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    The best undergraduate student loans of September 2022

    The best undergraduate student loans of September 2022

    Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.

    If you’ve already used your savings, scholarships, and grants to pay for college and still find that you’re unable to pay for school, a student loan could be a good option.

    When considering your options, federal student loans should always take precedence over private ones. Federal loans have the lowest interest rates and come with a level of protection that private lenders don’t offer.

    Take the Biden administration’s plan to cancel federal student loan debt. The Department of Education is poised to forgive $10,000 in student loans for borrowers making less than $125,000 per year, and as much as $20,000 for Pell Grant recipients. Federal loans will qualify for forgiveness, but private loans won’t.

    Here are some of the best options for undergraduates looking to take out student loans. 

    Best undergraduate student loans

    • Federal Direct Subsidized Loan

    • Federal Direct Unsubsidized Loan

    • SoFi Undergraduate Student Loans

    • Ascent Undergraduate Student Loans

    • College Ave Undergraduate Student Loans

    • Earnest Undergraduate Student Loans

    • MPower Financing Undergraduate Student Loan

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    Editor’s Rating

    5/5

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    Regular APR

    Undergraduates: 4.99%

    Editor’s Rating

    4.75/5

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    Regular APR

    Undergraduates: 4.99%, Graduate and professional students: 6.54%

    Editor’s Rating

    4/5

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    Regular APR

    Variable: 3.35% – 13.35%, Fixed: 3.75% – 13.35%

    Editor’s Rating

    3.5/5

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    Regular APR

    Variable: 2.52% – 11.11%, Fixed: 3.89% – 13.16%

    Editor’s Rating

    4.5/5

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    Regular APR

    Variable: 1.79% – 12.99%, Fixed: 3.22% – 13.95%

    Editor’s Rating

    4.25/5

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    Regular APR

    Variable: 2.55% – 7.99%, Fixed: 3.22% – 8.49%

    Editor’s Rating

    2.5/5

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    Regular APR

    Fixed: 9.56% – 14.98%


    Learn more


    On Federal Direct Subsidized Loan’s website


    Learn more


    On Federal Direct Unsubsidized Loan’s website

    Federal Direct subsidized loan


    Regular APR


    Undergraduates: 4.99%


    Loan amount range


    Up to $3,500 for first year students, increases every year you’re in school


    Regular APR


    Undergraduates: 4.99%


    Loan amount range


    Up to $3,500 for first year students, increases every year you’re in school

    Pros

    • Government pays interest while in school
    • Low interest rate
    • No credit check required
    • No cosigner needed

    Cons

    • Low maximum loan amount
    • Eligibility based on financial need

    More Information

    • 10-year standard repayment term
    • Rates change annually
    • Loan maximum of $3,500 for first-years, $4,500 for second-years, and $5,500 per year for each school year after that

    Federal Direct unsubsidized loan


    Regular APR


    Undergraduates: 4.99%, Graduate and professional students: 6.54%


    Loan amount range


    Up to $5,500 for first-years, scales up each year you’re in school


    Regular APR


    Undergraduates: 4.99%, Graduate and professional students: 6.54%


    Loan amount range


    Up to $5,500 for first-years, scales up each year you’re in school

    Pros

    • Low interest rate
    • No credit check needed
    • No cosigner
    • Not based on financial need

    Cons

    • Interest accrues while you’re in school
    • No variable loans

    More Information

    • 10-year standard repayment term
    • Rates are fixed, but new rates for each school year
    • Loan maximum of $5,500 for first-years, $6,500 for second-years, and $7,500 per year for each school year after that

    SoFi undergraduate student loans


    Regular APR


    Variable: 3.35% – 13.35%, Fixed: 3.75% – 13.35%


    Regular APR


    Variable: 3.35% – 13.35%, Fixed: 3.75% – 13.35%

    More Information

    • Apply through your computer or mobile device
    • Customer service available via phone, mail, and social media
    • Five, seven, 10, or 15 year repayment terms available
    • Loan minimum of $5,000, maximum up to 100% cost of attendance
    • Unemployment Protection provides up to 12 months of loan forbearance for eligible borrowers who lose their job through no fault of their own
    • Loans are originated by SoFi Lending Corp. or an affiliate

    Ascent undergraduate student loans


    Regular APR


    Variable: 2.52% – 11.11%, Fixed: 3.89% – 13.16%


    Regular APR


    Variable: 2.52% – 11.11%, Fixed: 3.89% – 13.16%

    Pros

    • No prepayment or origination fees
    • Low minimum fixed rate APR
    • Many options for repayment term length
    • Multiple ways to contact customer support
    • May be eligible without a cosigner
    • Cashback reward after graduation

    Cons

    • Credit check required
    • Late payment fee


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    More Information

    • Apply through your computer
    • Customer service available via phone, email, and physical mail
    • Provided you are eligible, you’ll receive 1% of your initial loan balance as a cashback bonus after graduation
    • Five, seven, 10, 12, 15, or 20-year repayment terms available (20-year term only available for variable loans)
    • Undisclosed late fees
    • Loan minimum of $2,001, maximum up to 100% cost of attendance per term
    • Overall maximum loan amount of $200,000
    • Loans made through Bank of Lake Mills, Member FDIC

    College Ave undergraduate student loans


    Fees


    Late payment of 5% of the amount due, capped at $25


    Regular APR


    Variable: 1.79% – 12.99%, Fixed: 3.22% – 13.95%


    Fees


    Late payment of 5% of the amount due, capped at $25


    Regular APR


    Variable: 1.79% – 12.99%, Fixed: 3.22% – 13.95%

    More Information

    • Apply through your computer or mobile device
    • Customer service available via phone, text, email, and live chat
    • Five, eight, 10, or 15 year repayment terms available
    • Loan minimum of $1,000, maximum up to 100% cost of attendance
    • Loans made through Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC

    Earnest undergraduate student loans


    Regular APR


    Variable: 2.55% – 7.99%, Fixed: 3.22% – 8.49%


    Regular APR


    Variable: 2.55% – 7.99%, Fixed: 3.22% – 8.49%

    Pros

    • No origination fees, prepayment penalties, or late fees
    • Great APR
    • Many options for repayment term length
    • Quick application process
    • Skip a payment option
    • Low loan minimum

    Cons

    • Credit check
    • May need a cosigner

    More Information

    • Five, seven, 10, 12, 15, and 20-year repayment term lengths available
    • Apply through your computer or mobile device
    • Customer service available via phone, live chat, email, and standard mail
    • Loan minimum of $1,000, maximum up to 100% cost of attendance
    • Skip a payment feature allows you to forgo making one payment every year
    • Loans are originated by Earnest Operations LLC

    MPower Financing undergraduate student loans


    Fees


    5% origination fee and undisclosed late fee


    Regular APR


    Fixed: 9.56% – 14.98%


    Loan amount range


    $2,001 — $100,000 lifetime


    Fees


    5% origination fee and undisclosed late fee


    Regular APR


    Fixed: 9.56% – 14.98%


    Loan amount range


    $2,001 — $100,000 lifetime

    Pros

    • Lends to international students without a cosigner
    • Interest rate discounts for hitting certain requirements
    • No prepayment penalties

    Cons

    • Only fixed-rate loans available
    • One repayment term available
    • High APR range
    • Origination and late fees
    • Only lends to students within 2 years of graduation from college

    More Information

    • 10-year repayment term
    • 5% origination fee and undisclosed late fee
    • Customer service available by filling out a form or phone
    • $2,001 loan minimum, up to $100,000 lifetime loan limit
    • 1.5% reduction in your interest rate with automatic payments, six on-time payments, and proof of graduation and employment
    • Lends to students for 350 schools
    • Loans are made by Bank of Lake Mills or MPOWER Financing

    Other private student loans we considered

    • Citizens Bank private student loans. Citizens Bank offers good rates, but there are fewer repayment options through this lender, as Citizens doesn’t give the option to pay while you’re still in school. 
    • Discover private student loans. While the lender has no fees, you can find more competitive APRs elsewhere. 
    • Sallie Mae private student loans. You might want to go with Sallie Mae if you want to avoid origination and prepayment fees, as the lender doesn’t charge any. However, the lender charges hefty late fees. 
    • Credible private student loans. Credible doesn’t directly make student loans. Rather, it is a marketplace that makes loans through the lenders listed above and more. Credible works with Ascent, Citizens Bank, College Ave, and Sallie Mae, for example. 

    Which lender is the most trustworthy?

    We’ve only selected student loan lenders with no public controversies in the last three years. We’ve also compared each institution’s Better Business Bureau score.

    The BBB, a non-profit organization focused on consumer protection and trust, evaluates companies by judging a business’s responses to consumer complaints, honesty in advertising, and clarity about business practices. Here is each company’s score:

    Of our top picks, only Choice MPower are not currently rated an A- or higher by the BBB. The BBB doesn’t have sufficient information to rate MPower Financing. That said, this doesn’t necessarily reflect MPower’s trustworthiness, and you should ask others about their experiences with the businesses before deciding against borrowing from the companies. 

    Methodology

    Personal Finance Insider’s goal is to help smart people make the best possible decisions with their money. To do that, we combed through many student loans, comparing interest rates, terms, and fine print so you don’t have to. We looked for several factors in determining the best student loans, including: 

        • Interest rates: The lower the interest rate the better, and we prioritized lenders with the lowest interest rates for undergraduate students.
        • Nationwide availability: We searched for student loans available in all or most US states. 
        • Flexibility of repayment plans: There are four main options for repayment offered by most lenders: defer payments until after school; interest-only payments in school; small, fixed payments in school; and full monthly in-school payments. We looked for lenders with the most ways to pay.
        • No or few fees: We prioritized lenders that didn’t charge fees, like origination fees or prepayment penalties.

    Frequently asked questions

    Should you take out a student loan?

    There’s no one-size-fits-all answer to this question. Your choice depends on your unique financial situation. You may consider alternatives such as a less expensive school, scholarships, or a side job to earn more money. Whatever your decision, make sure you fully understand the terms of your loan before making a commitment.

    Should you refinance your student loans?

    Often, borrowers refinance to take advantage of lower interest rates or smaller monthly payments. You usually won’t pay any fees to refinance your loans, but that depends on the specific lender. Be careful before you refinance federal student loans, as you will lose key federal protections as a result.

    Do you need a cosigner to get a student loan?

    For most younger students, it’s unlikely you’ll be approved without a cosigner. It is possible, but mainly for students who have an established credit history and an income.

    Once you have some credit established, however, you may be able to remove your cosigner by refinancing. Some lenders also allow borrowers to remove cosigners after several years of consecutive payments. 

    What’s the difference between federal and private student loans? 

    Federal student loans have a number of protections that private student loans don’t. The widespread forbearance and 0% interest rates during the coronavirus pandemic are some examples.

    Similarly, income-based repayment plans are only available for federal student loans, and help to lower payments to a percentage of a person’s income. That’s a protection not available to private student loan borrowers that could make a big difference. 

    It’s a good idea to use all of your available federal loan options first to take advantage of these protections.

    Does interest accrue during a loan’s grace period?

    Yes, interest will accrue during the six-month grace period after you graduate, similarly to how it does while you are in school. Private lenders may have suspended this practice during the pandemic, but they are under no obligation to do so. 

    Variable-rate student loans vs. fixed-rate student loans — which is best?

    Fixed interest rates stay the same for the life of the loan. Variable interest rates are exactly what they sound like — they have interest rates that change based on interest rate indexes, like the LIBOR or prime rate, plus a margin. When that index rate increases, the amount of interest you owe increases, along with your monthly payment. 

    On variable-rate loans, interest rates and payments change over time. So, it’s important to remember that what goes up must come down, and vice versa. There’s a chance that interest rates will increase before a long loan (like a student loan) is paid off, and your interest rate and payment may not always be as low as it is now. 

    The best choice for you depends on your financial situation and which way you believe the market is headed. 

    Can private student loans be forgiven?

    Unfortunately, private student loans would not be eligible for any sweeping federal forgiveness programs that could the government may potentially enact. However, if you have federal student loans, you may be eligible for forgiveness if you are under a certain income threshold.  

    Ryan Wangman is a reporter at Personal Finance Insider reporting on personal loans, student loans, student loan refinancing, debt consolidation, auto loans, RV loans, and boat loans. He is also a Certified Educator in Personal Finance (CEPF).
    In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership. He graduated from Northwestern University and has previously written for The Boston Globe. 
    Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services here>>


    Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Read our editorial standards.

    Please note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed, or may no longer be available.

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