- Paying for college is already challenging enough,
but then you have to think about
finding the best student loans
and best student loan rates.
That can be daunting.
How do you find a lender?
What should you think about?
How do you know you're getting a good deal?
It can all be so overwhelming.
When I was in college,
there weren't a lot of options.
If you got federal loans,
you filled out your FAFSA
and waited for your email from the financial aid office.
If you were looking for private loans,
you went to a major bank to take care of it.
That is all changed today.
There are a lot of options
and comparing them all could be a challenge.
In this video we'll share what you need to know
about finding the best student loans
and the best interest rates.
Hey everyone,
this is Andy Hill with The College Investor
investing in personal finance for millennials.
If you're new to the channel
and like what you hear,
please hit subscribe so you're ready
when our next video comes out.
If you wanna quickly get a student loan quote by the way,
check out our partner College Ave.
You can get a quote
and find some of the lowest student loan rates in minutes.
We'll have that link in our video description.
Thanks.
Okay, let's talk about federal versus private student loans.
The first thing to understand is that you don't get a choice
in your student loan rates with federal loans.
Federal student loan rates are set by the government
and change periodically.
However, for most people borrowing federal student loans,
that doesn't matter because they're trying to take advantage
of special student loan repayment programs
or loan forgiveness plans
that come with federal student loans.
Federal student loan interest rates vary
from as low as 4.993% to as high as 7.543%.
They actually increase by over a percentage this year.
Check out this chart to see where
your student loan interest rate may fall.
These rates are over 1.25% higher than the previous year
and approaching historical averages.
For many borrowers,
federal loans will be the best student loans.
However, if you have great credit
or a co-signer with good credit,
a private loan could potentially save you a lot of money,
but you do lose out on government benefits
like loan forgiveness and income-driven repayment
if you opt for a private loan.
Let's talk about finding the best student loans.
If you go the private student loan route,
then there are a lot of lenders with different programs
and it's important to compare.
We've reviewed most of the major student loan lenders
and have a comparison tool
that we'll link in our video description.
We also recommend really researching
the different loan programs out there.
There are a lot of lenders that offer different programs
and incentives that can be helpful depending on the type
of degree and what you believe your employment
will look like after graduation.
If you already have student loans
and you're looking to refinance,
it's also essential to compare.
Some of the key features that you should look for
to find the best student loans include interest rate,
obviously the lower, the better,
the loan term,
anywhere from three years to 25 years,
origination fees,
you want none of these,
repayment plan options,
forbearance options,
bonus offers,
no prepayment penalties
and co-signer release,
since it's almost impossible
to get a student loan without a co-signer.
Let's jump to comparing the best student loan rates.
The best private student loan rates
range from 2.99% APR to closer to 15%
depending on various factors including your credit score,
household income, cosigner, and much more.
We recommend using a service like Credible
to compare the best student loan rates out there.
With Credible,
you can compare multiple lenders in about two minutes.
It's quick and easy
and it'll give you a snapshot of what you might see
for student loan rates.
Check it out in our video description,
we'll have a link for you there.
Credible doesn't have every lender available,
so it's important to shop around.
When shopping around,
remember that most banks and credit unions
do pull a soft credit poll on your credit
for your initial application,
and that's okay.
If you do all your loan shopping
within a two week period of time,
it shouldn't hurt your score overall.
When you do a formal application,
the lender will do a hard pull.
You should only move to this part once you're ready to go.
Finally, remember it can take about 30 days
to complete the application from start to finish.
If you're looking to start college in August
you should probably have your loans all ready to go
no later than July.
If you're ready to shop around,
here are our picks for the best private student loans.
We recommend comparing all of them.
It honestly takes just a few minutes.
Considering everything else you've done to apply
for college at this point in time,
spending an hour comparing the best student loans
is a no-brainer.
Number one,
as we mentioned already,
Credible.
Credible is our number one pick
for the best private student loans
because they are a comparison tool
that shops all the major private loan providers
to give you the best rates and terms possible.
Instead of manually doing the work,
Credible shops the following,
Citizens Bank, Connext,
Discover Student Loans,
iHELP,
EDvestin,
Raise private student loans and Sally Mae.
These are pretty much all the major private
student loan lenders available.
The cool thing with Credible is that it takes
about two minutes and you can get a good sense
of your loan options.
Number two, College Ave.
College Ave is a private student loan lender
that typically offers some of the lowest interest rates
in the market at any given time.
You'll have the option to pay back your student loan
in five, eight, 10, or 15 years.
The minimum loan amount is $1,000
and College Ave will cover up to
100% of the cost of attendance.
College Ave also has multiple options for repayment programs
once you're outta school,
which is a great option.
Number three, Earnest.
Earnest is another lender that offers
strong student loan options with good rates and loan terms.
They also don't charge any fees for origination,
disbursement, prepayment, or late payment and repayment.
They also allow you to have
a nine month grace period after graduation.
Most lenders are six months
and they allow you to skip a payment once a year.
Number four, Ascent.
Ascent Student Loans offers competitive in-school loans
and has two products,
co-signer student loans and non co-signer student loans.
Ascent is one of the few companies that make their criteria
for getting a private student loan
without a co-signer very clear.
Ascent doesn't charge any application fees
and they have a solid repayment option
including deferment while you're in school.
They also offer very competitive interest rates
on their loans.
Number five, LendKey.
LendKey is another one of our favorite places to shop
for student loans because they take care of
comparing all the rest of your options.
Instead of major banks and lenders,
LendKey is a comparison tool that focuses
on community banks and credit unions.
However, don't think that you're dealing
with some random bank in the middle of nowhere.
LendKey actually manages everything for your loan.
The money simply comes from one of these community banks.
LendKey doesn't charge any application fees.
It has one of the shortest periods
of co-signer release which is 24 months,
and it has several payment options
to help you manage your student loans.
Number six, ELFI.
ELFI is our final favorite place
to get a private student loan.
They are one of the few direct lenders we have on this list
simply because they aren't on any of the comparison sites,
but there is a reason for this.
By avoiding the middleman
you get the savings passed on to you.
ELFI has some of the lowest private student loan
interest rates available on the market right now.
They do require a co-signer for their loans though,
that's important to know.
After hearing this list you might be asking,
are private student loans right for me?
Well, it can be hard to know
if private student loans are right for you.
Honestly, there is really no right answer.
Some people swear off a private student loans.
Other people have found them to be helpful to pay
for college while saving money and interest.
It's important to remember that federal student loans
come with a lot of options
and they usually have a very, very good interest rate.
With federal student loans,
you get access to income driven repayment plans,
student loan forgiveness options,
and much more.
You don't get many benefits with private student loans.
However, private student loans
typically give you the best student loan rates possible.
You might also consider an income sharing agreement
as an alternative to a private loan.
Income sharing agreements are where you get money for school
in exchange for paying back a portion of your income
after graduation.
These plans are typically structured in a way
that means you only pay back
if you see a positive return on your education.
As with everything related to paying for college,
we recommend you follow the proper order of operations
to pay for college.
Make sure you've exhausted your other aid,
federal student loans and working
before diving into private student loans.
If you're at that point already,
make sure you're shopping around
for the best student loan rates and terms.
In the end,
no matter what path you take in paying for school,
it's essential that you educate yourself on your options.
Whether you're looking for the best student loans
or other financial aid options,
you're gonna have to spend a little time doing homework.
If you haven't already checked out financial aid options
look at our guide
Student Loan and Financial Aid Options By State.
You can find that in our video description
and on thecollegeinvestor.com.
Many states maintain their own special financial aid
and student loan programs
that could save you even more money
or help you pay for college.
Thanks for hanging out today everybody.
This is Andy from The College Investor.
We'll see you in the next video.