Most college students will have to borrow one or more student loans before they graduate. There are more than $100 billion in new student loans made each year and more than $1.6 trillion in student loan debt outstanding.
Given that, for many, student loan debt is unavoidable, it is important for college students to understand how student loans work.
What is a Student Loan?
A loan is borrowed money that is repaid over time. In addition to repaying the amount borrowed, most borrowers also have to pay a fee, called interest. This is in addition to the amount you borrowed, which is referred to as principal.
A student loan is used to pay for college costs.
What is Interest?
Interest is a fee charged for the use of someone else’s money. It is typically charged once a month based on the unpaid loan balance. It is not a one-time fee, as some borrowers incorrectly assume.
The interest rate is expressed as a percentage of the loan balance. Most new student loans have fixed interest rates, which do not change over the life of the loan. A variable interest rate may change periodically, such as every month, quarter or year.
The lowest variable interest rates available are often lower than the lowest fixed interest rates, but fluctuations to the variable rate are difficult to predict. When the rate fluctuates, your payments may be affected, and may increase.
How Does Student Loan Interest Work?
This is one of best questions to ask because interest is the cost of your loan. A student loan could have a fixed or variable interest rate, and will assess interest with either a simple interest or compounding interest formula.
In general, federal student loans will use a simple daily interest. Check out our blog which provides the details of how interest is assessed.
Who Provides Student Loans?
Student loans are available from many sources. Most new student loans and parent loans come from the federal government through the U.S. Department of Education’s Federal Direct Loan program. Other student and parent loans come from private lenders, such as banks and other financial institutions, state governments and colleges.
Generally, students should always borrow federal first, because federal student loans are cheaper, generally available to a broader audience, and have better repayment terms.
How Much Can You Borrow?
A loan limit specifies the maximum amount you can borrow.
Some student loans allow you to borrow up to the full cost of college, reduced by the amount of financial aid received. Some student loans may have lower annual and cumulative loan limits.
Student loans may be good debt, because they are an investment in your future. But too much of a good thing can hurt you. So, borrow as little as you need, not as much as you can.
How Do You Apply for a Student Loan?
To apply for federal student loans, file the FAFSA® (Free Application for Federal Student Aid). The loans will be disbursed through your college’s financial aid office.
To apply for a private student loan, our recommended first step is to compare lenders. Once you have reviewed the various lender interest rates and benefits, and selected a lender, you can then apply. Many lenders offer an easy online application process.
Eligibility for most private student loans is based on the borrower’s credit. Most students do not have a long enough or robust enough credit history to borrow on their own without a creditworthy cosigner. A cosigner is a co-borrower, equally responsible for repaying the debt. For most students, this is often a parent or other family member.
After the loan is approved, the borrower will need to sign a promissory note, which describes the terms and conditions of the loan, such as the interest rate and repayment options.
For federal student loans, there is a Master Promissory Note (MPN). Your MPN allows you to take out loans for ten years, as long as you are continuously enrolled at the same school. If you switch schools, you could be required to complete another MPN.
How Do You Get Student Loan Money?
Federal student loan money is sent to the college financial aid office while private student loan funds are sent either to the borrower or to the college financial aid office. If the loan proceeds are received by the financial aid office, they will be applied to the college’s charges for tuition and fees, and also room and board if the student lives in college-controlled housing.
Any money left over is refunded to the student to pay for books, supplies and other college-related costs. Check out our blog for more information on student loan disbursement.
How Do You Repay a Student Loan?
After the student graduates or drops below half-time enrollment, the borrower will be required to start repaying his or her student loans. Federal student loans offer a grace period, typically six months, before repayment begins. Private student loans may also offer a grace period that may vary by lender.
Standard repayment on federal loans involves a 10-year repayment term with equal monthly loan payments. Federal loans also offer extended repayment, which has a longer repayment term, and income dependent repayment, which bases the monthly payment on the borrower’s discretionary income. These repayment plans reduce the monthly payment by increasing the term of the loan. (i.e., you will pay less per month, but pay on the loan for a longer period of time.)
The lender or the loan servicer will send the borrower a coupon book before the start of repayment. The borrower should send in each month’s payment with the correct coupon. Some lenders send borrowers statements instead of a coupon book. Borrowers can also sign up for auto-debit, where the monthly loan payment is automatically transferred from the borrower’s bank account to the lender.
Some lenders provide borrowers with an interest rate reduction as an incentive to sign up for auto-debit and electronic billing. Auto-debit is also a great way to ensure you pay your bill on time every month.
What Happens If You Don't Repay Your Student Loans?
If a borrower does not make a loan payment by the due date, they are considered to be delinquent. Late fees may be charged to delinquent borrowers.
If a borrower is very late with a loan payment – 120 days on private student loans and 360 days on federal student loans – the borrower will be in default. Bad things happen when a borrower is in default. For example, collection charges of up to 20% will be deducted from every payment after a borrower is in default on federal loans. The federal government may also seize up to 15% of the borrower’s wages and intercept federal and state income tax refunds.
Compare Featured Lenders
- Choose the #1 Private Student Loan Lender in the Nation. Sallie Mae is trusted by more families than any other private student loan lender.
- Variable Rates: 5.04% APR - 15.21% APR. Fixed Rates: 3.49% APR - 15.49% APR. Lowest rates shown include 0.25 percentage point interest rate discount with auto debit payments.1
- Applying online is easy - you could receive a credit result in about 10 minutes.2
- Multiple repayment options from in-school payments to deferred.1 No origination fee or prepayment penalty2
- Last year, students were 4x more likely to be approved with a cosigner3 and it may help you get a better rate.
- Borrow up to 100% of school-certified expenses, whether you're online or on campus4
Borrow Responsibly
We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.
Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.
1Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.
2Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
3Based on a comparison of the percentage of students who were approved with a cosigner to the percentage of students who were approved without a cosigner from October 1, 2022 to September 30, 2023.
4For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
Information advertised valid as of 10/25/2024.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.
Sallie Mae Loans are made by Sallie Mae Bank. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.
Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.
© 2024 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.
- Competitive APRs starting at 3.59%1
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum) 2
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
- Applying with a cosigner can increase your chances of getting approved and could result in a lower interest rate
College Ave's student loan products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1All rates 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. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
2As certified by your school and less any other financial aid you might receive. Minimum $1,000.
3This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 11/01/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
- AFFORDABLE fixed rates starting at 3.69% APR with Automatic Debit Discount*
- 1% CASH BACK Graduation Reward*
- NON-COSIGNED option may be available for eligible undergraduate juniors and seniors.
- PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
- FORGET FEES – No application, origination or disbursement fees. No late fees and no prepayment penalty if you choose to pay your loan off early.
- COVER UP TO 100% of your tuition and eligible living expenses.
* 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, terms and conditions may apply for Ascent's Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates displayed above are effective as of 11/1/2024 and reflect an Automatic Payment Discount of 0.25% for credit-based college student loans and 1.00% discount on outcomes-based loans when you enroll in automatic payments. The Full P&I (Immediate) Repayment option is only available for college loans (except for outcomes-based loans) originated on or after June 3, 2024. For more information, see repayment examples or review the Ascent Student Loans Terms and Conditions. The final amount approved depends on the borrower’s credit history, verifiable cost of attendance as certified by an eligible school, and is subject to credit approval and verification of application information. Lowest interest rates require full principal and interest (Immediate) 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 examples above, based on the amount of time you spend in school and any grace period you have before repayment begins. 1% Cash Back Graduation Reward subject to terms and conditions. For details on Ascent borrower benefits, visit AscentFunding.com/BorrowerBenefits. The AscentUP platform is only available to eligible Ascent borrowers and subject to terms and conditions.
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.
- Check your eligibility in just 2 minutes
- Flexible repayment options you can choose from
- No fees for origination, disbursement, prepayment, or late payment3
- Skip a payment once per year (once repayment period restarted)4
- Will cover up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)2
- Apply over the phone with the Client Happiness Team
- Call 866-492-1222, Monday through Friday, 5 A.M. - 5 P.M. PST
- Mention us when you call in to start your application
This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.94% APR to 16.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.87% APR to 17.10% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.
3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.
4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.
The information provided on this page is updated as of 09/10/2024. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107
Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.
© 2024 Earnest LLC. All rights reserved.
THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.
- Prequalification: Prequalify to estimate your rate without affecting your credit score
- Online Application Process: Submit online application in minutes
- Flexible Repayment Options: ELFI offers immediate, interest only, partial payment, and fully deferred repayment options
- No Fees: No application fees, origination fees, or prepayment penalties
- Low Rates: Fixed rates from 3.69% to 14.22% and variable rates from 5.00% - 14.22%*
- Award winning Customer Service: Individually paired Student Loan Advisor to guide you through the application process
*ELFI is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 10-01-2024. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.
- Simple application process
- See your rate in minutes without affecting your credit score2
- Auto debit savings3
- Flexible repayment plans and multiple loan terms available
- No application fees and no origination fees
- Easy cosigning options
Nelnet Bank (Member FDIC)
Lowest rates shown already include an auto debit discount.
1 Fixed interest rates range from 3.69% APR (with auto debit discount) to 9.36% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan. Variable interest rates range from 5.83% APR (with auto debit discount) to 10.32% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. Variable rates may increase after consummation. Variable rates for Nelnet Bank Student Loans are calculated using either (a) the One-Month SOFR; (b) the 30-day Average SOFR; or (c) the forward-looking term rate based on SOFR as published by the Federal Reserve Bank of New York and/or The Wall Street Journal “Money Rates” table on the twenty-fifth day (or the next business day) of the immediately preceding calendar month. The variable rate may reprice and change on the first day of each month if the SOFR index changes. This may result in higher monthly payments. The current One-Month SOFR index is 4.86% as of November 1, 2024. The lowest interest rate for each loan type requires automatically withdrawn (“auto debit”) payments. The lowest rate is available only to the most creditworthy applicants. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, and (3) the loan type selected. If approved, applicants will be notified of the rate qualified for within the stated range.
2 Credit Score: Checking your rate results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
3 Auto Debit: Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest), interest only and fixed pay are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.
Student Loan Eligibility: You must be a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. All applicants must be the legal age to enter into binding contracts in their state of residence or territory. Non-residents can apply with an eligible cosigner who is a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. Student must be enrolled at least half-time at a Title IV program at an eligible school. You must not have defaulted on any student loan. Approval subject to credit review. Other credit criteria may apply.
Undergraduate Loan Amounts*:
Minimum loan amount: $1,000
Maximum loan amount: $125,000
Graduate Loan Amounts*:
Minimum loan amount: $1,000
Maximum Loan amount:
- Graduate or doctorate degree: $175,000
- MBA or graduate law degree: $175,000
- Graduate health professions degree: $500,000
*Maximum loan amounts are subject to limits on total student loan debt
This referral partner is not the creditor of Nelnet Bank loans and may receive compensation from Nelnet Bank for the referral of Nelnet Bank loan customers.
Before taking out a private student loan, make sure to take advantage of any federal student loans, grants, or scholarships you have access to. Federal student loans often include benefits and lower interest rates, so be sure to consider all of your options before applying for a private student loan.
- All online, all easy.
- SoFi covers 100% of school-certified costs.
- No fees. Period.
- Repay your way with flexible repayment options (find the monthly student loan payment and rate that fits your budget).
- Applying with a cosigner may increase your chances of approval and getting a better rate.
- Over 1 million students have chosen SoFi.
Interest Rates: Eligibility and Important Details. Fixed rates range from 3.54% APR to 15.99% APR with 0.25% autopay discount. Variable rates range from 5.54% APR to 15.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates are capped at 17.95%. SoFi rate ranges are current as of 11/20/24 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term and type of repayment option you select, evaluation of your creditworthiness, income, presence of a co-signer (if applicable) and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. Check out our eligibility criteria at https://www.sofi.com/eligibility-criteria/. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 8/5/24 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org)