Student Loan Reviews
Your Guide to the Best Private Lenders
Frequently Asked Questions
How do student loans work?
When you take out a student loan, you’re usually given a lump sum of money to use for education, and you don’t have to begin repayments until after you’ve graduated. You qualify for federal student loans based on financial need, not your credit score. Interest rates are fixed and relatively low, and if the loan is subsidized, the government pays interest costs while you’re in school. Once your payments come due, you may be able to have your monthly payment amount adjusted to fit your income.
How are federal student loans different from private student loans?
Federal student loans are offered by the U.S. government, while private loans come from banks and credit unions. While federal loans are based on need, private lenders require a credit check and may be harder to qualify for. Private loans may have a fixed or variable interest rate, but federal loan rates are fixed and tend to be lower. Finally, federal loans have more flexible repayment options, such as income-based plans and forgiveness for those who qualify.
How can I get a student loan?
To get a federal student loan, fill out a FAFSA form with details about your family’s assets and income. If approved, you’ll need to sign a loan agreement. If not, or if you need more money than you can get from federal loans, you can apply for loans from private lenders, who will look at your credit score and debt-to-income ratio. Most students can’t qualify for private loans on their own, so will need the help of a co-signer.
How can I refinance my student loan?
To refinance a student loan, you’ll need to take out a new private loan with a lower interest rate, then use those funds to pay off the original loan. Just as with other private loans, you’ll have to qualify for the refinance loan based on your credit and other financial information. The refi should lower your overall interest costs. But if you refinance federal student loans, you’ll forever lose some of their benefits and protections, such as generous deferment and forbearance options. You’ll need to decide whether the lower interest rate is worth it.
Consolidation combines multiple loans into a single loan so you just have one payment to manage each month instead of several separate ones. You can consolidate federal student loans with a Direct Consolidation Loan whose fixed rate is based on the average of the rates on the loans being consolidated. To consolidate private loans, you’ll need to get a private refinance loan.
A co-signer is someone who applies for a loan with another individual and who contractually agrees to pay off the debt if the other borrower doesn't make payments. The co-signer signs the loan application with the borrower and effectively guarantees the loan.
Education loans are a specific type of loan used to pay for the costs of an academic program. Also called student loans, education loans are offered by the Department of Education and by private lenders. Only students and their parents or guardians can qualify for education loans.
A debt-to-income ratio (DIT) is a measurement of your monthly income compared to your debt payments. Private student loan lenders often use this ratio to determine your creditworthiness. When you have plenty of extra income each month, you’re more likely to qualify for a loan.
An origination fee is charged by a lender to cover the costs of processing a loan. It may be used to pay for preparing documents, processing your application, or underwriting your loan. In most cases, the fee is quoted as a percentage of the total loan amount. Federal student loans have an origination fee, but most private student loans do not.
An annual percentage rate (APR) is the interest rate you pay each year on your student loan. It’s represented as a percentage of the total balance you have to pay.
A credit score is a number that evaluates and rates your creditworthiness based on your credit history. Lenders use credit scores to decide whether to approve someone for a loan or credit card and to determine what interest rate to charge.
A loan term is the length of time it will take for a loan to be completely paid off when the borrower is making regular payments. The time it takes to eliminate the debt is a loan’s term. The standard repayment schedule for a federal student loan is 10 years, but it could be as long as 30 years, depending on the loan type and repayment plan. Private student loans tend to have terms of five to 20 years.
Student Loan Forbearance
Student loan forbearance is the temporary suspension or reduction of student loan payments. During a forbearance period, you're not required to pay anything toward the principal on your student loans. Interest can continue to accrue on your loans and be capitalized or added to your balance at the end of the forbearance period.
Student Loan Cash-Out Refinance
A student loan cash-out refinance mortgage is a mortgage loan that allows you to tap into your home's equity to pay off your student loan debt. Through it, you combine your mortgage and student loans into a new mortgage and potentially reduce the interest rate you were paying on your educational debt.