Best Student Loan Interest Rates Of May 2024 – Forbes Advisor

Among undergraduate and graduate student loan options, federal direct subsidized loans are the cheapest and most flexible. Only undergraduate borrowers with financial need—as determined by the information in the Free Application for Federal Student Aid, or FAFSA—can get subsidized loans. The government will pay the interest when students are in school, during their grace period and when they put their loans into deferment.

The interest rate on subsidized loans is one of the lowest you’ll find, and no co-signer is required. All eligible undergraduate borrowers qualify and they receive the same rate regardless of credit history. Most importantly, borrowers of federal subsidized loans have access to income-driven repayment options that can lower the amount due and loan forgiveness for those who work in public service fields.

While there is an origination fee of 1.057%, it’s lower than what many private lenders offering loans without a co-signer charge.

Loan terms: 5, 7, 10, 15 and 20 years

Loan amounts available: $5,000 minimum; no maximum, except for associate’s degree graduates, who can refinance up to $50,000.

Eligibility:   Must be enrolled at least half-time in a school that participates in the federal direct loan program. Must be an undergraduate and be determined to have financial need.

Forbearance options:  Forbearance available for up to three years in certain circumstances. Enrolling in an income-driven repayment program can lower monthly payments and result in loan forgiveness after 20 to 25 years.

Federal direct unsubsidized loans offer low fixed interest rates, and this type of loan isn’t credit-based and doesn’t require a co-signer. All eligible undergraduate borrowers qualify, and they receive the same rate regardless of credit history.

While there’s a chance the most creditworthy borrowers could get a lower interest rate with a private student loan, they’ll miss out on a range of consumer protections that might be useful in the future. Borrowers of federal direct unsubsidized loans have access to income-driven repayment options that can lower the amount due and loan forgiveness for those who work in public service fields.

Direct unsubsidized loans come with an origination fee of 1.057%, while most private loans do not. But in many cases, the low interest rate and loan benefits make the fee worth it.

Loan terms: Terms of 10 to 25 years are available, depending on the repayment plan.

Loan amounts: Loan amounts up to $12,500 per year and $57,500 in aggregate in aggregate are available.

Eligibility: You must be enrolled at least half-time in a school that participates in the federal direct loan program.

Forbearance options: Forbearance available for up to three years in certain circumstances. Enrolling in an income-driven repayment program can lower monthly payments and result in loan forgiveness after 20 to 25 years.

Co-signer release policy: N/A

Custom Choice provides private student loans to undergraduate and graduate students. This lender stands out due to its competitive interest rates and no-fee structure; borrowers will never pay late fees, origination fees or prepayment penalties.

Custom Choice also offers a few unique benefits, including a Graduate Reward that reduces your loan’s principal balance by 2% when you get your degree.

Loan terms: 7, 10 or 15 years

Loan amounts available: $1,000 to $99,999 per year ($180,000 aggregate per borrower)

Eligibility: Does not publicly disclose credit score or income requirements, but you will need to submit proof of income and your monthly housing costs. Depending on your circumstances, students are likely to need a co-signer to qualify.

Forbearance options: Forbearance available for up to 12 months.

Education Loan Finance (known as ELFI) offers student loans to borrowers enrolled at least half-time. Eligible students can borrow as little as $1,000 and choose from four repayment plans, including interest-only payments or a flat $25 monthly payment while you’re in school.

ELFI’s rates are competitive, though you’ll need excellent credit to lock in the lowest APRs. If your credit isn’t strong enough, you can add a well-qualified co-signer to your application.

Loan terms: 5, 7, 10 and 15 years

Loan amounts available: $1,000 up to 100% of the school-certified cost of attendance.

Eligibility: Must be a U.S citizen or permanent resident enrolled in a bachelor’s, master’s or doctoral program at least half-time. The primary borrower must have a credit score of 680 or higher and an annual income of at least $35,000 per year. A credit history of at least three years is required.

Forbearance options: Up to 12 months of forbearance available

SoFi is perhaps best known as a student loan refinance lender, but it also makes loans to undergraduates, graduate students, law and business students and parents. Its undergraduate student loan product offers mostly industry-standard features, plus a few perks: no late fees, an interest rate discount of 0.125% if your co-signer already uses another SoFi product and job search help through its career team.

Loan terms: 5, 7, 10 and 15 years.

Loan amounts available: $1,000 up to the total cost of attendance.

Eligibility: Does not disclose credit score or income requirements.

Forbearance options: Qualified borrowers can take up to 12 months total forbearance.

Co-signer release policy: Available after 24 payments.

Rhode Island Student Loan Authority, known as RISLA, is a nonprofit based in Rhode Island that lends to students across the country. It offers two different loan types for undergraduate students, which each come with their own fixed interest rates. One loan requires immediate repayment, and one lets you defer payments until six months after you leave school. Everyone who qualifies for each of the loan types gets the same rate, which makes it easy to compare RISLA loans with others you’ve qualified for.

For borrowers who struggle to afford their loan after graduating, RISLA is one of the only private lenders to offer an income-based repayment plan, which limits payments to 15% of income for a 25-year period.

RISLA was a winner of Forbes Advisor’s best private student loans of 2020 awards. Learn more here.

Loan terms: 5, 10 and 15 years

Loan amounts available: $1,500 to $45,000 per year ($150,000 aggregate per borrower).

Eligibility: Applicants must show a minimum income of $40,000 per year and a minimum credit score of 680. Most undergraduate students will need a co-signer to qualify.

Forbearance options: Forbearance available for up to 24 months.

Co-signer release policy: Available after 24 months of payments. Periods during which borrowers use income-based repayment do not qualify.

Ascent offers both co-signed and non-co-signed student loans, which gives borrowers without co-signers more college funding options. We scored the company based on its co-signed credit-based student loan for undergraduates.

Ascent stands out for its range of payment reduction and postponement options, rare among private student loan companies. Borrowers can choose a graduated repayment plan, which provides a lower monthly payment to start that increases over time. That can be useful for graduates just starting out, who will likely make more money as they move up in their careers.

Borrowers also can pause payments if they’re experiencing a temporary financial hardship for one to three months at a time, up to a maximum of 24 months total. However, taking this forbearance means you will repay the loan over a longer period. Interest continues to accrue during forbearance, which is true for the vast majority of private student loans.

Ascent also offers benefits for students including 1:1 free success coaching*, a graduation reward of 1% of the loan’s original principal balance and access to monthly no-essay scholarships.

Ascent was a winner of Forbes Advisor’s best private student loans of 2021 awards. Learn more here.

Extra Details

Loan terms: 5, 7, 10, 12 or 15 years. See repayment examples for more details.

Loan amounts available: $2,001** up to total cost of attendance, to a maximum of $200,000 per academic year ($200,000 aggregate)

Eligibility: Student borrowers with no credit history can qualify with a creditworthy co-signer. Co-signers must show income of at least $24,000 for the current and previous year. Co-signers must have a minimum credit score which can vary.***

Forbearance options: When experiencing financial hardship, borrowers can suspend payments for up to three months at a time, for a total of up to 24 months throughout the loan term. Only four rounds of forbearance (up to 12 months’ worth) may be taken consecutively.

Co-signer release policy: Available after 12 months of consecutive automatic debit payments, if the primary borrower meets certain credit score requirements.***

*Other eligibility requirements apply. Learn more at AscentFunding.com/BorrowerBenefits. 

**The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.

***Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates are effective as of 5/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require interest-only payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.

College Ave offers a solid all-around private loan product with a few unique features. Borrowers can choose an eight-year term, which is in addition to the typical five-, 10- and 15-year terms many lenders provide. Borrowers can also access an extended six-month grace period beyond the initial payment-free six months allowed after separating from school.

Loan terms: 5, 8, 10 and 15 years

Loan amounts available: $1,000 up to 100% of the school-certified cost of attendance

Eligibility: Applicants must have a minimum credit score in the mid-600s.

Forbearance options: Up to 12 months of forbearance is available, in three- to six-month increments

Co-signer release policy: Available after 24 payments

*Borrowers with a co-signer who choose the shortest repayment term available and who make full monthly payments while in school qualify for the lowest rates.

1 – College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

2 – All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3 – Cover up to 100% of your cost of attendance as certified by your school and less any other financial aid you might receive. Minimum $1,000.

Citizens Bank’s parent loan offers comparatively low interest rates, and borrowers can qualify for an interest rate discount of up to 0.50% if they have an existing account with the bank. (Student loans are available in all states, but checking and savings accounts are only available in Connecticut, Delaware, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont.)

Citizens Bank also offers a relatively rare loan modification program, introduced in spring 2020, that allows for reduced monthly payments for a period of 12 months. That’s in addition to the industry-standard 12 months of forbearance.

Loan terms: 5 or 10 years

Origination fee: None

Loan amounts available: $1,000 to $350,000

Eligibility: Parent applicant and student must be U.S. citizens. Student must attend school at least half-time.

Forbearance options: Up to 12 months throughout the life of the loan, provided in two-month increments.

Sallie Mae provides multiple payment reduction options for borrowers experiencing financial difficulty, including a one-year graduated repayment period after leaving school or an interest rate reduction. Students who attend school less than half-time also can qualify, which not all lenders allow.

International students may get a loan with the help of a U.S. citizen co-signer, but student borrowers cannot get a co-signer release unless they are U.S. citizens or permanent residents themselves by the time they request the release. Interest rates are also on the higher end.

Loan terms: 15 years

Loan amounts available: $1,000 up to total cost of attendance; no aggregate graduate student loan limit

Eligibility: International students can apply with a U.S. citizen co-signer. Borrowers are eligible if they’re attending full-time, half-time or less than half-time.

Forbearance options: Up to 12 months throughout loan term. Interest-only payment option for one year after leaving school.

Co-signer release policy: Available after 12 on-time monthly payments