Searching for the best student loan rates saves major money over the life of a loan. Many student loans feature extended repayment periods far beyond the life of most conventional lending options. Over a 10-year period, even a minor difference in APR adds up. Let’s face it, you probably don’t have money to burn on interest right out of college. If you do, you can use it to make extra payments toward the principal of your loan to further reduce the cost of borrowing.
And while we’re talking about budgeting, it’s important to consider your repayment options as you assess APRs. A bargain APR coupled with in-college payments can help you manage your borrowing while in school and enter the workforce with less debt.
For students with access to additional funds, a full repayment plan will help chip away at the loan balance more quickly.
The Best Student Loans of 2019
|Lender||Max Loan||Fixed APR||Variable APR||Deferment Eligible?|
|Citizens Bank||$150,000||4.72% – 12.04%||2.90% – 11.01%||Yes|
|Discover||100% of school costs||4.74% – 12.49%||2.95% – 11.62%||Yes|
|Ascent||$200,000||4.02% – 12.93%||3.31% – 12.62%||Yes|
|Sallie Mae||$200,000||4.74% – 11.35%||2.87% – 10.33%||Yes|
|U.S. Dept. of Education||$57,500||4.53% – 7.08%||N/A||Yes|
|College Ave||100% of school costs||4.45% – 11.98%||2.81% – 10.97%||Yes|
|SunTrust||$150,000||4.301% – 13%||3.126% – 12.125%||Yes|
|Wells Fargo||Up to total cost of school, minus other financial aid||4.99% – 12.99%||4.33% – 12.24%||No|
What are the Best Student Loan Rates?
The best student loan rates allow you to borrow money for your education with the lowest possible cost. For highly qualified borrowers, including parents, a variable interest rate may provide long-term savings on a short-term loan. Students with less access to resources may prefer the security of a fixed-rate loan with a dedicated APR you can plan your budget around.
Finding suitable repayment terms is also important for the cash-strapped. A stellar APR with an ambitious payment schedule could lead to default. While reviewing the best rates, make sure you can keep up with monthly payments from the start of the loan period to the end. For some students, complete deferment of repayment is the only option while focusing on studies. Others may prefer to work part-time to meet interest-only payments while some work full-time to tackle principal and interest prior to graduation.
U.S. Department of Education Direct Loans vs Sallie Mae Smart Option Student Loans
U.S. Department of Education loans — direct subsidized, unsubsidized and PLUS loans — all feature fixed interest rates ranging from 4.53% to 7.08% as of November 2019. Sallie Mae’s Smart Option loan offers a fixed rate of 4.74% – 11.35%. Direct loans provide easy access for low-income, no-credit students and offer a mix of repayment options when you do not immediately enter a higher earning bracket. For students with greater access to resources, Sallie Mae loans provide similar APRs with a degree of repayment flexibility. Sallie Mae is also an option for graduate loans for students who require more funding than direct unsubsidized loans provide.
Discover Undergraduate Student Loan vs Ascent Non-Cosigned Student Loan
Sometimes it can be difficult to choose between a fixed rate or variable rate loan, particularly when starting interest rates are similar. For example, the Discover undergraduate student loan has a starting APR of 4.74% on a fixed-rate loan and a maximum rate of 12.79% as of November 2019. Ascent’s non-cosigned student loan option features a variable interest rate ranging from 3.31% to 12.62%. For the budget-conscious student, a fixed loan can feature a higher starting APR. However, it also provides a predictable repayment plan. Variable loans provide a lower starting APR, but it may increase over the life of the loan.
Wells Fargo Parent Student Loan vs College Ave Undergraduate Loans
The Wells Fargo Parent Student Loan sends funds to the borrower, making it a solid option for parents who need more control of a child’s finances. It features a variable APR of 5.74% to 12.24% and a fixed rate of 6.74% to 12.99%. By comparison, the fixed rates of a College Ave undergrad loan range from 4.54% to 11.98% while variable rates start at 2.84% and rise to a 10.97% maximum. A parent can cosign on this loan but has less control of the funds. Parents can also be released from the loan after half of the repayment period elapses if there is a history of timely payments.
Best Student Loans Reviews
Citizens Bank: Best undergrad loan
Few college students have a lengthy credit history due to age, and applying for too many lines of credit in a short window of time can negatively impact your score for years. Student loan applications trigger a hard pull of your credit report, and too many applications submitted back-to-back may limit your ability to secure a loan in the future. Citizens Bank undergraduate loan options minimize credit pulls by providing multi-year approval with an initial application. After the first year, annual reviews of your credit are only a soft credit inquiry and do not hurt your credit score. Citizens Bank provides this service while offering a fixed APR of 4.72%-12.04% — a range in keeping with many of the best student loan rates. As of November 2019, the company’s 2.90% variable rate is one of the lowest around.
Discover: Best way to earn benefits
When you were a kid, grades were likely a source of pain or pleasure. Rewards were offered for high achievement, and grounding or technology bans tended to follow negative reports cards. Fortunately, Discover student loans have your back, and the company is ready to salute you for a job well done. Discover offers eight different loan types ranging from undergraduate to grad school loans to MBA financing and law student loans. The best part? If you earn a 3.0 GPA or above, the company provides a good grades reward equal to 1% cash on your loan amount. Have a $10,000 loan? Expect a $100 reward to complement a fixed interest rate of 4.74% to 12.49%. Simply sign in to your Discover account up to six months after the term covered by your loan ends to submit your grades.
Ascent: Best low credit score private option
When your credit history is minimal, it is hard to find a private student loan, particularly one with a comfortable APR and repayment terms. Ascent reviews other criteria when determining your eligibility for a loan when you are new to building credit. When your credit history is less than 2 years, a minimum credit score is not required to qualify. Instead, the company assesses your financial history. As long as you are free of any defaults or judgments within a specified time period, you meet the basic “creditworthy” requirements for a student loan without a cosigner. If your credit history is older than 2 years, a minimum credit score of 680 is required, and Ascent will still review judgments and defaults when considering your application.
Sallie Mae: Best variety of repayment options
Sallie Mae student loans range from undergraduate options to loans for parents, dental school and medical school. The loans also carry a solid mix of repayment options, including the standard deferred repayment plan while you are actively enrolled and pursuing a degree. Other variations include repaying interest while obtaining your education and making flat payments of $25 per month.
Ashley Boucher, corporate communications director, states Sallie Mae’s lending philosophy centers around responsibility.
“We assess a customer’s ability, stability and willingness to repay before making a loan,” Boucher said. “The result: 98% of our customers are successfully managing payments and fewer than 2% default. In addition, more than 90% of Sallie Mae customers complete their program of study.”
According to Boucher, a typical college freshman customer who makes interest-only payments on a Smart Option Student Loan while in school could save an average of 28% on the total loan cost. A freshman customer who makes $25 monthly fixed payments while in school saves an average of 14% on their total loan cost compared to the deferred payment option. Over half of Sallie Mae customers choose to make payments while in school.
Curious about which APR you may qualify for? Boucher said APRs generally fluctuate based on the repayment term and whether a loan with fixed or variable rates is chosen.
U.S. Department of Education: Best flexible repayment options
Federal student loans through the U.S. Department of Education provide the most diverse selection of repayment options on flat-rate loans. As of November 2019, flat-rate APRs start at 4.53% and max out at 7.08%. Standard and graduated plans feature a 10-year repayment schedule with the graduated plan starting with lower payments that increase as time goes by and your earnings, presumably, increase. If an emergency occurs or life changes impede your ability to pay off a loan in 10 years, additional options are available for those with limited resources. Pay as You Earn allows you to repay a maximum of 10% of your discretionary monthly income. After 20 years, the remaining undergraduate loan balance is forgiven. However, this is not a no-strings-attached way to leave a student loan behind. Borrowers must pay income taxes on the amount of the loan forgiven.
College Ave: Best grad school student loan
College Ave provides a solid option for student loans tailored to the needs of graduate students. With variable APRs from 2.81% to 10.97% and fixed rates from 4.45% to 11.98%, College Ave’s graduate options are as flexible as undergrad loan terms and provide lower interest rates for well-qualified students. It also allows you to use a cosigner if your credit requires it.
“We offer a free credit pre-qualification tool to tell graduates and cosigners if their credit scores qualify, and what interest rates they can personally expect from us before they apply,” said Tori Cordeiro, spokesperson for College Ave. “Plus, using the tool won’t impact your credit score. Pre-qualification isn’t a full review or guarantee, but it may help you decide if you want to submit a full application.”
Repayment options include full deferment, interest-only payments, flat payments of $25 per month during school or a traditional payment schedule from the time the loan is issued. A minimum loan of $1,000 is required, and well-qualified applicants can borrow up to 100% of the cost of grad school including tuition, books and room and board. Cordeiro said the typical graduate customer has a FICO in the mid-700s and an annual income of $50,000 or more.
SunTrust: Best overall interest rates
All APRs on SunTrust student loans skew toward the lower end of the spectrum, making it a solid choice for nailing a good rate when you have good credit or a ready cosigner. The bank also offers incentives on three of its loan types. The Custom Choice student loan provides a 2% principal reduction at graduation while the Start Student Loan strikes the APR for your first six months. A Union Federal Private Student Loan allows students to earn a 0.25% reduction in the interest rate when you make seven on-time payments in a row. As of November 2019, SunTrust fixed-rate loans carry an interest of 4.301% to 13% while variable interest ranges from 3.126% to 12.125%. With already low rates, a discount can easily make these loans a home run for overall savings.
Wells Fargo: Best for parents
Parents or other friends and family members ready to help out the college-bound can find a lot to appreciate with Wells Fargo student loans, particularly when there is an existing relationship with the bank. Wells Fargo sends funds directly to the parent or borrower on these loans to ensure money is directed to the appropriate expenses. It also provides for interest-only payments for the first 48 months or an immediate repayment schedule. Parents with other Wells Fargo accounts can also reduce their interest rate. A 0.50% discount is offered for a Portfolio by Wells Fargo account, 0.25% discount for a consumer checking account and a 0.25% discount for a prior or existing student loan. A final 0.25% discount is also available for enrolling in automatic payments.
The Final Word
When you’re searching for a student loan, there are many decisions to make. These include choosing between a government or private loan, flying solo or obtaining a cosigner and picking a preferred repayment schedule. Always make finding a competitive annual percentage rate a major part of your student loan research. Over the life of a loan, the best student loan rates save you big money that can be reinvested in your future via savings or retirement accounts. It’s also never too early to start thinking about college savings for the next generation.