Best Student Loans and Private Student Loans of December 2023

There are two main types of student loans: federal student loans — issued by the U.S. Department of Education — and private student loans. Both differ in interest rates, eligibility requirements, loan modification options and forgiveness programs.

Although federal loans offer more flexible repayment terms and borrower protections, a private student loan can help cover your school’s total cost of attendance after you’ve hit the federal borrowing limit and exhausted all other options. We researched available loan options and identified the nine best private student loans for 2023.

Student Loan Forgiveness Update:

The Supreme Court blocked President Biden's debt relief plan, but there are other routes to get loan forgiveness, and the Biden Administration is exploring other policy options.

The federal student loan payment freeze ended and payments resumed in October.

Our Top Picks For Best Student Loans

Note: Experts recommend taking out federal student loans before taking on private student loan debt. Jump straight to that section. See how we chose our winners.

Best Private Student Loans:

• College Ave – Best Overall
• Sallie Mae – Best for Healthcare Professions
• Earnest – Best for Parents
• SoFi – Best for No Fees and Discounts
• Discover – Runner-up for No Fees and Discounts
• Ascent – Best for Borrowers Without a Cosigner
• LendKey – Best Marketplace
• Credible – Runner-up for Best Marketplace
• MPower Financing - Best for International Students

Best Federal Student Loans:

• Direct Subsidized Loan
• Direct Unsubsidized Loan
• Direct PLUS Loans for Parents & Graduate Students

Best Private Student Loans Reviews

College Ave's private student loan rates

Basic eligibility requirements

To apply for a private student loan with College Ave, student borrowers must:

• Be at least 16 years of age
• Be enrolled in an eligible school in the USA
• Have a Social Security number
• Meet the school’s satisfactory academic progress guidelines

Although College Ave doesn't have a minimum credit score for students with cosigners, the cosigner must have a credit score in the mid-600s. College Ave doesn't disclose its exact credit requirements, citing that its criteria is proprietary.

Students interested in applying for a private student loan with College Ave can obtain pre-approval with a soft credit check that won’t impact their credit score.

Repayment options and fees

While in school, College Ave offers borrowers several repayment options. Depending on the type of loan you’re applying for, you may be able to choose from the following options:

• Interest-only payments
• Flat $25 monthly payments
• Deferred payments
• Full interest and principal payments

You can select a loan term of five, eight, 10 or 15 years for most loans. If you are attending medical school, loan terms can be as long as 20 years.

This online lender doesn’t charge application fees, origination fees or prepayment penalties. Its late payment fee is 5% or $25.

Why we chose College Ave as Best Overall

College Ave ranks as best overall due to its variety of loan options, in-school payment plans and lengthy grace periods for graduate students.

More on College Ave's student loan options

College Ave Student Loans offers private loans for students, international students and parents. Borrowers can receive a College Ave loan if they’re enrolled at least part time, as long as they’re registered at a qualifying, degree-granting institution and show satisfactory academic progress.

College Ave finances up to the total cost of attendance and disburses the loan directly to the institution. The lender offers loans for undergraduate, graduate, MBA, medical school, graduate health professions, dental school, law school and career training programs. College Ave also allows borrowers to refinance their loans.

For those experiencing financial hardships, College Ave offers up to 12 months of forbearance for the life of the loan. It’s usually provided in three- or six-month increments, but varies based on your situation.

Finally, College Ave partnered with Payce Rewards, a free service where students earn cash back for online and in-store purchases to help them pay down their education loans. Payce Rewards is linked to around 61,000 stores and restaurants across the United States, including CVS, Walmart and DoorDash.

Read full College Ave student loan review>>

Sallie Mae's private student loan rates

Basic eligibility requirements

To apply for a private student loan with Sallie Mae, student borrowers must:

• Show evidence of academic enrollment status, degree and course of study
• Be a U.S. citizen, permanent resident or international student with cosigner
• Include references from two personal contacts other than the cosigner
• Provide financial information, including bank statements and mortgage or rent payments
• Provide income and employment information (cosigner or student)

Although Sallie Mae doesn’t disclose its minimum income and credit score requirements online, the average FICO score for approved borrowers was 747 in 2022, and 86% of Sallie Mae’s private loans were cosigned.

Repayment options and fees

Borrowers can choose from the following payment options:

• Interest-only payments
• Flat monthly payments while in school
• Deferred payments

Eligible borrowers can also utilize Sallie Mae’s Graduated Repayment Period. It allows borrowers to make interest-only payments for a year after the six-month grace period ends.

Sallie Mae's loan terms range from 10 years to 20 years, depending on the type of loan. Sallie Mae charges a late payment fee of 5% of the amount of the past due payment (up to $25).

Why we chose Sallie Mae as Best for Healthcare Professions

With Sallie Mae, medical school students can borrow up to 100% of the total cost of attendance. Sallie Mae’s medical school loans feature a 36-month grace period, and borrowers can defer payments for up to 48 months during their residency and fellowship.

More on Sallie Mae's student loan options

Sallie Mae loans has education loan options for undergraduate, graduate, professional and medical school programs. And for borrowers enrolling in trade or certificate programs, you can get loans for school through Sallie Mae's career training loan program.

Sallie Mae’s loans can cover up to your total cost of attendance, with no borrowing limits.

Its medical school loans have several unique features that make it the standout choice for healthcare students, including multiple repayment options and 12 months of reduced payments after your grace period ends. You can also take advantage of Sallie Mae’s medical residency and relocation loans to borrow up to $30,000 to cover your expenses.

Borrowers can improve their chances of qualifying for a loan — and securing a competitive rate — by adding a cosigner to your loan application. Sallie Mae has the shortest payment period to qualify for a cosigner release; you can apply after making just 12 monthly payments on time.

Students can also get a 0.25% interest rate discount by setting up automatic payments.

Read full Sallie Mae student loan review>>

Earnest's private student loan rates

Basic eligibility requirements

To apply for a loan with Earnest:

• You must be the age of majority in your state

• You must be a U.S. citizen or permanent resident

• You must have a FICO score of 650 or higher

• You must earn at least $35,000 per year (or have a cosigner)

• If you’re a parent borrower, first, second and third-year students must be enrolled full-time. College seniors can be enrolled half-time, and graduate students have no enrollment requirement.

Earnest’s loans are not available in Nevada.

Repayment options and fees

Earnest has several options for student and parent borrowers, including:

• Interest-only repayment
• Flat monthly payments
• Deferred payments
• Immediate repayment

Borrowers can choose a repayment term of five, seven, 10, 12 or 15 years. Borrowers can also opt for a nine-month grace period before repaying their loans.

Earnest does not charge origination, application or late fees, nor does it charge prepayment penalties.

Why we chose it as Best for Parents

While other lenders have limited repayment options for parents, Earnest has four repayment plans to choose from, and parents can take advantage of a longer-than-usual grace period.

More on Earnest's student loan options

Earnest is a lender of undergraduate, graduate and parent student loans. Parent borrowers can borrow up to their child’s cost of attendance. And parents can choose to take advantage of a nine-month grace period, giving them more time after their child graduates before full interest and principal payments are due.

Earnest also has a skip-a-payment feature. All borrowers can skip one payment once per year without penalty or negative effect on their credit. And Earnest offers a rate match guarantee; if you’re approved for a loan with another lender that has a better rate, Earnest will give you a $100 Amazon gift card.

Earnest’s rates for parent student loans are quite low, and you may qualify for an even lower rate by signing up for automatic payments; the discount will reduce your rate by 0.25%. This discount is not available while loan payments are deferred.

Earnest’s loans are only eligible for degree-granting programs, and it doesn’t issue loans to residents of Nevada.

SoFi's private student loan rates

Basic eligibility requirements

To apply for a private education loan with SoFi, student borrowers must:

• Be U.S. citizen, permanent resident or non-permanent resident alien

• Permanent residents and non-permanent resident aliens must show their permanent residency card or DACA or asylum documents

• Be employed or have a cosigner

• Be enrolled at least half time in a four-year, degree-granting program

• Have reached the age of majority in their state of residence

• Use the loan for higher education expenses at an eligible institution

• Attend a four-year school

SoFi doesn't disclose its minimum credit score. But according to SoFi's 2022 annual report, the average credit score for approved borrowers was 773.

Repayment options and fees

SoFi offers flexible repayment options for all student loan borrowers while in school, including options for full principal and interest payments, interest-only payments or a $25 flat monthly payment. Borrowers can also choose a deferment option to delay paying their loans until six months after graduation.

SoFi offers four different loan terms: five years, seven years, 10 years and 15 years.

Along with no late fees, SoFi also does not charge application, origination or prepayment fees.

Why we chose SoFi as Best for No Fees and Discounts

SoFi is our choice for the best student loan lender for no fees and discounts because of its rate discounts, membership benefits and the lack of origination or late fees.

More on SoFi's student loan options

SoFi offers education loans for undergraduate, graduate, law and medical school programs, and it also offers private parent loans and student loan refinancing. SoFi doesn’t charge any fees at all, so there are no application, origination, late or insufficient payment fees, nor are there prepayment penalties.

You can take advantage of SoFi’s discounts to lower your interest rate. You can qualify for a 0.25% reduction by signing up for autopay. And if you take out additional loans to pay for the rest of your education, you’ll qualify for another 0.125% discount.

When you take out a loan through SoFi, you qualify for its membership benefits, including unemployment protection and career coaching.

However, you will need very good credit to qualify for a loan. Although SoFi accepts credit scores in the mid-600s, the weighted average FICO score on originated loans was 773 in 2022, a higher-than-typical score.

Read full SoFi student loans review>>

Important: Discover Financial Services recently announced it plans to end its student loan business. As of Feb. 1, 2024, it will no longer accept new student loan applications. If you want to apply for a Discover loan, make sure you apply ahead of that date.

Discover will transfer existing customers to a new servicer, but the new company has not been announced yet.

Discover's private student loan rates

Note: lowest rates include autopay discount and interest-only repayment discount

Basic eligibility requirements

To apply for a private student loan with Discover, student borrowers must:

• Be at least 16 years old

• Be a U.S. citizen, permanent resident or international student (international students must have a cosigner that is a U.S. citizen or permanent resident)

• Be enrolled at least half-time

• Be enrolled in a bachelor’s or associate degree program at a qualifying institution

Discover doesn't disclose its minimum credit score requirement. However, its 2022 annual report shared that 94% of its student loans were issued to borrowers with credit scores of 660 or better.

Repayment options and fees

For undergraduate student loans, Discover only offers a 15-year term for student loan repayment. For graduate student loans, the only option is 20 years. Borrowers can choose from interest-only, fixed and deferred repayment plans; those that select interest-only repayment will get an added discount.

This lender doesn’t charge any application, origination, disbursement, prepayment or late fees.

Why we chose Discover as runner-up for no fees and discounts

We chose Discover as a runner-up for best for no fees and discounts because it doesn’t charge any fees — not even late payment fees — for its student loans.

More on Discover's student loan options

Discover is mostly known for its credit cards and home loans. However, it also offers student, parent and student loan refinancing. Through Discover, you can borrow up to the total cost of attendance, and Discover doesn’t charge any added fees. There are no origination fees, late fees or prepayment penalties.

Discover has several financial hardship programs for borrowers struggling to afford their payments. Depending on your situation, you may be able to postpone your payments, qualify for a temporary interest reduction or lower your monthly payments.

Discover only has one repayment term for undergraduate borrowers — 15 years — so it offers less flexibility than other lenders. And you’ll likely need a cosigner to qualify for a loan, but Discover does not offer cosigner releases. The only way to remove the cosigner’s responsibility for the loan is to refinance the loan.

Read full Discover student loans review>>

Ascent's private student loan rates

Basic eligibility requirements

To apply for a student loan with Ascent, borrowers must:

• Be a U.S. citizen, DACA recipient, or U.S. temporary resident (international students can qualify for a loan if they have a creditworthy cosigner that is a U.S. citizen or permanent resident)

• Be a full- or half-time student at an eligible institution

• Have at least a 2.9 GPA

• Meet a minimum gross annual income of $24,000 for the current and previous year, and submit satisfactory proof-of-income (cosigners)

Income requirements vary by your year and cosigner status:

• Undergraduate borrower with or without a cosigner and less than two years of established credit history: No minimum income requirement for the student

• Graduate borrower with a cosigner: No minimum income requirement

• Borrower without a cosigner and at least two years of credit history: Minimum gross income of $24,000 for the current and previous year

• Cosigners: Minimum gross income of $24,000 for the current and previous year

Ascent doesn't disclose its minimum credit score requirements. However, its annual report shared that the average credit score for approved borrowers with outcomes-based loans was 650, and the average credit score for borrowers with credit-based loans was 670.

Repayment options and fees

Ascent has multiple repayment options. The available repayment plans vary based on the type of loan you have, but you may be able to make interest-only payments, flat monthly payments or defer payments until after graduation. You may also qualify for a nine-month grace period.

Why we chose Ascent as Best for Borrowers With No Cosigner

We chose Ascent as the best for borrowers without a cosigner due to its specialized non-cosigned loan options for undergraduate, graduate and DACA students.

More on Ascent's student loan options

Ascent is one of the few private lenders offering non-cosigned loans to undergraduate, graduate and DACA (Deferred Action for Childhood Arrivals) students. (DACA protects eligible immigrant youth who came to the United States as children from deportation and helps them apply for a Social Security number, a driver’s license and a work permit.)

The Non-Cosigned Outcomes-Based loan is available to full-time junior and senior students. For students without an established credit history, Ascent bases eligibility on the school, program, major, academic performance (GPA), graduation date and cost of attendance.

Ascent also offers cosigned loans for undergraduate, graduate, DACA and international students. Cosigned loans include perks like a 1% cash back graduation reward and a 0.25% deduction rate with autopay. Students can apply for a cosigner release after making 12 consecutive on-time payments.

Read full Ascent student loans review>>

LendKey's student loan interest rates

Basic eligibility requirements

To apply for a loan through LendKey, students must:

• Be a U.S. citizen or permanent resident
• Be enrolled at least half-time in an eligible school
• Be the age of majority
• Have a credit score or cosigner

LendKey does not disclose its minimum credit score, and income and credit requirements vary by partner lender.

Repayment options and fees

Repayment options for LendKey’s student loans include flat monthly payments and interest-only payments while in school, and a six-month grace period after leaving school. LendKey loans only have one loan term option: 10 years.

As a marketplace, LendKey offers private student loans and student loan refinancing with no application or origination fees. Late payment or insufficient funds fees depend on the lender.

Why we chose LendKey as Best Marketplace

We chose LendKey as the best marketplace because it partners with a large network of loan providers and the company also services student loans.

More on LendKey's student loan options

LendKey is not a lender but a digital loan marketplace that partners with over 13,000 small banks and credit unions. Unlike other marketplaces, LendKey services the loans borrowers take through its marketplace and offers in-house customer service. In other words: it will not underwrite or disburse your loan, but it will manage all administrative and customer-related aspects of it.

Private student loans obtained through LendKey begin at $2,000 and can finance 100% of school-certified expenses, including tuition, room and board and supplies.

Applications are credit-based, and cosigners are allowed if the borrower doesn’t meet eligibility criteria. Cosigner release will depend on the lender’s approval and requirements. Some lenders on LendKey’s marketplace offer it after 12 months of payments, while others require up to 48 months.

LendKey offers undergraduate, graduate and student refinance loans.

Read full LendKey student loans review>>

Credible's private student loan rates

Basic eligibility requirements

To apply for a student loan with Credible, potential borrowers must:

• Be a U.S. citizen or permanent resident
• Be enrolled at least part-time in a qualifying institution
• Provide income and employment information

Other eligibility requirements, including the minimum credit score required, and documentation vary by lender.

Repayment options and fees

Credible partners offer a variety of in-school repayment options, including full principal and interest, interest-only, and partial interest payments. Some lenders also offer forbearance for those borrowers who want to delay repayment until after graduation.

None of the lenders listed on Credible's platform charge origination fees or prepayment penalties.

Why we chose Credible as runner-up for loan marketplace

Credible allows borrowers and cosigners to compare multiple lenders with only one application and a soft credit check that won’t impact their credit scores.

More on Credible's student loan options

Credible isn’t a lender. It is a free online marketplace that partners with private student loan lenders like Ascent, College Ave, Custom Choice, INvestEd, MEFA and Sallie Mae. Borrowers can prequalify with a soft credit check and compare offers from different lenders at once.

Through the platform, you can shop for undergraduate, graduate and parent student loans. Credible also offers undergraduate, graduate, parent, medical school, law school and MBA loans.

Depending on the lender you choose, you may be able to borrow up to the total cost of attendance. But rates, terms and policies vary by the lender issuing the loan.

Read full Credible student loans review>>

MPower's student loan interest rates

Basic Eligibility Requirements

To qualify for a loan from Mpower, you must meet the following requirements:

• You must be an undergraduate or graduate student within two years of graduating or enrolled in a one- or two-year program

• You must be enrolled with one of Mpower's partner schools in the United States or Canada

MPower does perform credit checks, but it doesn't have a minimum credit score, and a lack of a U.S. credit history will not affect your application.

Repayment options and fees

All of MPower's loans have 10-year repayment terms. While you're in school and for six months after graduation, you must make interest-only payments. The first interest-only payment is due 45 days after the loan disbursement date.

Unlike many lenders, MPower charges a 5% origination fee, but that fee is included in the annual percentage rate (APR) calculation. There are no prepayment penalties.

Why we chose MPower as Best for International Students

Although some private student loan lenders will issue loans to international students, they typically require the student to have a cosigner that is a U.S. citizen or permanent resident. If the student doesn't have close friends or family in the country, it can be difficult to find loans for school.

MPower is one of the only lenders that offers private student loans to international students without a cosigner or collateral.

More on MPower's student loan options

MPower offers private student loans and student loan refinancing to international students, Deferred Action for Childhood Arrivals (DACA) students, U.S. citizens, refugees and asylum-seekers. It partners with over 400 colleges and universities in North America to provide funding to students.

Students can finance up to 100% of their education expenses — up to a lifetime maximum of $100,000 — and through MPower's partnership with Zolve, all approved MPower borrowers are prequalified for a U.S. credit card and bank account, helping students build their U.S. credit history.

Federal Student Loans

Federal student loans are backed by the U.S. Department of Education and offer exclusive benefits and repayment options that are not available with private student loans. Experts recommend you always exhaust federal student loans before turning to private lenders.

Today, all of these loans are issued under the federal Direct Loan program. Unlike private loans, most federal loans don't require credit checks, so you can qualify even if you have bad credit.

There are three main types of federal student loans available to students and parents of students:

• Direct Subsidized Loan: For undergraduate students with financial need. The Education Department pays the interest while the student is in school at least half-time, during the grace period after leaving school, and during deferment.

• Direct Unsubsidized Loan: For undergraduate, graduate and professional students regardless of financial need. Students are responsible for paying interest at all periods.

• Direct PLUS Loans: For graduate and professional students and parents of undergraduate students. Unlike other federal loans, PLUS loans require basic credit checks. Borrowers with adverse credit histories may need to meet additional requirements, such as adding an endorser to their applications and completing PLUS loan credit counseling.

Benefits of federal student loans

• No credit checks for most federal loans
• No minimum income requirement
• Lower interest rates for undergraduate loans
• Subsidized interest payments on some loans
• Financial hardship forbearance available
• 6-month grace period after graduation for most loans
• Access to income-driven repayment plans
• Possibility of loan forgiveness

Student Loans Guide

In this guide, we outline what students and their families need to know to easily navigate the student loan application process.

• How do student loans work?
• Types of student loans
• Student loan interest rates
• Student loan terms
• Federal student loans vs private student loans
• How to apply for student loans
• How to pay off your student loans
• Latest student loans news

How do student loans work?

Student loans are issued by the federal government or private lenders to help students pay for undergraduate or graduate studies. The loan goes toward tuition, books, student housing and other education-related expenses.

Once a student loan application is approved, the funds are sent directly to the school to cover tuition, fees and on-campus student housing. The remaining balance is disbursed to the student.

Private loans accrue interest from the start of the loan, while some federal loans have more flexible terms. Repayment options include deferment, interest-only, or full payment.

Types of student loans

Since private loans don’t offer the same protections that federal loans do, the general advice is to seek private student loans after you’ve exhausted every federal option.

Federal student loans

Federal student loans are the first choice for many due to their low rates, flexible repayment options and federal protections.

The U.S. Department of Education offers the following loan options:

• Direct Subsidized
• Direct Unsubsidized for Undergraduate and graduate students
• Parent PLUS
• Grad PLUS

To apply for federal loans and additional financial aid, students must submit the Free Application for Federal Student Aid (FAFSA) once every school year. Your school will calculate how much you’re eligible to borrow based on the cost of attendance and your family’s financial information.

The federal government limits how much a student can borrow annually and over their lifetime based on the academic year, loan type and the borrowers’ dependency status.

Private student loans

Private student loans are similar to personal loans, as they are issued by private banks or credit unions.

Private student loan lenders look at students' credit scores and credit reports to determine interest rates and loan approval. Since most students don't have enough credit history, lenders often require a qualifying cosigner.

Private loans don’t feature the same benefits as federal student loans, but they can help pay your school’s total cost of attendance if you’re no longer eligible for federal aid. Most schools will have a list of recommended lenders they partner with.

You will receive any remaining balance from the loan directly from the school after covering tuition, fees and student housing.

Most private lenders suggest borrowers start loan repayment while still in school, but most offer in-school deferment or grace periods, although interest will continue to accrue.

Student loan interest rates

Current private student loan interest rates range from 4.43% to 16.99%. The interest rate on your loans depends on the type of loans you have, your education level and the lender issuing the loan.

Rates can be fixed or variable. Fixed interest rates stay the same for the entire repayment period. By contrast, variable interest rates can change over time, so they are usually best for borrowers who want a shorter repayment term.

Average student loan interest rate

Federal student loans

Interest rates on federal student loans are established by federal law. The rates are fixed, so they stay the same for the duration of your loan term.

For federal student loans, we calculated the average interest rate using data from the past 10 years. The overall average interest rate for federal student loans was 5.65%.

The rates you’ll pay depend on the loan and borrower type. These are the rates for loans issued for 2023-2024:

Undergraduate loans will now carry a rate of 5.50%, up from 4.99% last year. Graduate student direct loans will have a 7.05% interest rate, up from 6.54% last year. PLUS loans for both parents and graduate students will carry a rate of 8.05%, up from 7.54%

• Undergraduate: 5.50%
• Graduate: 7.05% for Direct Unsubsidized | 8.05% for Grad PLUS
• Parent: 8.05%

Private student loans

Private student loans work differently. Lenders set their rate range based on an index, such as the Secured Overnight Financing Rate (SOFR). The rates can change over time as the market fluctuates, so you may find that current rates are higher or lower than when you took out your loan.

Other factors affect your private loan rates, including your credit history, income, debt-to-income ratio and whether you have a cosigner.

For private student loans, we looked at available interest rates from 15 leading lenders. We calculated that the overall average interest rate for private student loans was 9.88%.

How to calculate student loan interest

To calculate your interest:

• Divide your annual percentage rate (APR) by 365 to get your daily interest rate
• Multiply the daily interest rate by the remaining loan principal to find your daily interest accrual
• Multiply the daily interest accrual by the number of days in your loan billing cycle

For example, let’s say you have $20,000 at 6.00% APR:

• Divide 6.00% (APR) by 365 (number of days in a year)=0.0001643 (Your daily interest rate)
• Multiply 0.0001643 (daily interest rate) by $20,000=3.286 (daily interest accrual)
• Multiply 3.286 (daily interest accrual) by 30 (days in billing cycle)=$98.58

The resulting $98.58 is how much you’ll pay in interest during the first month of repayment.

You can use the Federal Student Aid Simulator to calculate your interest and overall repayment.

Student loan terms

Federal student loan terms are set by law, while the lender determines private student loan repayment plans. When shopping for private student loans, borrowers should compare repayment options to see which lender allows more flexibility.

Federal student loan terms

For federal student loans, the government offers multiple repayment plans that can be grouped as follows:

Private student loan terms

While in school, most private lenders will allow you to:

• Defer loan and interest payments until after you graduate
• Make fixed monthly payments towards interest and principal
• Pay a moderate monthly payment towards accrued interest only

Once you’re out of school, the repayment plans are standard “balance-based” ones, meaning your monthly payment is based on how much you owe plus interest; and you pay an equal amount each month over a period of five to 15 years.

Lenders also may offer grace periods and forbearance to students who cannot make their monthly payments. However, the student loan interest rates will continue to accrue, increasing their student debt.

How to apply for student loans

The following are general tips to consider before applying for student loans, whether federal or private.

1. Calculate your financial needs

Consider your school’s cost of attendance (tuition, materials, room and board, etc.) and then factor in additional living expenses. Money’s Best Colleges in America 2023 contains information about admission, costs, financial aid and graduation rates of hundreds of public and private institutions around the United States.

If you’re considering private loans, take the time to evaluate your creditworthiness and whether you will need a cosigner.

Private lenders base interest rates on your credit score, income and employment history. If you have a cosigner, lenders will also consider their credit for approval.

If you need to improve your credit before applying for a private student loan, start with our credit repair guide or check out our best credit repair companies if you don't want to DIY it.

2. Look into federal loans

We recommend you consider federal loans first, as they have several advantages over private loans and a variety of options to choose from.

If you need to take out a private student loan, keep in mind that each lender offers different terms, rates and benefits.

Shop around and compare fees and APRs from multiple lenders before making a decision.

3. Seek expert help

Read expert advice from sources like the Consumer Financial Protection Bureau and College Board before you apply for private student loans. Other options may be available to you, such as grants and scholarships.

If you are a graduate school student or parent looking into private student loans, it could also be worth paying a financial planner to help you weigh the costs and benefits. Search for a fee-only planner who has experience helping clients plan for college or pay down student debt.

4. Choose the right lender for you

To choose the best student loan, you should have a clear understanding of what each lender requires and what they offer regarding interest rates and repayment options:

• Check your lender’s credentials: Only do business with reputable lenders. To determine this, use reputable sources like Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).

• Apply for prequalification: By prequalifying, you get to see what rates, terms and benefits each lender offers, while avoiding a hard credit inquiry. Be sure to understand how different interest rates and terms affect your payments.

• Look for lenders with in-school repayment options: Starting loan repayment early will reduce the debt burden. Opt for private lenders with multiple options, a grace period, and no penalties for early loan repayment.

• Opt for lenders with low or no fees: Application and origination fees are processing costs added to your principal, which means you’ll pay interest on them. All federal loans have origination fees; private loans typically do not. Note that student loan companies are legally prohibited from charging prepayment penalties. If you can, look for lenders that don’t charge late fees either.

• Take advantage of discounts and perks: Many lenders offer autopay discounts and other perks such as free study or tutoring programs and bonuses for good grades or referring friends.

Check what documents you need to apply

The application process for federal student loans starts by filling out the Free Application for Federal Student Aid (FAFSA). To do so, you will need:

• Social Security Number or Alien Registration Number
• Tax returns and income employment information
• If applicable, bank statements, investment records or evidence of untaxed income

To apply for private student loans you will need:

• Social Security number
• Tax returns and income employment information
• Rent or mortgage docs
• Financial information from your cosigner
• Application submitted no later than a month before tuition is due

How to pay off your student loans

Paying off student loans isn't easy. Americans owe a total of $1.7 trillion in student debt, a burden that can delay home ownership, starting a family and even retiring.

Ill-informed recommendations for paying off student loans include credit card balance transfers or filing for bankruptcy, but these can worsen your financial situation.

Some college students may be counting on student loan forgiveness to settle their debts. But this is only a viable option for federal student loans, and even then, it’s not a guarantee. The existing federal student loan programs can take 10 to 25 years to complete, and they're not available to all borrowers.

With this in mind, we have outlined some of the best practices to help you stay on top of your student loan debt:

Start repayment while you’re still in school

Private student loans begin accruing interest while you’re still in school. To keep accrued interest down, begin repayment as early as possible. You can save thousands of dollars over the life of the loan by keeping up with interest payments while you finish your degree.

Take advantage of loan forgiveness programs

President Joe Biden's student loan forgiveness plan was blocked by the U.S. Supreme Court at the end of June. While mass cancellation is off the table for now, the administration is pursuing another path to provide debt relief to low- and middle-income borrowers through a regulatory process known as negotiated rulemaking. Details about this latest plan are limited, but it will take longer to pursue, the president said.

However, you may be eligible for an existing federal loan forgiveness program.

Federal loans can be forgiven through Public Service Loan Forgiveness, a program that helps borrowers who work in traditionally lower-paying positions at government agencies, schools and non-profit organizations. Borrowers working in an eligible job can have their debts forgiven after 10 years of payments.

If you don’t work in public service but you also don’t earn enough to pay off your loans, you may be able to benefit from an income-driven repayment plan. These plans tie your monthly payments to how much you earn, and after a certain number of years, any outstanding debt is forgiven.

With existing income-driven repayment plans, borrowers can qualify for loan forgiveness after 20 or 25 years. But President Biden's new SAVE repayment plan would allow some borrowers to qualify for forgiveness in as little as 10 years.

Finally, even if you don’t qualify for full loan forgiveness, be sure to check for other forgiveness programs. Some states, for example, have programs aimed at recruiting health care workers or teachers to underserved areas.

Create a budget

Budgets help track your spending habits and organize your finances. You may identify areas where you can cut back on spending to be able to make more payments toward your student loan debt.

Look for a job with loan repayment as a benefit

You may be able to get hired at a company that helps employees pay off their loans, or you could encourage your current employer to add loan repayment to its benefits program. Approximately 25% of employers offer some kind of student loan assistance program, according to the Employee Benefit Research Institute.

Consider refinancing and debt consolidation

Student loan refinance can be a good option if you already have private loans, but it’s not always a smart move for those with federal loans. Learn more through our article on how to refinance your student loans and our list of best student loan refinance companies.

Pay more than the minimum toward your principal

Calculate the maximum you can afford to pay each month toward your principal loan amount. If you can pay more than what you owe each month, that’s the best way to pay off your loans quicker. When you pay extra, the additional money goes directly to reducing your principal debt.

Consider the debt snowball or debt avalanche methods

Two of the most popular strategies to minimize debt are the snowball and avalanche methods.

Latest Student Loans News

The student loan payment pause ended, and payments resumed in October. However, the White House announced it will ease borrowers into repayment with an "on ramp" to payments restarting: through September 30, 2024, borrowers who miss a monthly payment will not be considered delinquent or reported to credit bureaus, though their loans will accrue interest.

How We Chose The Best Student Loans

To choose the best student loans of the year, we looked at both federal and private student loan options, outlining the benefits and drawbacks of each.

Our reviews, however, are focused on private student loan lenders. Private student loans don't offer the same benefits and protections you would have through federal student loans.

For this reason, we prioritized private lenders that offered the following:

Flexible repayment options

Federal student loans have several different standardized payment plan models, whereas private lenders often offer less flexibility. We looked for lenders that offered deferred payment options, forbearance plans and interest-only loans while still in school.

Low or no processing fees

Possible costs for private loans include late fees or insufficient fund fees. When we looked at the industry, we looked for lenders that waived these or offered reduced fees and had discounts available.

Competitive interest rates

We preferred lenders that offered rates that were in line with the industry average or better. For December 2023, we looked for lenders with rates of 9.88% or better.

Students and parents should compare offers from multiple lenders to ensure they get the lowest rates. With this in mind, we also included student loan marketplaces that allow borrowers to compare loan offers from multiple lenders in one place.

Summary of Money’s Best Student Loans 2023

• College Ave – Best Overall
• Sallie Mae – Best for Healthcare Professions
• Earnest – Best for Parents
• SoFi – Best for No Fees and Discounts
• Discover – Runner-up for No Fees and Discounts
• Ascent – Best for Borrowers Without a Cosigner
• LendKey – Best Marketplace
• Credible – Runner-up for Best Marketplace
• MPower Financing - Best for International Students