Credible takeaways
- Subsidized and unsubsidized federal loans generally offer the lowest interest rates compared to other types of student loans.
- All federal student loans offer borrower protections that private loans don't, but may come with lower borrowing limits.
- Private student loans can fill a gap in funding, but many students must apply with a cosigner to qualify.
- You can access federal loans via the FAFSA, and private loans directly through a lender's online application.
Paying for your education may mean using a mix of federal and private loans to pay for college, as well as scholarships and grants. When it comes to student loans, your main options include Federal Direct Loans from the U.S. Department of Education, and private student loans from a bank, credit union, or other lender.
In general, it’s wise to max out your eligibility for federal student loans before borrowing privately, since the government offers helpful repayment plans, forgiveness programs, and other benefits.
Compare student loan options
| | Direct Unsubsidized Loans | | |
|---|
| | | | |
| | 5.50% for undergraduates; 7.05% for graduate and professional students | | |
| Undergraduate students with financial need | Undergraduate and graduate students; no financial need requirement | Graduate students or parents of dependent undergraduates; must not have adverse credit | Based on credit and other factors, like income |
| | | | 5 to 20 years, but varies by lender |
Aggregate borrowing limit | | $31,000 for undergraduates; $138,500 for grad students | | Typically up to cost of attendance; varies by lender |
| Undergraduate students from low-income households | Undergraduate and graduate students who don’t qualify for need-based aid | Graduate students and parents who want federal benefits | Borrowers (or cosigners) with good or excellent credit; borrowers who have maxed out federal loans |
Interest rates apply to loans first taken out on or after July 1, 2023, and before July 1, 2024.
Related: Average Student Debt in 2024
Types of federal student loans
Federal Student Aid, an office within the U.S. Department of Education, offers several student loans to eligible students and parents.
1. Direct Subsidized Loans
Best for: Undergraduate students from low-income backgrounds
Direct Subsidized Loans are available to undergraduate students with financial need, as determined by the schools that receive your Free Application for Federal Student Aid (FAFSA).
The government covers interest on subsidized loans while you’re in school at least half-time, during your grace period, and during any other periods of deferment.
In 2023-24, Direct Subsidized Loans have an interest rate of 5.50% and a loan fee of 1.057%. Borrowing limits range from $3,500 to $5,500 per year, with an aggregate limit of $23,000.
2. Direct Unsubsidized Loans
Best for: All undergraduate, graduate, and professional students
Direct Unsubsidized Loans are available to any student, undergraduate or graduate, who’s eligible for federal aid. There’s no financial need requirement, but there’s also no interest subsidy — you’re responsible for paying all the interest that accrues from the date of disbursement.
Direct Unsubsidized Loans have an interest rate of 5.50% for undergraduates and 7.05% for graduate students, along with a loan fee of 1.057%.
Dependent undergraduates can borrow between $5,500 and $7,500 per year, with an aggregate limit of $31,000. Graduate students can take out $20,500 per year with an aggregate limit of $138,500, which includes any loans borrowed as an undergraduate.
Related: Subsidized vs. Unsubsidized Student Loans
3. Direct PLUS Loans
Best for: Graduate students who’ve maxed out unsubsidized loans; parents of dependent students
The federal government offers two types of Direct PLUS Loans geared toward graduate students and parents of dependent undergraduates:
- Grad PLUS loans: Available to graduate students
- Parent PLUS loans: Available to parents of undergraduate students
Direct PLUS Loans have higher interest rates and fees than Direct Subsidized and Unsubsidized Loans, with a rate of 8.05% and loan fee of 4.228% in 2023-24. But the upside is that you can take out up to your school’s cost of attendance, minus any other financial aid received.
Direct PLUS Loans also require that borrowers don’t have adverse credit, such as a bankruptcy or loan default in the past. If you have adverse credit, you may still be able to borrow a PLUS loan by applying with an endorser — which is similar to a cosigner — or by documenting the extenuating circumstances around your adverse credit. You must also complete PLUS counseling.
Good to know:
To access federal student loans and other financial aid, like grants and scholarships, students need to complete the FAFSA annually.
Types of private student loans
If you need additional funding for school, a private student loan could fill the gap. You can find private loans from banks, credit unions, and online lenders. To qualify, you (or your cosigner) will need to meet a lender’s requirements for credit, income, and debt-to-income ratio (DTI).
1. Private loans for students
Best for: Students who need additional funding after maxing out federal subsidized and unsubsidized loans
Many private lenders offer loans to both undergraduate and graduate students. Some also provide loans for specific programs, such as medical school loans, law school loans, and MBA loans.
Graduate students may be able to qualify for a private student loan on their own, but the majority of undergraduates (over 93%) apply with a cosigner, such as a parent, according to the latest report from Enterval Analytics. Depending on the lender, you may be able to borrow up to your school’s cost of attendance.
Rates can be fixed or variable, and terms may span anywhere from five to 20 years. Most lenders offer a six- or nine-month grace period.
Advertiser Disclosure$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Abe's private student loans are available to undergraduates, graduate students, and students in certificate programs. The lender is unique in that it allows you to borrow even if you're enrolled less than half-time.
Abe offers rate discounts and payment relief that other lenders don't, such as a reduction in your rate for every six months of on-time payments, up to a total of 0.25 percentage points. Borrowers can also extend their grace period up to an additional six months. Plus, you can choose to lengthen your repayment term by five years, which can be helpful if you need to lower your monthly payments, or you can request a hardship forbearance of 12 months.
pros
- Offers 2% loan reduction after graduation
- Doesn’t charge late fees
- Can reduce interest rate for making on-time payments
- Possible repayment term and grace period extension
cons
- Doesn’t offer parent loans
- Relatively low borrowing limit of $99,999
Minimum income
$1 (Must have positive income)
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $225,000)
Cosigner release
After 12 months of on-time principal and interest payments
Eligibility
Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a cosigner who is a U.S. citizen or permanent resident alien. Loans not available to permanent residents of CO, CT, ME, NE, TX or WV.
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 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 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.
$1,000 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.
$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.
Overview
Nelnet Bank (Member FDIC) provides private student loans at competitive rates for undergraduate, graduate, and health professional degrees. You'll need a FICO credit score in the mid to high 600s to qualify. Borrowers with bad credit can apply with a cosigner, which may help them qualify and could reduce their interest rate.
Cosigners on Nelnet student loans can be released after 24 consecutive on-time payments (see disclaimer). You can also get a 0.25% interest rate reduction when you sign up for automatic payments (see disclaimer). There are no loan origination or application fees, but Nelnet does charge fees for late payments of insufficient funds.
pros
- Rates are competitive for borrowers or cosigners with strong credit
- Rate discount of 0.25 percentage points for autopay
- Cosigners can be released after 24 on-time payments
- Offers deferment and payment assistance programs
cons
- Charges fees for late payment and insufficient funds
- Doesn’t guarantee deferment and forbearance options
Loan terms
5,10,15* (IO, Deferred, Immediate)
Loan amounts
$1,000 to $125,000 for undergraduate, $1,000 to $175,000 for graduate, $1,000 to $500,000 for graduate health professions
Eligibility
All states and US Territories
$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 to $99,999 annually $180,000 aggregate limit)
Overview
Abe's private student loans are available to undergraduates, graduate students, and students in certificate programs. The lender is unique in that it allows you to borrow even if you're enrolled less than half-time.
Abe offers rate discounts and payment relief that other lenders don't, such as a reduction in your rate for every six months of on-time payments, up to a total of 0.25 percentage points. Borrowers can also extend their grace period up to an additional six months. Plus, you can choose to lengthen your repayment term by five years, which can be helpful if you need to lower your monthly payments, or you can request a hardship forbearance of 12 months.
pros
- Offers 2% loan reduction after graduation
- Doesn’t charge late fees
- Can reduce interest rate for making on-time payments
- Possible repayment term and grace period extension
cons
- Doesn’t offer parent loans
- Relatively low borrowing limit of $99,999
Minimum income
$1 (Must have positive income)
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $225,000)
Cosigner release
After 12 months of on-time principal and interest payments
Eligibility
Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a cosigner who is a U.S. citizen or permanent resident alien. Loans not available to permanent residents of CO, CT, ME, NE, TX or WV.
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 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 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
$1,000 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.
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.
Overview
Nelnet Bank (Member FDIC) provides private student loans at competitive rates for undergraduate, graduate, and health professional degrees. You'll need a FICO credit score in the mid to high 600s to qualify. Borrowers with bad credit can apply with a cosigner, which may help them qualify and could reduce their interest rate.
Cosigners on Nelnet student loans can be released after 24 consecutive on-time payments (see disclaimer). You can also get a 0.25% interest rate reduction when you sign up for automatic payments (see disclaimer). There are no loan origination or application fees, but Nelnet does charge fees for late payments of insufficient funds.
pros
- Rates are competitive for borrowers or cosigners with strong credit
- Rate discount of 0.25 percentage points for autopay
- Cosigners can be released after 24 on-time payments
- Offers deferment and payment assistance programs
cons
- Charges fees for late payment and insufficient funds
- Doesn’t guarantee deferment and forbearance options
Loan terms
5,10,15* (IO, Deferred, Immediate)
Loan amounts
$1,000 to $125,000 for undergraduate, $1,000 to $175,000 for graduate, $1,000 to $500,000 for graduate health professions
Eligibility
All states and US Territories
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.
2. Parent student loans
Best for: Parents who prefer to take on the burden of debt for their child and fully manage the terms of the loan
Parents who want to help their kids pay for college can also find private parent student loans. Interest rates may be higher on parent loans than student loans, and repayment options might be more limited. For instance, some lenders require parents to start making small or full payments on their loan right away, rather than offering a grace period.
Related: Can You Get a Student Loan With Bad Credit?
Federal vs. private student loans
Both federal and private student loans can help you pay for college or graduate school, but they have several differences potential borrowers should be aware of:
| | |
|---|
| | |
| | Fixed or variable; generally higher |
| Annual and aggregate borrowing limits apply | Typically up to your school’s cost of attendance |
| Income-driven repayment plans, deferment, forbearance, and forgiveness options | Competitive rates for borrowers with strong credit |
| | |
Most federal loans don’t have a credit requirement, and they come with fixed interest rates. They’re eligible for multiple repayment plans, as well as protections like deferment, forbearance, and loan forgiveness. However, they may come with borrowing limits that fall below the amount you need for school.
Private loans, on the other hand, typically have a credit requirement, so many students must apply with a cosigner to qualify. Rates may be fixed or variable, and your repayment plan and deferment options are up to the discretion of the lender. You can often borrow as much as you need to pay for school, but your private loans won’t be eligible for forgiveness programs or other federal benefits.
How to choose the right student loan
Everyone’s financial situation is different, so there’s no one-size-fits-all rule for which student loan you should choose. However, it’s generally a good idea to max out your eligibility for federal Direct Subsidized Loans, if available, since they’re likely your most affordable option. After that, consider borrowing federal Direct Unsubsidized Loans to pay for school.
If you need additional money after that, consider whether a federal Direct PLUS Loan or a private student loan would offer the better deal. If you have excellent credit, you may find a private lender that offers lower rates and no fees. Just keep in mind that private loans don’t usually offer as many borrower benefits as federal student loans do.
If you decide you need a private student loan, make sure you compare as many lenders as possible.
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FAQ
What is the best type of student loan?
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The best student loan type is the Direct Subsidized Loan, which is available to undergraduate students with financial need. The government covers interest while you’re in school and during your grace period, so you don’t have to worry about your balance growing as you earn your degree. Plus, this loan has a competitive interest rate and a variety of repayment options. The downside is Direct Subsidized Loans have lower borrowing limits than other types of loans and aren’t available to everyone.
When should I apply for a student loan?
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If you’re looking to borrow federal student loans, submit the FAFSA as soon as possible. The form usually opens on October 1 every year, though for 2024-25, it opened in December 2023. Submitting the FAFSA will put you in the running for Direct Subsidized and Unsubsidized Loans, as well as grants and the federal work-study program. As for private student loans, you can apply at any time, but it may take anywhere from 10 days to a few weeks or more for the lender to process your loan. Starting the process early can ensure your tuition bill gets paid on time.
Related: How To Apply for Student Loans
How are student loans different from other types of loans?
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Unlike other types of loans, student loans are designed for higher education. They often come with a grace period, allowing you to postpone payments while you’re in school and for several months after you graduate or drop below half-time enrollment. Student loans may also come with certain protections, such as forbearance, deferment, loan forgiveness, and income-driven repayment plans. If you pay student loan interest during the year, you could also qualify for a tax deduction up to $2,500.
Eric Rosenberg contributed to the reporting for this article.
Meet the expert:
Rebecca Safier
Rebecca Safier has more than eight years of experience in personal finance. Her work has been featured by CNN, U.S. News & World Report, New York Post, and Buy Side WSJ.
