Student loans are a well-known way for students to finance their education. In fact, 69 percent of college students say they use student loans to finance their education. We all know that student loans are a huge burden on college graduates. For this reason, it is important to take smart steps when applying for a student loan. The three (3) main things to consider when considering student loans are student experience, interest rates, and repayment terms.
We’ve spent hours researching and analyzing different student lenders and student marketplaces. Here are some of our recommendations for the best student loans. Note that these include private student loans and government student loans. Read on to learn more about the interest rates, repayment terms, and fees of these best student loans.
Best Student Loans 2022
Best Overall Student Loan:
Federal Direct loans
Federal Direct Student Loans include subsidized and unsubsidized loans, but graduate students are only eligible for unsubsidized loans. These student loans are issued by the Ministry of Education. To apply for Federal Direct Loans, students must submit the FAFSA (Free Application for Federal Student Aid). The US Department of Education has a helpful help center that includes phone support, live chat, and email support.
Eligible Degrees: Graduate and Undergraduate
Interest Rates: Undergraduates: 2.75 percent (fixed), PhD: 4.30 percent (fixed)
Repayment Terms: There are a wide variety of repayment options, including income-sensitive repayment plans that can considerably lower your monthly payment
Our Opinion: Federal Direct Student Loans are the best option for most students because of flexible repayment options and competitive interest rates. Students pursuing a career in public service may also qualify for loan forgiveness.
Best Student Loan for Low-Income Students:
Subsidized Federal Direct Loans
For low-income students, there’s a special type of direct student loan that earns no interest while you’re in college, deferred, or in the months after you graduate. This can save students money and makes this type of loan a great option. The only drawback to these student loans is that they are usually capped at $2,000 per academic year.
Just like all federal student loans, students can contact the US Department of Education with any questions via live chat, phone, or email.
Eligible degrees: Bachelor’s degrees only
Interest Rates: Fixed and variable interest rates are offered, but specific interest rates vary by lender
Repayment terms: Loan terms vary from 5 to 10 years, but depend on the lender
Our Opinion: If you are eligible for subsidized student loans through the FAFSA, this is the most affordable type of student loan. As mentioned, the only real drawback is that they have a limit per academic year.
Best for Comparing Private Student Loans:
Credible
If you’re considering private student loans, a student loan marketplace allows you to compare and shop around your different options. Our recommendation for the best student loan comparison tool is Credible because it offers a great user experience, requires no credit check, and compares reputable lenders, including Sallie Mae, Ascent, and others.
Eligible Degrees: Graduate and Undergraduate
Interest Rate: Both variable and fixed interest rates are offered, but specific interest rates vary by lender
Payment terms: Loan terms vary from 5 to 10 years but depend on the lender
Our Opinion: If you’re considering applying for private loans, we recommend looking into Credible. They make shopping around and finding the best student loans for undergraduate and graduate students easy.
Best Private Student Loan:
Ascent Student Loans
Ascent is an online student loan lender that offers undergraduate and graduate student loans. Unlike other lenders, Ascent charges no application fees and offers co-signed and unsigned student loans to students.
One attractive option Ascent offers is an “income-based” student loan, which is helpful for students who do not meet credit requirements or do not have a co-signer. Ascent offers other benefits to students such as automatic payment rebates and the ability to forbear your loan for about 24 months.
Eligible Degrees: Graduate and Undergraduate
Interest Rate: Fixed (3.39 to 14.50 percent) and Floating (2.4 to 12.98 percent)
Repayment terms: Loan terms vary from 5 to 10 years but depend on the lender
Our Opinion: As an online lender, Ascent offers a great user experience and very student-centric perks (longer forbearance than most lenders and automatic discount).
Best Income Share Agreement Provider:
Stride Funding
Stride Funding isn’t a conventional student loan company and rather offers students Income Share Agreements (ISA). The idea of an ISA is simple: students agree to give back their future income in exchange for funding. Students generally agree to give back a certain percentage of their income over a certain period of time (or until they return a certain amount of money).
The advantage for students is that you only pay your ISA if you make a certain amount of money. At Stride, if you’re unemployed or earning less than $40,000 a year, you don’t have to pay anything back. Also, students don’t need a co-signer (unlike some student loan providers).
Stride Funding is among the largest ISA providers, working with hundreds of universities. Stride also offers other student benefits such as Supporting Career Services.
One of the major downsides of Stride ISAs is that they are not available for all majors or at all universities.
Eligible Degrees: Junior or senior undergraduate college students, and graduates who are within two years of graduation.
Interest rate: N/A
Repayment terms: Students do not pay interest but a percentage of their income, which can vary between 3% and 9% for approximately 5 years.
Our Opinion: Stride ISA is a great option for students who are eligible based on their major and university. The fact that you don’t have to repay your earnings if you are unemployed or earn less than $40,000 is a huge plus for students.
The Best of the Rest
Here are some of the other student loan options not listed above for student loans. Please note that we listed these student lenders in alphabetical order.
Federal Direct PLUS Loans
Interest rate: 5.30 percent (fixed)
Pros: Federal Direct PLUS loans are eligible for almost all federal student loan repayment plans, including income-sensitive repayment. These loans can also be applied for up to the amount of childcare costs (with no financial aid).
Cons: Fixed interest rates of 5.30 percent are above average.
Funding U
Interest rates: 7.99 percent to 13.49 percent APR (fixed)
Pros: Funding U student loan does not require a co-signer or credit history; instead, a minimum GPA and college graduation rate is required.
Cons: Loans are available only in 30 states, and fixed rates of 7.99 to 13.49 percent are above average.
Sallie Mae
Interest rate: 1.13 percent to 11.23 percent* APR (variable), 3.50 percent to 12.60 percent* APR (fixed)
Pros: Sallie Mae offers student loans to part-time students, as well as DACA students and non-US citizens.
Cons: Offers require a strict credit check.
Final Thoughts on the Best Student Loans in 2022
For many students, Federal Direct Student Loans are the best loans and offer the best repayment options and interest rates. You should almost always take advantage of these loans before considering Parent PLUS Loans or Private Loans. For this reason, all students, regardless of demonstrated financial need, must file the FAFSA.
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