Higher education costs are rapidly on the rise, so it’s no surprise that you need assistance funding your tuition and other related expenses. Federal loans may be an option, but some private lenders also offer student loan products with great perks. Read on for the best private student loans on the market.
Best Private Student Loans for 2020
Ascent offers two options to help student fund their higher education expenses:
- Cosigned Loan: designed for college students who have a part-time load or greater and a co-signer willing to back the loan for them. It’s also ideal for students who are not U.S. citizens or are designated as permanent residents as they can still qualify with a cosigner who is a resident. Payment terms are 5, 10, or 15 years, and interest-only repayment is permitted while you are enrolled in school.
- Independent Loan: designed for full-time college Juniors, Seniors, or Graduate students. To qualify, you must be a U.S. citizen or permanent resident and maintain a GPA of at least 2.5. Payment terms are 10 and 15 years, and you won’t have to start repaying your loan until coursework is complete.
But what makes them really stand out among the other private lenders is the one-percent cash back incentive that they offer if you graduate and meet certain criteria. Furthermore, their APRs for both fixed and variable loan products are some of the lowest in the industry for those who are well-qualified borrowers (or have a stellar credit history).
The cosigned loan is accompanied by variable and fixed APRs ranging between 4.06 and 13.06 percent and 5.66 and 14.73 percent, respectively. On the other hand, the independent loan’s variable and fixed APRs are between 5.72 and 13.01 percent and 7.20 and 13.90 percent, respectively.
Ascent also offers a 0.25 percent f you enroll in automatic ACH payments. You can use their online tool to determine if you’re eligible to apply for a loan. It only takes a few minutes of your time and you’ll receive a real-time response.
Citizens Bank has two loan options to choose from:
- Student Loan: caters to students with, but a co-signer may be required.
- Student Loan for Parents: caters to parents wishing to assist their students with higher education expenses. You may also choose this option if you have stellar credit and do not require a cosigner to qualify.
Another key benefit of Citizens Bank private student loan products is the multi-year approval feature. In a nutshell, it allows borrowers to request for more funding as needed without jumping through more hoops. This means that you don’t have to submit a different application or supporting documentation each year that you wish to take out a loan.
To qualify for a student loan from Citizens Bank, you must be a full-time undergraduate or graduate student with at least one year left until you’re eligible for graduation. You must also be a citizen of the US or a permanent resident.
College Ave’s student loan products include:
- Undergraduate loans: can be used to cover all qualifying college expenses, including tuition, books, fees, and housing. Variable and fixed interest rates range between 3.94 and 11.19 percent and 5.29 and 12.78 percent, respectively.
- Graduate loans: can be sued to cover expenses related to postgraduate, masters, doctoral studies. Expenses incurred in relation to professional degree studies are also eligible for coverage under the graduate loan program. Variable and fixed interest rates range between 3.94 and 9.25 percent, and 5.29 and 10.45 percent, respectively.
Parent loans and career loans are also available to help offset the cost of higher education.
They also offer a scholarship program for borrowers that allows you to win up to $1,000 to be allocated towards your higher education expenses. An award is disbursed each month, and it only takes a few seconds to enter.
You can apply in as little as three minutes and know right away which loan product, along with specific terms, you qualify for. Loans can also be tailored to meet your budgetary needs.
CommonBond offers competitive student loans to undergraduate borrowers. You’ll have 5, 10, or 15 years to repay the loan, and there are fixed and variable rate options available.
The interest rates are as follows:
- Fixed loans: 5.3 to 9.82 percent APR
- Variable loans: 3.96 to 9.83 percent APR
To qualify, you must meet select income and credit criteria. You have the option to bring a cosigner on board to strengthen your approval odds, and they can be released from the loan if you make two years of consecutive on-time payments.
CommonBond offers forbearance for up to 12 months if you encounter financial difficulties during the repayment period. And should you decide to pay your loan off early, you can rest assured that you won’t be hit with prepayment penalties.
When you take out a loan from CommonBond, you will also help fund Pencils of Promise, which is a charitable initiative that helps cover educational expenses for underprivileged school-aged children in Ghana.
Known for its stellar credit card products, Discover also offers student loans to undergraduate and graduate students. Interest rates range between 3.99 and 13.99, depending on the loan type and accompanying repayment term. As a borrower, you can choose from:
- Undergraduate loans
- Graduate loans
- MBA loans
- Health professions student loans
- Law student loans
- Residency student loans
- Bar exam student loans
- Debt consolidation student loans
Their loans include several perks, including:
- One-percent cash reward with a GPA of 3.0 or better
- Repayment discount when enrolling in autopay
- The ability to choose between in-school or deferred repayment
You can apply directly from the website or by calling 1-800-STUDENT. And if you qualify for and decide to accept the loan offer presented to you, there are no application or origination fees.
When you take out a student loan from Sallie Mae, you’ll enjoy all the perks that the Smart Option Student Loan has to offer, including:
- Three flexible repayment options
- Zero origination fees
- No early prepayment penalties
- A deferred payment option which halts repayment until you complete your studies
You can choose from variable and fixed interest rate loan products with APRs ranging from 4.37 to 11.23 percent and 5.74 to 11.85 percent, respectively. They also offer specialized graduate loans for MBA, medical, dental, health, professional, graduate, and law school students. Sallie Mae also offers parent loans for those wishing to assist to cover the costs of attendance for the children.
To move forward with the loan application, visit their website or call 1-877-279-7172. Upon completion, you should receive an instant decision.
SoFi boasts some of the lowest rates in the private student lending industry. APRs on fixed and variable rate loans start at 3.899 and 2.4790 percent, respectively, when you enroll in Autopay. They have served thousands of borrowers and loaned well over $30 billion.
You can explore your loan options with SoFi using the online tools. It only takes a few minutes and there is no impact on your credit score.
With the Custom Choice student loan from SunTrust, you can tailor a loan product that meets your budgetary needs while saving a bundle on interest. They offer fixed and variable APR loans, ranging from 5.347 to 14.050 percent and 4.122 to 13.125 percent, respectively.
Other accountholder perks include:
- The option to defer loan payments while enrolled in school
- A principal reduction of 2 percent upon completion of your degree program
- A 0.25 percent discount when you enroll in autopay
- An additional 0.25 percent discount when you enroll in autopay from a qualifying SunTrust account
It only takes a few minutes to apply and you’ll receive an instant decision. Upon approval, you can rest assured that you won’t incur any loan origination fees. Even better, prepayment penalties do not apply if you decide to pay off the loan early.
How to Evaluate Private Student Loan Options
Ready to start applying for private student loans. Before you go any further, here are some questions to ponder:
- Is the lender reputable? There are shady lenders that will promise you one thing, and give you another, either in the form of ridiculous payment terms, fees or a monthly payment you can’t afford. Even worse, you could end up dealing with a con artist disguised as a student lender if you don’t do your homework. A better option: dig a bit deeper to learn more about the lender’s background. Take a look at their status with the Better Business Burea (BBB), and it also doesn’t hurt to read reviews to see what others are saying. If all the reviews are negative or sound too good to be true, they probably are and that’s your queue to move on to other options.
- Does the lender require that you meet minimum income and credit score requirements? If you don’t qualify, are they willing to work with you, and are you allowed to bring a cosigner on board?
- Does the lender offer any enticing perks to borrowers? Some will automatically grant you a reduction in interest if you enroll in auto pay. Other benefits include the ability to defer the loans or request forbearance if you encounter financial hardships during the repayment period?
- Are loan payments deferred while you’re enrolled in school? If so, does interest still accrue?
- Does the lender charge application or loan origination fees? Will you incur a prepayment penalty if you decide to pay the loan off early?
- Does the lender offer flexible loan options? Are you allowed to tailor your monthly payment and repayment term to fit your budget?
- Is the APR comparable to what’s being offered by other private lenders in the industry?
Should You Borrow From a Private Lender?
Wondering if a private student loan is right for you? It’s not a bad idea to shop around as not all private lenders are created equal.
But first, it’s best to exhaust your federal options. Why so? For starters, they generally have more competitive interest rates than what you’d find with private student loans. Furthermore, they offer great perks to borrowers, like the income-based repayment programs, forbearance, and deferment (as needed, student loan forgiveness, and loan cancellation, just to name a few. You may also qualify for free grants or the federal work-study program which allows you to earn money through an on-campus position designed specifically for students.
To determine if you qualify for federal loans, complete the Free Application for Federal Student Aid (FAFSA) at fafsa.gov. The income data input into this form will be analyzed to determine how much unmet financial need you have to fund your higher education. Colleges and universities will then use this information to compile federal loan offers (assuming you haven’t exhausted the aggregate federal loan limit).
No luck? Try local community banks and credit unions when you begin your search for private lenders as they tend to have more flexible qualification criteria. Online lenders may also be a good fit, and some allow you to determine if you qualify for a loan and with what terms with no impact to your credit score
The Bottom Line
Before you borrow from a private lender, be sure to explore all your federal options. And if you have to go the private route, obtain several quotes to ensure you’re getting the biggest bang for your buck.