Bank offers private student loans for undergraduate and graduate students, as well as parents. With its multiyear approval option, you can apply for a loan once, and as long as you qualify, you won't need to reapply each year. This means you can secure loans for future academic years without multiple hard credit checks.
Citizens borrowers can also take advantage of interest rate discounts. If you or your cosigner has an account with Citizens Bank, you can reduce your rate by 0.25 percentage points. Another 0.25 percentage points can be shaved off by enrolling in automatic payments, giving you the chance to lower your rate by up to 0.5 percentage points.
pros
- Multiyear approval lets you secure funding for future school years
- You can reduce your rate by 0.5 percentage points with autopay and loyalty discounts
- International students can apply with a qualified cosigner
- Offers parent student loans
cons
- Fewer repayment terms to choose from than some other lenders
- Long wait time for cosigner release
- Parents can’t defer payments while student is in school
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
$1,001 up to 100% of school certified cost of attendance
Overview
INvested is an Indiana company that offers affordable student loans exclusively to state residents. Loans are available to Indiana students and parents who can meet income and credit requirements, or who have an eligible cosigner. Borrowers can borrow as little as $1,001 or as much as the school-certified cost of attendance minus other aid.
INvested provides detailed information on eligibility so borrowers can quickly determine whether to apply for a loan — however, there’s no option to prequalify with a soft credit check. Cosigner release is also available after just 12 on-time payments, considerably shorter than many other lenders.
pros
- Low minimum borrowing limits
- Autopay discount of 0.25 percentage points
- Short cosigner release requirements
- Transparent qualification requirements
cons
- Loans are available only to Indiana residents
- No prequalification option to view your rates
- No loan options for international students
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) offers student loans to borrowers with good credit. However, you won't be able to see your potential rate before applying.
The lender doesn't charge any fees and its rates are competitive, though MEFA only offers two repayment terms. You can add a cosigner to your loan if you're unable to qualify, but only one repayment plan allows you to release your cosigner.
pros
- Doesn’t charge any fees
- Low maximum rate compared with some lenders
- Can borrow up to the school-certified cost of attendance
cons
- No discounts for borrowers
- Limited repayment terms
- No prequalification available
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers student loans for almost every type of degree program, with a range of repayment options, including a unique eight-year repayment term. Additionally, you can get extended grace periods of as long as 36 months on graduate, dental, and medical student loans.
It's also possible to get loan approval for multiple school years at one time. About 90% of undergraduates applying with a cosigner are approved for additional student loans. However, you must complete at least half of your repayment term before you can remove a cosigner for your loan. Some lenders allow cosigners to be released much sooner, after as few as one to two years of payments.
pros
- Rate discount of one-quarter of a percentage point for using autopay
- Does not charge origination or application fees
- May qualify for multiyear approval
- Grace periods between 9 and 36 months for graduate, MBA, law, dental, and medical school loans and 36 months
cons
- Parents borrowers are required to pay at least the interest while the student is in school
- Cosigners not eligible for release until at least half the repayment term of the loan is completed
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers the Smart Option Student Loan for undergraduate students and a suite of loans for graduate students. You can borrow up to your school-certified cost of attendance and apply just once annually to get the funds you need for the entire academic year. Plus, applying for a Smart Option Student Loan with a cosigner may help you get a better rate.
Through Sallie Mae, you can find a variety of loans designed for specific needs, including loans for MBA programs, law school, medical school, and health profession programs.
pros
- Can borrow up to school-certified cost of attendance
- No prepayment or origination fees
- Loans available to noncitizens with an eligible cosigner
- Cosigner release after 12 on-time payments
cons
- No parent loan options
- No option to check your rates through prequalification
- Loan terms not disclosed until after you apply
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
Loan Amounts
$1,000 up to cost of attendance
Overview
ELFI a division of Tennessee-based SouthEast Bank, offers private student loans and refinancing for undergraduates, graduates, and parents. Borrowers can take out loans starting at $1,000, with options up to the full cost of attendance at their school.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. Borrowers can choose from multiple repayment terms and benefit from competitive interest rates and support from a dedicated Student Loan Advisor. However, ELFI doesn't offer cosigner release or rate discounts, which may limit flexibility for some borrowers.
pros
- Receive support from a dedicated Student Loan Advisor
- Transparent credit and income requirements
- Flexible repayment terms
cons
- Must be enrolled in a bachelor’s degree program or higher
- Cosigners can’t be released from the loan
- No autopay rate discounts available
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Overview
While Ascent provides traditional student loans for undergraduate, graduate, and medical programs, it also stands out with some options that are uncommon among private student loan lenders. For example, its Outcomes-Based Loan, which doesn't require established credit or a cosigner, is available to juniors and seniors. When assessing your application, Ascent considers factors including your school, major, and GPA to determine if you're eligible.
Ascent also offers its Progressive Repayment plan to qualified borrowers. It allows you to begin with smaller payments at the start of the repayment term and then gradually pay more each month over time. If you borrow with a cosigner, they can be released after you make as few as 12 monthly payments. However, cosigners for loans for international students do not qualify.
pros
- Doesn’t charge application fees or origination fees
- Offers discounts of 0.25 to 1 percentage points when using automatic payment
- Can get a 1% cash-back reward after you graduate
- Grace periods from 9 months to 36 months
cons
- May find lower interest rates with some competitors
- International students don’t have option to release cosigners
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 to $350,000 (depending on degree)
Overview
Citizens Bank offers private student loans for undergraduate and graduate students, as well as parents. With its multiyear approval option, you can apply for a loan once, and as long as you qualify, you won't need to reapply each year. This means you can secure loans for future academic years without multiple hard credit checks.
Citizens borrowers can also take advantage of interest rate discounts. If you or your cosigner has an account with Citizens Bank, you can reduce your rate by 0.25 percentage points. Another 0.25 percentage points can be shaved off by enrolling in automatic payments, giving you the chance to lower your rate by up to 0.5 percentage points.
pros
- Multiyear approval lets you secure funding for future school years
- You can reduce your rate by 0.5 percentage points with autopay and loyalty discounts
- International students can apply with a qualified cosigner
cons
- Fewer repayment terms to choose from than some other lenders
- Long wait time for cosigner release
- Parents can’t defer payments while student is in school
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens Bank offers private student loans for undergraduate and graduate students, as well as parents. With its multiyear approval option, you can apply for a loan once, and as long as you qualify, you won't need to reapply each year. This means you can secure loans for future academic years without multiple hard credit checks.
Citizens borrowers can also take advantage of interest rate discounts. If you or your cosigner has an account with Citizens Bank, you can reduce your rate by 0.25 percentage points. Another 0.25 percentage points can be shaved off by enrolling in automatic payments, giving you the chance to lower your rate by up to 0.5 percentage points.
pros
- Multiyear approval lets you secure funding for future school years
- You can reduce your rate by 0.5 percentage points with autopay and loyalty discounts
- International students can apply with a qualified cosigner
- Offers parent student loans
cons
- Fewer repayment terms to choose from than some other lenders
- Long wait time for cosigner release
- Parents can’t defer payments while student is in school
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,001 up to 100% of school certified cost of attendance
Overview
INvested is an Indiana company that offers affordable student loans exclusively to state residents. Loans are available to Indiana students and parents who can meet income and credit requirements, or who have an eligible cosigner. Borrowers can borrow as little as $1,001 or as much as the school-certified cost of attendance minus other aid.
INvested provides detailed information on eligibility so borrowers can quickly determine whether to apply for a loan — however, there’s no option to prequalify with a soft credit check. Cosigner release is also available after just 12 on-time payments, considerably shorter than many other lenders.
pros
- Low minimum borrowing limits
- Autopay discount of 0.25 percentage points
- Short cosigner release requirements
- Transparent qualification requirements
cons
- Loans are available only to Indiana residents
- No prequalification option to view your rates
- No loan options for international students
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
Loan Amounts
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) offers student loans to borrowers with good credit. However, you won't be able to see your potential rate before applying.
The lender doesn't charge any fees and its rates are competitive, though MEFA only offers two repayment terms. You can add a cosigner to your loan if you're unable to qualify, but only one repayment plan allows you to release your cosigner.
pros
- Doesn’t charge any fees
- Low maximum rate compared with some lenders
- Can borrow up to the school-certified cost of attendance
cons
- No discounts for borrowers
- Limited repayment terms
- No prequalification available
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Frequently asked questions
What are the pros and cons of unsubsidized loans?
Compared to private student loans, federal unsubsidized loans offer fixed interest rates that tend to be lower. They also offer flexible repayment terms, and it's not necessary to demonstrate financial need to qualify. However, unlike with subsidized loans, interest begins to accrue as soon as the loan is taken out, and the borrower is responsible for paying interest during all periods.
Should I get an unsubsidized student loan?
Whether or not you can get a federal unsubsidized loan depends on the financial aid offer you receive after filling out the FAFSA. In general, federal student loans are more favorable than private student loans, as they tend to have lower interest rates and more flexible repayment options.
Is a subsidized or unsubsidized loan better?
Subsidized loans have slightly better terms than unsubsidized loans, namely because the government pays the interest on subsidized loans while you’re enrolled in school and during periods of deferment (like your grace period). However, only undergraduate students with financial need are eligible for subsidized loans.
Do unsubsidized loans qualify for forgiveness?
Yes, in certain circumstances, unsubsidized loans may qualify for forgiveness. For instance, you may secure loan forgiveness if you're a teacher who's eligible for Teacher Loan Forgiveness. It's also possible to qualify for Public Service Loan Forgiveness. Individuals on income-driven repayment plans may also receive loan forgiveness after making a certain number of qualifying payments on their unsubsidized loans.
Rebecca Safier has contributed to the reporting of this article.
Meet the expert:
Becca Stanek
Becca Stanek has been in personal finance for over seven years, with expertise on student and personal loans, mortgages, banking, retirement, taxes, and budgeting. Her work has been featured by MSN, SoFi, Forbes, and Fox Business.
