As education costs continue to rise, several places are available for those who wish to get a student loan.
Finding suitable student loan options can be daunting, especially for those venturing into higher education for the first time.
In this guide, we will explore the various places where students can obtain loans, including banks, credit unions, online lenders, and specialized loan programs.
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Where Can a Student Get a Loan?
Many students need financial assistance to pursue their academic dreams due to the high cost of college education.
However, there are various avenues where students can access loans; they include the following:
1. The US Government
The U.S. Department of Education offers several federal student loans through the William Ford Federal Direct Loan Program, which include;
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
These loans are available to undergraduate and graduate students and come with various benefits and borrower protections.
Federal student loans have several advantages, making them an attractive option for many students.
Firstly, they offer competitive interest rates that are often lower than those of private loans.
Additionally, federal loans provide various borrower protections, such as income-driven repayment plans and options for loan forgiveness under specific conditions, like the Public Service Loan Forgiveness (PSLF) program.
You must complete a Federal Student Aid (FAFSA) Application form to apply for this loan.
The great thing about federal student loans is that they are available to students with different financial needs and don’t require a credit check or a co-signer.
This makes them accessible to many students with limited or no credit history.
However, it’s essential to borrow responsibly and only take out the amount you need for your education expenses.
Federal student loans must be repaid, so consider your future financial obligations before taking on any debt.
Before applying for federal loans, try applying for scholarships and grants which don’t need to be repaid.
2. Banks
While federal student loans are a standard option, they may only cover some of the expenses, leading students to explore alternative avenues for funding.
In such cases, private student loans come into play; one such good option for private lenders is using bank student loans.
Numerous national banks provide student loans with low-interest rates and flexible terms, making them a great starting point when searching for private loans for education.
These banks have established reputations and often offer various loan options suitable for undergraduate, graduate, and professional students.
As they have branches nationwide, students can access their services conveniently.
Here are some banks that offer student loans:
I. Citizens Bank
Citizens Bank operates branches in 14 states but extends its private student loan services to students nationwide.
The bank caters to undergraduate and graduate students and parents who wish to support their child’s education journey.
Loan durations vary, with students having the option to repay over five to 15 years, while parents can choose between five and ten years for repayment.
II. Discover
Discover is an internet-based bank with a single physical branch. It provides an extensive range of private student loans, encompassing;
- Undergraduate loans,
- Graduate loans,
- MBA loans,
- Health professions loans,
- Law loans,
- Residency loans,
- Bar exam loans, and
- Parent loans.
The repayment period for undergraduate loans is 15 years, while graduate loans come with a 20-year term.
III. PNC Bank
PNC Bank, headquartered in Pennsylvania, provides private student loans for undergraduate and graduate students.
Additionally, it offers specialized loans tailored for health and medical professions, health professions residency, and bar study.
PNC offers both fixed and variable interest rates. Like some other banks, PNC gives an interest rate discount twice the standard discount at 0.5 percent.
PNC Bank’s private student loans’ repayment periods vary from five to 15 years.
IV. Sallie Mae
Sallie Mae is an online bank with no physical branches. They provide various types of loans, including undergraduate loans, graduate loans, and career training loans.
Graduate loans are categorized into
- MBA Loans,
- Medical School Loans,
- Medical Residency Loans,
- Dental School Loans,
- Dental Residency Loans,
- Health Professions Loans,
- Law School Loans, and
- Bar Study Loans.
The repayment periods for these loans are from 10 to 20 years.
V. Education Loan Finance (ELFI)
Education Loan Finance, also known as ELFI, operates as the online division of SouthEast Bank, situated in Tennessee. ELFI provides loans to undergraduate students, graduate students, and parents.
The repayment periods for student loans range from five to 15 years, while for parents, it extends from five to 10 years. They also assigned student loan advisors to guide you.
3. Online lenders and Credit Unions
These lenders have emerged as alternatives to traditional banks, offering innovative and flexible loan options to meet the diverse needs of students pursuing higher education.
Some prominent lenders include
I. Earnest
Earnest was founded in 2013 to revolutionize student loans by using data and technology to provide personalized loan options.
The company aimed to simplify the borrowing process and offer transparency to borrowers.
Starting with student loan refinancing, Earnest expanded its offerings to include private student loans for undergraduate and graduate students.
Earnest became known for its flexible repayment terms and rewards for good academic performance.
II. Ascent
Ascent Student Loans was established in 2016 as a division of the San Diego-based financial technology company Goal Structured Solutions (GS2).
They aim to fill the student loan market gap by providing co-signed and non-co-signed loans to students.
They focused on offering student loans without a credit history or a co-signer, considering other factors such as academic performance and future income potential.
Ascent also stood out by providing unique repayment options, such as graduated repayment plans.
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III. College Ave
Founded in 2014, College Ave Student Loans is an online lender that focuses on simplifying the student loan process for borrowers.
The company sought competitive loan options and a user-friendly experience for students and parents.
College Ave aimed to offer flexible repayment terms and additional benefits, such as an extended grace period after graduation.
Over the years, the company expanded its loan offerings to include undergraduate and graduate student loans.
IV. SoFi
SoFi, short for Social Finance, started in 2011 as an online lender focused on refinancing student loans.
The company aimed to help graduates with high-interest student loans save money by offering lower interest rates through refinancing.
SoFi later expanded its services to include undergraduate, graduate, and parent student loans.
The company became known for providing various member benefits, such as career coaching and networking events, in addition to its loan products.
V. ISL Private Student Loan:
ISL Education Lending is a not-for-profit organization that has been providing student loans since 1978.
They offer private student loans, scholarships, and various programs to support families.
Being self-funded and self-capitalized, ISL Education Lending operates to reinvest its funds back into programs that benefit students and borrowers.
Headquartered in West Des Moines, the organization is crucial in making education accessible and affordable for aspiring learners.
VI. Edly Private Student Loan
Edly is a newer player in the student loan market, aiming to connect investors with students seeking funding for their education.
They offer income share agreements (ISAs) as an alternative to traditional loans, where students agree to pay a percentage of their income for a set period after graduation.
VII. Custom Choice Loan
The Custom Choice Loan, powered by Cognition Financial, provides private student loans for undergraduate and graduate students.
They aim to offer competitive loan options and personalized repayment terms to meet student’s unique needs.
VIII. RISLA Private Student Loan
Rhode Island Student Loan Authority (RISLA) has provided student loans since 1981.
They offer private student loans for students and parents to help cover education costs, focusing on serving Rhode Island residents.
IX. LendKey
Founded in 2009, LendKey started as a marketplace connecting borrowers to credit unions and community banks offering student loans.
The company aimed to simplify the borrowing process by providing a platform where borrowers could compare loan options from multiple lenders.
LendKey provides competitive interest rates and personalized loan options to its users.
X. Funding U
Established in 2016, Funding U targeted undergraduate students without a co-signer requirement.
The company used a unique underwriting process that considered factors beyond credit history, such as academic performance and future earning potential.
Funding U sought to make borrowing more accessible for students without established credit.
XI. MPOWER Financing
Founded in 2014, MPOWER Financing focused on providing loans to international and DACA students studying in the U.S.
The company aimed to address these students’ challenges securing loans due to their non-U.S. citizenship.
MPOWER offered loans without requiring a co-signer and considered the students’ academic history and potential future earnings.
XII. PenFed Credit Union
Founded in 1935, Pentagon Federal Credit Union (PenFed) is the second-largest federal credit union in the United States.
They provide comprehensive financial services, including checking accounts, credit cards, personal loans, mortgages, auto loans, and student loans.
PenFed Credit Union student loans focused on providing private student loans for undergraduate and graduate students.
They aimed to provide competitive rates and flexible repayment options to borrowers.
4. Colleges or Universities
These are also known as institutional loans. Institutional are different from federal or state government loans, as they are provided directly by the college or university.
Some loans may be similar to private student loans and can be funded through various sources, like endowments or third-party organizations.
These loans are considered private loans, even though the college offers them.
When comparing university loans to other loan options, they are not guaranteed to be better.
The interest rates and loan terms vary depending on the college. However, many university loans have interest rates and fees similar to private student loans and are serviced by third-party loan servicers.
Borrowing a university loan carries some risks, as defaulting on the loan can lead to consequences like the college withholding transcripts and diplomas or preventing class registration.
Eligibility for a university loan is often based on financial need, and some loans are targeted toward students who are not eligible for federal student loans, such as undocumented or international students.
Additionally, university loans may be designated for specific purposes, like buying a computer or textbooks.
Sometimes, colleges offer university loans as emergency aid with short-term repayment requirements.
Frequently Asked Questions
Where Do Most Students Typically Obtain Loans From?
Federal student loans account for most student debt in the United States, making up about 92% of all outstanding student loans.
Currently, there are approximately 43 million borrowers who owe a total of over $1.6 trillion in federal student loan debt.
Which Is a Better Choice: Student Loans From Banks or Online Lenders?
Both banks and online lenders offer student loans with similar features. While each bank may have unique advantages, there isn’t a significant difference between the two types of lenders.
However, some of the best banks for student loans provide loyalty discounts to their existing customers, which can be beneficial if you or your co-signer already have an eligible account with such a bank offering private student loans.
Additionally, if you prefer in-person customer support and there’s a nearby branch, a bank might be a suitable option.
It’s crucial to shop around and compare interest rates, repayment terms, and other features from various lenders before applying for any loan. This way, you can secure the best deal that suits your needs.
Read Also: College Ave Student Loans: 10 Things To Consider Before You Apply
Final Thoughts
If you require loans to support your college expenses, it’s advisable to explore all the types of federal loans and various options offered by national banks and other prominent lenders.
Take the time to compare the interest rates they provide to find the most favorable terms for your situation.
However, it is vital to approach student loans with caution and prudence. While they can be valuable tools for accessing education, students should know the responsibilities and consequences of borrowing money.
In the long run, balancing funding one’s education and avoiding an overwhelming debt burden is crucial.
Choosing a lender that aligns with your specific needs and financial requirements is essential, ensuring a smooth and manageable borrowing experience.
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