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The Best Student Loan Companies

The best student loan company is the one that offers you the lowest interest rate and the best terms.

Written by
Grace Lemire
Last Update on Aug 10, 2023

In today’s high-cost academic landscape, choosing the right student loan company has become crucial for students and parents alike. The wide range of options can be overwhelming, with varying interest rates, repayment plans, and loan terms to consider. In this article, we thoroughly explore the leading student loan companies, examining their practices, customer satisfaction, interest rates, and repayment flexibility. 

Our goal is to provide clear insights and empower readers to make informed decisions in the complex realm of educational financing. Join us on this enlightening journey as we demystify the process and help you navigate the world of student loans with confidence.

LenderBest ForFixed APRVariable APRMin. Credit ScoreBorrowing Min./Max.
AscentFlexible repayment terms4.62% to 15.66%6.16% to 15.49%Mid 600s$2,001 up to $200,000
Custom Choice LoanStrong borrower benefits3.65% to 12.47%5.97% to 14.45%Varies$1,000 up to $99,999 per year ($180,000 aggregate limit)
College AveFlexible repayment options4.44% to 15.32%4.99% to 15.32%Mid 600s$1,000 up to the total cost of attendance
DiscoverMulti-year loans5.49% to 14.99%6.12% to 15.37%Does not disclose.$1,000 up to the school-certified cost of attendance minus other financial aid
EarnestCustom repayment terms4.45% to 14.90%5.15% to 16.20%650$1,000 up to the total cost of attendance
EDvestinUBorrowers with strong finances7.0% to 10.578%7.79% to 10.74%750; 675 if applying with a cosigner$1,000 up to $200,000 aggregate limit
ELFILarge loan amounts4.48% to 12.29%4.48% to 18.00%680$1,000 up to the school-certified cost of attendance
LendKeyShort repayment terms4.89% to 10.39%Starts at 5.80%660$1,000 up to the total cost of attendance minus other aid received
Nelnet BankBorrowers with a strong financial foundation and no cosigner4.49% to 14.57%5.96% to 15.48%680; 640 if applying with a cosigner$1,000 up to an aggregate limit of $125,000
SoFiSoFi customers4.49% to 13.80%5.16% to 13.07%Does not disclose.$5,000 up to the total cost of attendance
Best for Borrowers Seeking Flexible Repayment Terms

Ascent

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$2,001 up to $200,000
Repayment Options
Deferred Repayment, Interest-Only Repayment, $25 Minimum Payment
Fixed APR
4.62% to 15.66%
Variable APR
6.16% to 15.49%
Minimum Credit Score
Mid 600s
Show More Details

Ascent’s cosigned, credit-based loan offers five repayment terms — 5, 7, 10, 12, and 15 years — and four repayment plans. This makes them a strong option for borrowers seeking flexible repayment terms.

They also provide borrowers with added bonuses, such as engaging financial wellness courses and over $80,000 in scholarship opportunities each year.

Loan Terms: 5, 7, 10, 12, or 15 years

Forbearance Options: Offers one to three months of forbearance for economic hardship, for up to 24 months total over the life of the loan

Cosigner Release Policy: Available after 24 months of on-time payments

Pros

  • Competitive interest rates
  • Auto debit discount of 0.25%
  • Variety of repayment options
  • Cosigner release available after 12 months

Cons

  • Students enrolled less than half time are ineligible
  • Cosigner release is unavailable to international students
  • Charges late fees
Additional Details

Ascent also offers two non-cosigned loan options — one credit-based loan, and one outcomes-based loan. The credit-based loan option is best for borrowers that don’t have a cosigner but have strong finances. The outcomes-based loan is best for borrowers without a cosigner that don’t have the credit score or income to qualify for a credit-based loan.

Best for Borrowers Seeking Strong Borrower Benefits

Custom Choice Loan

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to $99,999 per year ($180,000 aggregate limit)
Repayment Options
Immediate Repayment, Interest-Only Repayment, Flat Repayment, Deferred Repayment
Fixed APR
3.65% to 12.47%
Variable APR
5.97% to 14.45%
Minimum Credit Score
Varies
Show More Details

The Custom Choice LoanⓇ is powered by Cognition Financial and funded by Citizens. They offer competitive interest rates and strong borrower benefits.

Upon graduation, borrowers may be eligible for a 2% principal reduction. The reduction applies to the total dollar amount disbursed, excluding any amounts that are reduced, canceled, or returned. For example, if $20,000 were disbursed, the borrower would receive $400 off.

Loan Terms: 7, 10, or 15 years

Forbearance Options: Borrowers can receive 12 total months of forbearance, provided in two-month increments.

Cosigner Release Policy: Available after 36 consecutive, on-time monthly principal and interest payments

Pros

  • Competitive interest rates
  • 0.25% auto debit discount
  • 2% principal deduction upon graduation
  • No fees

Cons

  • Only offers three repayment term options
  • Forbearance option is less generous that other lenders
Additional Details

The Custom Choice LoanⓇ allows for both greater-than-minimum payments and biweekly payments via autopay. This allows borrowers to optimize their loan payoff strategy with automation, which some other lenders don’t allow.

Best for Borrowers Seeking Flexible Repayment Options

College Ave

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to the total cost of attendance
Repayment Options
Immediate Repayment, Interest-Only Repayment, Partial Repayment, Deferred Repayment
Fixed APR
4.44% to 15.32%
Variable APR
4.99% to 15.32%
Minimum Credit Score
Mid 600s
Show More Details

College Ave is a solid loan option for borrowers who want a flexible repayment term and don’t plan to release their cosigner until the loan is paid off. Borrowers will need a credit score in the mid-600s to qualify.

Loan Terms: 5, 8, 10, or 15 years

Forbearance Options: Offers up to 12 months of forbearance due to financial hardship, unemployment, or disability

Cosigner Release Policy: Available after half of the original repayment term elapses

Pros

  • Competitive interest rates
  • Auto debit discount of 0.25%
  • Several loan term options

Cons

  • Strict cosigner release policy
Additional Details

College Ave partners with Payce Rewards, a free cashback service, that allows borrowers to earn cashback for in-store and online purchases at major retailers like Starbucks, CVS, and Walmart. If you opt to use it, Payce will automatically direct cashback to pay down your College Ave loan.

Best for Borrowers Seeking a Multi-Year Loan

Discover

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to the school-certified cost of attendance minus other financial aid
Repayment Options
Immediate Repayment, Interest-Only Repayment, Fixed Monthly Payment, Deferred Repayment
Fixed APR
5.49% to 14.99%
Variable APR
6.12% to 15.37%
Minimum Credit Score
Discover does not list a credit requirement. However, a score of 670 or higher is recommended.
Show More Details

Discover offers a straightforward student loan option, complete with a multi-year loan option for eligible borrowers. If you’re a new student, Discover provides a seamless process for borrowing more each year you need it.

While they don’t have the option to release a cosigner, they offer flexible repayment options and a variety of assistance programs if you experience financial hardship.

And while there is only one repayment term option, you can repay the loan sooner without penalty. Discover does allow for greater-than-minimum payments via autopay, so you can set the payment amount to reflect your ideal payoff timeline.

Loan Terms: 15 years

Forbearance Options: Discover offers several assistance options, including one forbearance option:

  • Hardship Assistance: Interest rate is temporarily lowered to reduce your monthly payment. Program is limited to 12 months.
  • Hardship Forbearance: Temporarily postpone your monthly minimum payment.
  • Reduced Payment Program: Temporarily lower your monthly minimum payment, for up to 36 months.
  • Early Repayment Assistance Program: Temporarily postpone your minimum monthly payment for up to 3 bills, if you’re within the first 3 months of the repayment period.

Cosigner Release Policy: None

Pros

  • 0.25% auto debit discount
  • No fees
  • Offers rewards for good grades
  • Offers several forbearance and assistance options

Cons

  • Interest rates are higher than some competitors
  • No cosigner release
  • One repayment term option
Additional Details

If you earn a GPA of 3.0 or higher, Discover will give you a cash reward as part of their Good Grades rewards program. The reward is equal to around 1% of the disbursed loan balance. For example, if $10,000 was disbursed, you’d receive a $100 reward.

Best for Borrowers Seeking a Custom Repayment Term

Earnest

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to the total cost of attendance
Repayment Options
Deferred Repayment, Fixed Repayment, Interest-Only Repayment, Immediate Repayment
Fixed APR
4.45% to 14.90%
Variable APR
5.15% to 16.20%
Minimum Credit Score
650
Show More Details

Earnest is one of the top student loan lenders, offering competitive interest rates, custom repayment terms, and flexible repayment options.

Earnest uses “precision pricing,” which allows borrowers to select the exact repayment term they’d like between five and 15 years. For example, you could select a term of 11 years and three months if you’d like.

Unlike the industry standard of a six month grace period, repayment on Earnest private student loans begins nine months after graduation. During the repayment process, you can also skip a payment once every 12 months if you need to — although this shouldn’t be used just because, as interest will accrue in the meantime.

Loan Terms: Borrowers can choose any term between five and 15 years.

Forbearance Options: Earnest offers up to 12 months of forbearance for eligible borrowers. They also offer a short-term interest-only repayment option in 6-month increments for up to 48 months.

Cosigner Release Policy: None

Pros

  • Competitive interest rates
  • 0.25% auto debit discount
  • No fees
  • Nine-month grace period
  • Custom repayment term

Cons

  • No cosigner release
  • Loans aren’t available for borrowers in Nevada.
Additional Details

In most cases, student loan payments are due on a specific, preset day of the month, and you don’t have much, if any, say in what that date is. However, with Earnest, you can adjust your payment date to be within seven days before or after the preset date. This is especially helpful if you’d like to align your paychecks with your payment dates.

Additionally, borrowers in Nevada are ineligible for Earnest private student loans.

Best for Borrowers with Strong Finances

EDvestinU

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to $200,000 aggregate limit
Repayment Options
Immediate Repayment, Interest-Only Repayment, Deferred Repayment
Fixed APR
7.0% to 10.578%
Variable APR
7.79% to 10.74%
Minimum Credit Score
750; 675 if applying with a cosigner
Show More Details

EDvestinU student loans are funded by a nationally-recognized nonprofit provider, and proceeds support community scholarships and college access activities. This is different from the traditional for-profit lender, which can provide a unique option for borrowers whom this is important to.

That said, EDvestinU is only available in select states:

  • Alaska
  • Arkansas
  • Colorado
  • Connecticut
  • Florida
  • Maine
  • Massachusetts
  • Nebraska
  • New Hampshire
  • New Jersey
  • New York
  • North Carolina
  • Puerto Rico
  • Rhode Island
  • Texas
  • Utah
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin

Loan Terms: 7, 10, or 15 years

Forbearance Options: Available on a case-by-case basis.

Cosigner Release Policy: Available after 36 months of consecutive on-time payments.

Pros

  • 0.25% auto debit discount
  • Cosigner release after 36 consecutive on-time payments
  • Cons

  • Interest rates are higher than some competitors
  • Unavailable in several states
  • Vague forbearance options
Additional Details

To borrow with EDvestinU, either you or your cosigner must have a minimum annual gross income of $30,000. If applying alone, EDvestinU is ideal for borrowers with strong finances.

Best for Individuals that Need to Borrow a Large Amount

ELFI

Auto Debit Discount
None
Borrowing Minimum and Maximum
$1,000 up to the school-certified cost of attendance
Repayment Options
Immediate Repayment, Interest-Only Repayment, Fixed Repayment, Deferred Repayment
Fixed APR
4.48% to 12.29%
Variable APR
4.48% to 18.00%
Minimum Credit Score
680
Show More Details

ELFI, also known as Education Loan Finance, is a division of the Tennessee-based SouthEast Bank. While their private student loan offering is fairly standard, they’re an exceptional lender for borrowers that need to take on a large debt balance.

They pride themselves on their low rates, various repayment options and terms, and their strong customer service. This is consistent with their customer reviews, which earns them a 4.9 out of 5 stars on TrustPilot — a score that’s higher than most competitors.

Loan Terms: 5, 7, 10, or 15 years

Forbearance Options: Offers up to 12 months of financial hardship forbearance

Cosigner Release Policy: None

Pros

  • Competitive interest rates
  • Several repayment terms and repayment plans
  • Offers up to 12 months of forbearance

Cons

  • No cosigner release
  • Charges late fees
  • No auto debit discount
Additional Details

While ELFI doesn’t offer an auto debit discount, they claim that their interest rates already “include” the discount because they are the lowest possible rates.

Best for Borrowers Looking for The Shortest Repayment Timeline

LendKey

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to the total cost of attendance minus other aid received
Repayment Options
Immediate Repayment, Flat-Fee Repayment, Interest-Only Repayment
Fixed APR
4.89% to 10.39%
Variable APR
Starts at 5.80%
Minimum Credit Score
660
Show More Details

LendKey provides borrowers with access to a wide network of lesser-known credit unions and community banks, allowing you to work with smaller lenders that may offer more competitive interest rates.

LendKey also developed the Academic Credit Score, which is a proprietary scoring model that uses both you and your cosigner’s credit score (if applicable) and your GPA to score you. A good score could land you an interest rate discount.

The major downside of LendKey student loans is the lack of repayment options. Borrowers will need to make some form of payment while in school, which may not be ideal for some. However, for borrowers that can afford to make payments while in school, having one of these repayment plans can help you get out of debt faster.

Loan Terms: 5, 10, or 15 years

Forbearance Options: Offers up to 18 months of forbearance, given in six-month increments, which is longer than most other lenders.

Cosigner Release Policy: Available after 24 months of consecutive on-time payments

Pros

  • Competitive interest rates
  • 0.25% auto debit discount
  • Offers up to 18 months of forbearance
  • Offers rate discounts for good grades

Cons

  • Fewer repayment term options than some other lenders
  • Charges a late fee of 5% of the unpaid amount
  • Does not offer full in-school deferment
Additional Details

LendKey borrowers get access to a variety of borrower benefits, including:

  • Career Assistance, powered by NextJob. This includes online mock interviews, a resumé builder, hidden job opportunities, and a personality test to uncover new career paths.
  • Personalized credit acceleration plans, powered by Curu. This includes free credit reports and scores, personalized credit plans, free 1:1 coaching with certified credit consultants, and smart payment alerts.
  • Federal student loan assistance, powered by Savi. Savi is an online concierge service that helps borrowers find the best federal loan forgiveness and repayment plans for them.
Best for Borrowers with A Strong Financial Foundation Applying without A Cosigner

Nelnet Bank

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$1,000 up to an aggregate limit of $125,000
Repayment Options
Immediate Repayment, Interest-Only Repayment, Deferred Repayment
Fixed APR
4.49% to 14.57%
Variable APR
5.96% to 15.48%
Minimum Credit Score
680 individually; 640 with a qualified cosigner
Show More Details

Nelnet Bank offers competitive interest rates and a high borrowing limit, making them perfect for borrowers applying without a cosigner. That said, you’ll need a strong financial background to qualify, as they do have stricter eligibility criteria than some other lenders.

Loan Terms: Does not disclose.

Forbearance Options: Offers up to 12 months of forbearance, in three-month increments, for financial hardship, unemployment, or disability

Cosigner Release Policy: Available after 24 consecutive, on-time principal and interest payments, or the lump sum equivalent

Pros

  • Competitive interest rates
  • 0.25% auto debit discount
  • No fees
  • Cosigner release available after 24 consecutive, on-time payments

Cons

  • Unclear loan repayment terms
Additional Details

Nelnet Bank also offers student loan refinancing, which can be helpful if you plan to refinance your loan after graduation.

Best for Borrowers that Are Already so Fi Customers, or Those Who Have Cosigners that Are Already so Fi Customers

SoFi (Best Student Loan Companies)

Auto Debit Discount
0.25%
Borrowing Minimum and Maximum
$5,000 up to the total cost of attendance
Repayment Options
Immediate Repayment, Partial Repayment, Interest Only Repayment, Deferred Repayment
Fixed APR
4.49% to 13.80%
Variable APR
5.16% to 13.07%
Minimum Credit Score
Does not disclose.
Show More Details

SoFi is a highly-rated lender, offering a variety of student loan options. Borrowers that are already SoFi customers, or that have a cosigner who is, will see the most value from SoFi private student loans.

If your cosigner is supporting another child in college, you may be eligible to receive a 0.125% rate discount, which can be combined with the 0.25% auto debit discount and the 0.125% SoFi Member Discount.

If you don’t have a cosigner but are a SoFi member, you can still make use of the 0.125% member rate discount and the auto debit discount. You can also download the SoFi app, enroll in direct deposit and credit score monitoring, then earn points you can redeem to pay off loans.

Loan Terms: 5, 7, 10, and 15 years

Forbearance Options: SoFi offers two forbearance options:

  • Unemployment Protection Program: Allows borrowers to pause payments in three-month increments for up to 12 months if laid off
  • Economic Hardship Forbearance: Allows borrowers to take up to 12 months of forbearance for economic hardship, such as medical expenses

Cosigner Release Policy: Available after 24 consecutive on-time payments

Pros

  • 0.25% auto debit discount
  • No fees
  • Cosigner release after 24 consecutive on-time payments
  • Offers unemployment protection
  • Additional rewards for SoFi customers

Cons

  • Higher borrowing minimum than other lenders
Additional Details

SoFi members gain access to complimentary career coaching, which can help you with a variety of career skills like:

  • Personal branding
  • Navigating the job search
  • Career transitions
  • One-on-one support for unique career goals

How Student Loans Work

A student loan is a type of installment loan designed to cover educational costs after gifted aid, like scholarships and grants, are applied. Student loans can cover a variety of expenses, such as:

  • Tuition
  • Fees
  • Books
  • Living expenses
  • Transportation
  • Meal plans
  • Off-campus housing (eg. rent, utilities, etc.)
  • Personal items (eg. bed linens, microwave for your dorm, etc.)

As long as the expense is a part of the total cost of attendance, you can use your student loan funds to cover it.

Federal Vs. Private Student Loans

There are two types of student loans — federal and private. The federal government provides federal student loans, while private organizations provide private student loans. The type of loan you choose impacts your interest rate, repayment options, borrower protections, and more. 

FederalPrivate
OriginationIssued by the U.S. Department of EducationIssued by private organizations, such as banks, credit unions, and online lenders
Interest RatesSet by the government and are fixed for the life of the loan; Generally lower than private student loansSet by the lender; Can be fixed or variable
Credit Check RequiredNo; Eligibility is primarily based on financial need and enrollment in an eligible educational programIn most cases, yes; Lenders will review your credit score and credit history to decide whether you are eligible
Repayment OptionsVarious options, including standard repayment plans, income-driven plans, and extended plansDepends on the lender; Some lenders offer flexible repayment plans such as graduated repayment
Deferment and ForbearanceVarious forbearance and deferment optionsMay or may not have forbearance and deferment options
Eligible for ForgivenessYesNo

Which One Is Better?

Neither option is technically better. However, federal student loans tend to have lower interest rates, stronger borrower protections, and the potential for forgiveness. This makes them a more compelling offer than most private student loans.

That said, federal student loans aren’t available to all borrowers, and they won’t always cover the entire cost of college. In some cases, you’ll need to borrow both federal and private student loans to cover the bill.

What Is A Good Student Loan Interest Rate?

Generally speaking, a good interest rate is one below 7%. However, aim to keep your interest rate around or below the average for the loan type.

For federal student loans, the average interest rate is 6.36%. For private student loans, the average interest rate ranges from 4% to 15%.

How To Get The Lowest Rate On A Student Loan

To get the lowest possible rates on your student loans, start with federal student loans. Then, apply for private student loans using the steps below.

Federal Student Loans

Federal student loans generally have a lower interest rate than private student loans, which is why they’re ideal to pursue first.

You can also see the rates before applying because they’re set in advance by the government. For example, for the 2023-2024 school year, rates are:

  • 5.498% for undergraduate Federal Direct Loans
  • 7.048% for graduate Federal Direct Loans
  • 8.048% for Federal Direct Grad PLUS Loans
  • 8.048% for Federal Direct Parent PLUS Loans

To apply for federal student loans, complete the FAFSA.

Private Student Loans

To get the best interest rate on private student loans:

  • Compare rates. Each lender will offer you a different interest rate and terms. Always compare rates across multiple lenders before borrowing a loan.
  • Apply with a cosigner. If you know a creditworthy individual willing to sign onto the loan alongside you, ask them to be your cosigner. It can help you qualify for a stronger loan offer with a lower interest rate.
  • Improve your credit score. Your credit score is a major factor in determining your interest rate. If you have time to improve your score before applying, make sure to do so.
  • Opt into autopay. Most private student loan lenders offer a 0.25% interest rate discount for opting into automatic payments.
  • Ask about other discounts. Some lenders, like SoFi and Discover, offer additional discounts for members or good grades.

How To Get Student Loans With Bad Credit

If you have poor credit, know that it is possible to qualify for a private student loan. However, you may get hit with higher interest rates or less favorable terms.

If you’re unable to qualify for a traditional lender, consider applying for a loan with more flexible eligibility requirements. Here are a few options to consider:

Ascent’s Outcomes-Based Loan 

Ascent’s non-cosigned outcomes-based student loan is for juniors and seniors with a 2.9 GPA or higher and no credit score. To qualify, you must be a U.S. citizen, permanent resident, or DACA recipient enrolled full-time in an eligible program.

Fixed APR: 12.67% to 14.24%

Variable APR: 12.62% to 14.57%

Funding U’s No Cosigner Loan

Funding U offers no-cosigner student loans for undergraduate students. To qualify, you must be a U.S. citizen, permanent resident, or DACA recipient over the age of 18. You’ll also need to be enrolled full-time as an undergraduate student in a bachelor’s degree program within select states.

While Funding U will review your credit history, and negative marks can impact whether you qualify, they do not use credit as the sole factor in determining your eligibility. Instead, they use a combination of your academic achievements, career path, and credit history to evaluate you as a borrower.

Fixed APR: 6.99% to 12.49%

Variable APR: N/A

ISL’s Partnership No-Cosigner Loan

ISL offers a no-cosigner student loan for junior and senior students attending an Iowa or Illinois college full-time. While the eligibility criteria is strict, it’s a solid option for Iowa and Illinois students.

Fixed APR: 8.19%

Variable APR: N/A

FAQs

Do Student Loans Hurt Your Credit?

Student loans can impact your credit score. If you fail to make a payment, or pay late, it could hurt your score. However, if you make payments on time and in full, your score should remain okay.

What is the difference between federal and private student loans?

Federal student loans are issued by the government and often have more favorable terms, while private student loans come from private lenders and may have different interest rates and repayment options.

When do I start repaying my student loans?

Repayment usually starts after a grace period, which is typically six months after graduation or when a student drops below half-time enrollment.

What happens if I miss a student loan payment?

Missing a student loan payment can result in late fees and negative impacts on your credit score. It’s essential to communicate with the loan servicer to discuss possible options if facing financial difficulties.

Can I use student loans for expenses other than tuition?

While student loans are primarily intended for educational costs, they can be used for other qualified expenses like books, housing, transportation, and some personal expenses related to education.

Grace Lemire is a full-time content writer and part-time social media creator with a passion for helping people navigate life's toughest financial decisions – from moving out of your parents' house to buying a home.