Applying for student loans can be a daunting process. Knowing where to start is hard with so many options, including several private student loan companies and factors.
But having the right student loan can make all the difference in managing college costs.
This guide will walk you through the top student loan companies and help you find the best fit for your needs.
Best Student Loan Companies of 2023
Student loans are primarily in two categories: federal and private. It’s always a race to see which best suits your needs.
Federal Student Loans
Federal student loans should be your first stop when borrowing for college.
They come with key benefits not typically found with private loans, like low fixed interest rates, income-driven repayment plans, and forgiveness programs.
Here are the main types of federal student loans:
Direct Subsidized and Unsubsidized Loans
The government funds Direct Loans, and you must complete the Free Application for Federal Student Aid (FAFSA) to qualify.
Subsidized Direct Loans are based on financial need, and the government pays the interest while you’re in school.
Unsubsidized Direct Loans are available regardless of need, but you’re responsible for interest during school.
You’ll take out the loan in your name directly from the Department of Education for both loan types.
Parents can take out Direct PLUS Loans for dependent undergraduate students, while graduate students can use Grad PLUS Loans for additional funding needs.
These loans have higher credit requirements and interest rates.
Perkins Loans are low-interest federal loans awarded to students with exceptional financial need.
Not all schools participate in this program. Check with your school’s financial aid office to see if Perkins Loans are an option.
When borrowing federal loans, keep annual and aggregate limits in mind. Only borrow what you need for school to keep debt manageable.
Private Student Loans
Private student loans help fill funding gaps beyond federal loan limits. Because they’re based on creditworthiness, you may need a cosigner to get approved or receive a better rate.
Here are the top private lenders to consider:
I. Sallie Mae
Sallie Mae is one of the largest private student loan lenders, offering variable and fixed-rate loans.
Borrowers can qualify on their own or with a cosigner. Unique benefits include a free FICO credit score on your monthly statements and their Career Training Loan for vocational programs.
II. College Ave
College Ave allows you to prequalify for rates without impacting your credit score. They offer both variable and fixed-rate loans with no fees.
A unique option is their Parent Loan to help parents pay the full cost of college.
Ascent focuses specifically on student loans, offering competitive variable and fixed rates. They also provide tools like free academic advising and career coaching for borrowers.
Cosigner release may be available after 24-48 consecutive on-time monthly payments.
V. Citizens Bank
Citizens Bank offers undergraduate and graduate student loans and a loan for career training programs.
Variable and fixed rates are available, along with cosigner options. Unique perks include a 0.25% interest rate reduction for setting up auto-pay.
In addition to great rewards credit cards, Discover offers student loans with variable and fixed rates.
Loans start at just $2,000 for flexibility. Applying with a creditworthy cosigner may help you qualify and get better rates.
When comparing private lenders, consider interest rates, fees, cosigner release policies, and borrower protections.
Make sure only to borrow what you need, so you’re not saddled with too much debt.
Read Also: Best Student Loan Lenders in 2023
Tips for Choosing the Best Student Loans
With federal and private loans to evaluate, follow these tips to guide your decision:
- Complete the FAFSA – This opens up eligibility for federal grants and loans with the best rates and terms.
- Compare federal vs. private loans – Only supplement federal loans with responsible private borrowing if needed.
- Check cosigner requirements – A cosigner can help you qualify and get better rates. But see if you qualify on your own first.
- Ask about cosigner release – Many lenders let you apply to release the cosigner later.
- Calculate monthly payments – Make sure you can comfortably afford the monthly payments on your loans.
- Review fees and penalties- Avoid loans with extra fees and be aware of penalties for missed payments.
- Ask about hardship options – Consider flexible options to lower or pause payments if you’re struggling.
- Read borrower protections – Federal loans offer more protections if you hit tough times.
- Evaluate repayment options – Income-driven repayment makes federal loans more affordable.
Doing your homework on the front end will help you land the best student loans for your needs and budget.
Be sure to reevaluate options each year and before borrowing again.
Managing Student Loans
Once you’ve borrowed student loans for college, you’ll want to take steps for successful repayment.
Here are some tips:
- Automate payments – Set up autopay through your loan servicer to avoid missed payments.
- Pay interest during school – Pay interest as it accrues on unsubsidized loans to keep balances down.
- Start paying early – Begin making payments before your grace period ends to get ahead.
- Pay extra monthly – Increasing payments even slightly can shave years off repayment.
- Reevaluate IDR plans annually – Check that your payment under income-driven plans still fits your budget.
- Communicate with servicers – Contact them immediately if you need to pause or adjust payments.
- Explore employer repayment benefits – Some companies help employees pay back student loans.
- Monitor your credit – Student loans can help build your credit history when paid responsibly.
Alternatives to Consider College Financial Aid
While student loans are very common, also consider these options to help minimize debt:
Applying for scholarships can help cover tuition and other costs without repayment needed. Tap into national, local, university, and private scholarships.
Federal and school work-study programs let you earn money with an on-campus job during school. The money can help pay tuition or other expenses.
Employer Education Benefits
If your employer offers tuition reimbursement or education benefits, use those to earn your degree debt-free.
Budget and Reduce Costs
Getting creative with your budget and lifestyle while in college can significantly cut down on borrowing needs:
- Live at home or get roommates
- Cook meals instead of eating out
- Use public transportation to save on costs
- Take advantage of student discounts
- Work part-time while taking classes
Finding ways to lower your college costs means you’ll need to borrow less overall.
Read Also: Student Loan Consolidation Rates
Choosing the right student loan companies for college can be challenging. Start with federal student loans, then supplement responsibly with private loans as needed.
Manage your student loans carefully for successful repayment and reduced interest costs.
Consider all options – like scholarships, work-study, and budgeting – to minimize borrowing needs. Use these tips to make smart decisions and invest in your education.
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