The Best Student Loans of 2021

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The best student loans of 2021

• Best Lender Network: LendKey
• Best for Credit Score Checks: Sallie Mae
• Best for Referral Bonuses: CommonBond
• Best Mobile App: Earnest
• Best for Member Perks: SoFi
• Best for High Rate Discounts: PNC Bank
• Best for Flexible Payment Terms: College Ave

The best student loans at a glance

Best for a lender network – LendKey

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LendKey is the buffet of student loans, displaying a variety of options from small venders and regional lenders. There’s something for everyone.

Fixed APR

4.25%–12.59%

Loan Amount

100% of the costs of attendance

Fees

$25 or 5% late fee

SimpleScore

4.6 / 5.0

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SimpleScore LendKey 4.6

Max Fixed APR 5

Perks 5

Transparency 4

Loan Amount 5

Fees 4

LendKey acts as a middle man and account manager that connects you to student loans from non-profit lenders, regional banks and credit unions. The student loans available may offer lower interest rates and better terms than a larger bank. And because of this network model, you may be more likely to find something that fits your specific portfolio and credit history. LendKey also allows you to see if you’ll qualify and what rates are available without a hard credit check.

If the loan you’re matched with is a credit union, there may be a fee for joining that credit union, hopefully, countered by lower rates. You can make payments and manage the loan through LendKey, especially enticing if the lender has a clunky online interface. The specific pros and cons of student loans offered by LendKey will vary depending on the lender or bank you’re matched with.

In The News

LendKey launched a number of diversity initiatives at the end of 2020 to combat social injustice and racial inequality. LendKey’s efforts include the Diversity Resource Center, ongoing racial injustice discussions and a new recruiting process to help hire a group of diverse applicants.

LendKey Disclosure

Eligibility for federal, state and university funded financial aid is determined by completing the Free Application for Federal Student Aid (FAFSA). All students are strongly encouraged to apply for federal aid by completing the FAFSA, which can be obtained online at www.fafsa.ed.gov.

Students can check their eligibility for a private student loan with LendKey and our network of private student loan lenders by starting a student loan application.

Best for credit score checks – Sallie Mae

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Sallie Mae is the Hufflepuff of student loans; it’s open to any student and is ready to accommodate your needs and your educational timeline.

Fixed APR

4.25%–12.59%

Loan Amount

100% of the costs of attendance

Fees

$25 or 5% late fee

SimpleScore

4 / 5.0

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SimpleScore Sallie Mae 4

Rates 3

Perks 5

Transparency 4

Loan Amount 5

Fees 3

Sallie Mae originated as a federal student loan lender but has since transitioned to offer private student loans. Its most unique feature is flexibility around your student status. Sallie Mae is one of the few lenders that will offer loans to part-time students. Even if you’re picking up a few classes over the summer or taking night classes, you can qualify for a student loan. This benefit also applies to study abroad programs, professional certification courses and foreign schools.

There are a few perks to borrowing from Sallie Mae: a free quarterly FICO credit report, four months of free Chegg Study (a homework and textbook service) and interest-only payments for 12 months after graduation. Unfortunately, checking to see if you qualify and what rate you’ll receive requires a hard credit check.

In The News

Sallie Mae recently donated $50,000 to Big Brothers, Big Sisters of Delaware. The donation will help support the program amid the COVID-19 pandemic with initiatives including one-on-one guidance, mentorship and academic assistance.

Sallie Mae Disclosure

Sallie Mae Disclosure: 1. This information is for 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 $1000. Currently credit and other eligibility criteria apply. 2. This repayment example is based on a typical Smart Option Student Loan made to a freshman borrower who chooses a fixed rate and the Fixed Repayment Option for a $10,000 loan, with two disbursements, and a 8.51% fixed APR. It works out to 51 payments of $25.00, 179 payments of $124.69 and one payment of $66.91, for a Total Loan Cost of $23,661.42. 3. Although we do not charge you a penalty or fee if you prepay your loan, any prepayment will be applied as provided in your promissory note: first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.

Best for referral bonuses – CommonBond

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You can give a little back to the world with your CommonBond loan, and maybe get something in return for selling your friends on it.

Fixed APR

3.74%–10.74%

Loan Amount

100% of the costs of attendance

Fees

$10 or 5% late fee

SimpleScore

4.2 / 5.0

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SimpleScore CommonBond 4.2

Max Fixed APR 4

Perks 5

Transparency 3

Loan Amount 5

Fees 4

If you connect with a vast network of students, you can earn $200 towards your CommonBond loan for referring them to also sign up for a loan. Your student loan also contributes to the education of children in a developing country — for every student loan issued, CommonBond covers the cost of a child’s education.

One of CommonBond’s unique resources is a Money Mentor, a person who can give you free financial advice via text message. They can advise you on your budget, career path, credit-building and help find internship opportunities.

Oddly, loans are not available with CommonBond in Nevada and Mississippi. For most borrowers, a cosigner will be required.

In The News

In 2020, CommonBond announced SmartCash™ to help customers with refinancing while debuting a cash experience. CommonBond now lets borrowers refinance student loans and open a checking account to bring student loan debt management and money management together.

Best mobile app – Earnest

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There’s nothing more earnest than second chances, especially for missed payments. So, give this lender a try, we guarantee it’ll be a smooth ride.

Fixed APR

as low as 3.49%

Loan Amount

100% of the certified costs of attendance

Fees

None

SimpleScore

4.2 / 5.0

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SimpleScore Earnest 4.2

Max Fixed APR 2

Perks 4

Transparency 5

Loan Amount 5

Fees 5

Earnest impresses with low APR rates, a 9-month grace period for deferment, no fees and a 0.25% discount for setting up autopay. You can even skip one payment per year. On Earnest’s website, you can verify your eligibility in just two minutes and scroll through your options — no hard credit check required. If you like the interest rates they offer, you can choose between four repayment plans.

The lender’s digital interfaces are above and beyond the competition, with a seamless website experience and feature-packed mobile app. Earnest has a blog full of resources if you have any questions about the student loan process or finances.

To qualify for a student loan with Earnest, you (or your cosigner) will need a credit score of at least 650 and no history of bankruptcy.

In The News

Earnest’s main focus is helping customers during the COVID-19 pandemic with student loan relief to ease financial burdens. It offers a number of programs for assistance including Short-Term Only Interest Program and the Short-Term Coronavirus Forbearance Program.

Best for member perks – SoFi

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SoFi’s student loan options are out of this world. But you’ll need a ticket to their planet.

Fixed APR

4.23%–11.26%

Loan Amount

100% of the certified costs of attendance

Fees

None

SimpleScore

4.6 / 5.0

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SimpleScore SoFi 4.6

Max Fixed APR 3

Perks 5

Transparency 5

Loan Amount 5

Fees 5

SoFi is famous for its student loan refinancing, as the first lender to refinance private and federal student loans into one package. Like many of our other favorite lenders, SoFi gives a 0.25% discount for autopay, no fees and an online application. SoFi members also receive financial planning advice, career services and invitations to networking events.

At some point, SoFi will check with your school to verify you have satisfactory academic progress (they don’t specify what that looks like), and it could affect your eligibility for borrowing money. This might mean a specific GPA, graduation timeline or a percentage of completed credits.

In The News

SoFi is looking to go public soon and has invited investors into its mortgage lending side of the business. The decision to go public puts SoFi at over $8.6 billion in value and helps continue its efforts to help customers become financially independent.

SoFi Disclosure

UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.76% annual percentage rate (“APR”) (with autopay), variable rates from 1.90% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.83% APR (with autopay), variable rates from 1.80% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.11% to 11.81% APR (with autopay), variable rates from 1.78% to 11.72% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 11.26% APR (with autopay), variable rates from 1.90% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. 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. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 07/10/2020. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).

Best for high rate discount – PNC Bank

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PNC Bank is a bit old school compared to our other recommendations, but it’s worth considering if you’re a part-time student.

Fixed APR

4.44%–9.59%

Loan Amount

Up to $225K

Fees

5% or $5 late fee

SimpleScore

4 / 5.0

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SimpleScore PNC Bank 4

Max Fixed APR 4

Perks 5

Transparency 4

Loan Amount 3

Fees 4

PNC Bank is one of the few lenders that will offer student loans to part-time students. You’ll also get double the usual discount for enrolling in auto-pay, 0.50%. After four years of timely payments, you can apply to release the cosigner and be solely responsible for the loan.

The PNC Bank website is a bit barebones, and that can make it hard to compare your options. You won’t find an abundance of online resources or extensive FAQ sections, and will often be directed to call the helpline for detailed information. PNC Bank also has the highest starting rate for variable interest.

In The News

PNC Bank recently sued Plaid, inc. over several claims including trademark copywriting, trademark infringement and false advertising. PNC also claims that its logo and name are being used on Plaid’s mobile app. PNC Bank is seeking $2 million in statutory damages.

Best for flexible payment terms – College Ave

Check Rates

If getting a student loan is like going for ice cream, College Ave is the hip froyo spot. You get to customize what you’re buying and get some unique toppings like a few fees and a quick application.

Fixed APR

3.34%–12.99%

Loan Amount

100% of the certified costs of attendance

Fees

$25 or 5% late fee

SimpleScore

3.8 / 5.0

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SimpleScore College Ave 3.8

Max Fixed APR 2

Perks 4

Transparency 4

Loan Amount 5

Fees 4

College Ave gives borrowers a few different ways to customize their experience. You can choose between four repayment options and four different loan term lengths. There are options to make small payments while still in school, or you can defer. The specific deferment policy is considered on a case-by-case basis. While this could result in a longer post-graduation timeline if your financial situation is sticky, it could also mean there’s no guarantee of a deferment period. Most students are offered six months.

Another upside is that you can check your potential rates and terms without impacting your credit with College Ave’s super-quick prequalify application. Part-time students can also apply for a student loan. Like SoFi, College Ave will verify satisfactory academic progress as a qualification to borrow.

In The News

College Ave is helping students amid the COVID-19 pandemic. It is willing to offer assistance for borrowers that are unable to pay or need a lower payment at this time due to financial hardship. Customers must call for assistance, as requests cannot be fulfilled via email.

College Ave Disclosure

*College Ave Student Loans products are made available through either Firstrust 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. Rates shown are for the College Ave Undergraduate Loan product and include autopay 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. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Information advertised valid as of 4/22/2021. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.

What is a student loan?

Student loans are a sum of money lent to students for funding education and associated costs. Unlike scholarships or grants, this money is paid back (with interest) over a set amount of time. There are federal student loans available from the government depending on your financial need, as determined by the Free Application for Federal Student Aid (FAFSA). Federal loans typically don’t require a credit check nor a cosigner.

Private student loans are available through banks, credit unions and other financial institutions. This type of student loan does require a credit check and often a cosigner. Interest rates will be varied, and it’s best to shop around for a low rate.

What are private student loans? 

Private student loans are offered by organizations like banks and credit unions. Unlike federal student loans that have terms and conditions set by federal law, private entities can set their own terms. In general, private loans usually aren’t as flexible as federal loans.

With private student loans, your interest rates can be either variable or fixed, and you usually need higher credit to qualify for low interest rates. Private loans are a good option for students who might be looking for larger loan amounts and already have good or excellent credit. If you have the right qualifications, a private loan may have a lower interest rate while offering a bigger loan.

How to get a student loan with no credit 

Many students haven’t had the opportunity to build credit yet, making it more difficult to secure private loans. Lenders usually rely on credit reports to determine how much risk you’ll have as a borrower. Borrowers with bad credit who haven’t paid other loans on time are subject to higher interest rates and usually have fewer loan options. Luckily, you still have options if you’re trying to get a loan without a credit history.

As a student, you can ask a parent or guardian to become a cosigner for a loan. A bank or other private lender will look at the cosigner’s credit history to determine your loan options and interest rates. A cosigner takes on the responsibility of the loan with you, so they’ll be subject to payment if you aren’t able to pay back the loan on your own.

You can also consider lenders that offer personal loans for users without credit or who have bad credit histories. If you already have debt, consider a consolidation loan as well to help make your payments easier to manage.

[Read: Multiple Personal Loans and Your Credit Score]

How do student loans work?

The student loan process is typically pretty straightforward — especially compared to other financial undertakings. You apply online a few months before your school year commences. The money is sent to your school during the first few weeks. Any amount remaining after the tuition and fees is sent to you (ideally used for books, rent, associated costs of attending the university.)

Your repayment plan will depend on the loan you chose. You might pay small amounts while still in school or defer payments until after you’ve graduated, usually with a grace period of six months to a year. That monthly repayment will continue until the loan is paid off.

Loan terms and limits

A loan term is the length of time the borrower has to repay the loan with monthly payments. For student loans, loan terms range from 5-15 years. You can often choose the loan terms, but it will depend on your lender.

Loan limits refer to the amount of money you borrow. Some lenders have minimum and maximum amounts, while others may cover 100% of attendance costs.

Loan minimums: The minimum amount of money you can borrow. Most lenders require a minimum loan amount of around $1,000 – $5,000.

Loan maximums: The maximum amount of money you can borrow. Most lenders will let you borrow 100% of the cost of attendance, while others may have a maximum amount limiting the total you can borrow. The limit is usually around $200,000, which will likely cover 100% of costs, depending on the education.

Loan rates

A loan rate is the percentage of interest that accumulates over the lifetime of the loan. When getting a student loan, lenders offer a choice between fixed or variable interest rates.

Fixed-rate loans: The interest rate will remain the same for the entire repayment period. Fixed loan rates can be a bit higher in range than variable, but depending on your credit score (and your cosigner’s credit score), the fixed rate you’re quoted could be low.

Variable-rate loans: The interest rate will fluctuate during the loan period as market interest rates change. The starting rates are often lower than fixed rates, but that rate will vary and may be higher at times than the fixed rate you’re quoted.

Types of student loans

There are a few different types of student loans, mostly depending on the education you’re pursuing.

• Undergraduate student loans. Typically used for pursuing a bachelor’s degree. Loan rates are pretty average, and term lengths are often flexible.
• Graduate or professional school loans. For postgraduate education. Some lenders will offer different loans and rates depending on the specialty — medical school, law school, MBA program, etc. Graduate loans often have lower rates and higher maximum loan amounts than undergraduate student loans.
• Community college or technical training loans. Not every lender will offer loans for community college, technical training or part time enrollments. Some lenders have higher loan rates for this level of education than loans for a bachelor’s degree. Other lenders will let you take out a traditional undergraduate loan for community college.
• Parent loans. A parent will take out a loan to help pay for their student’s education. This is a step further than cosigning on a loan, and the parent is solely responsible for the loan’s repayment. The loan will have no impact on the student’s credit (positive or negative). Loan rates are often the same as those for other student loans, but there are fewer repayment and loan term options.

Getting a student loan with a cosigner

To get a student loan with a cosigner, all you need to do is find someone you trust who has a good or excellent credit score. Keep in mind that your cosigner will have to take on the loan debt if you aren’t able to pay off the loan. For 17- to 18-year-old students, parents and guardians are usually the best options for cosigners. Most private institutions also have requirements for cosigners, such as established credit history, legal age and citizenship. Once you find a responsible cosigner, follow the steps below:

1. Gather necessary documents such as income information, Social Security numbers and personal contact information.
2. Fill out one loan application together. You don’t need to apply separately if you have a cosigner, the two of you can apply together on one application with most lenders. If your cosigner doesn’t live with you or near you, the lender will most likely send your cosigner a link via email to complete their portion of the application.
3. Once the application is approved, sign the final loan documents together. These documents will need both the primary applicant’s and cosigner’s signatures.
4. Have a conversation about the payment schedule. Remember, while the student is responsible for the loan, the cosigner is as well.

[Read: How to Take Out Student Loans Without a Cosigner]

Getting a student loan without a cosigner 

If you don’t have a viable cosigner, you still have some options for obtaining a student loan. While personal loan options and student loans require some form of credit history, it’s still possible to get a student loan with no credit and no cosigner. First, exhaust all federal student loan options and funding.

If you do have a good credit history or the student loan lender doesn’t require extensive credit histories, you can still apply for a student loan without a cosigner. Each lender will have different requirements, so you’ll still need to apply and see which institutions will offer a loan with a decent interest rate. To obtain a student loan without a cosigner, follow these steps:

1. If you don’t have credit, apply for a federal loan through the FAFSA application online. Next, apply for scholarships and grants that apply to your situation. Try to pursue all forms of federal funding before turning to private student loan lenders.
2. Gather a list of lenders that don’t require cosigners and check your rates with each one. Remember, checking your rate won’t affect your credit score — these are only soft credit checks.
3. Compare your loan options, paying special attention to the amounts, interest rates and loan terms before choosing the loan that works for your needs.
4. Gather the documents you’ll need for loan applications. This includes Social Security number, employment information and contact information.
5. Once approved for a loan, continue with the application. This will involve a hard credit check, which will temporarily lower your credit score. Once your loan offer is accepted, you can sign the final documents. Keep in mind that you are the sole person responsible for this loan and it’s your credit score and finances at risk if you fail to pay back the loan in a timely manner.

How to apply for a student loan

Applying for a student loan is often a quick process. Before you begin, you’ll need your Social Security number (SSN), banking information, employment and income information, your school’s information and an estimate of the amount you’ll need to borrow. If you have a cosigner, they’ll need to collect the same information.

On the lender’s website, the process typically goes like this:

• Set up an account using an email address, user ID or password
• Follow the website prompts to provide personal information, including name, date of birth, home address and Social Security number
• Enter the requested financial information, such as monthly income
• Answer verification questions
• Choose the loan type and repayment terms
• Provide your co-signer’s information and financials

Once you apply, you’ll receive an answer in a matter of minutes. Make sure you understand the application before you apply. Most student loan companies will let you prequalify for a loan and provide you the interest rate and terms without a hard pull on your credit, so you can go with the offer or pass. But some other lenders will only tell you what you’re approved for after the loan application process is completed, and they’ve done a hard pull on your credit score.

How to choose the best student loan for you

1. Calculate the amount you’ll need to borrow. You’ll need this information to apply for loans.
2. Apply for FAFSA. You’ll want to compare all the options available to you, private and federal.
3. Submit several applications to private lenders and compare the interest rates (variable and fixed), fees, term lengths, repayment options and rewards.
4. Decide on the best loan options for you and your financial situation.

Refinancing student loans

There are times when your student loan debt amounts to more than you can afford. If you’re paying student loans with high-interest rates and would like to benefit from a lower-interest offer, refinancing your student loan may be the answer. Even if you only have a small amount of student loan debt you’re responsible for, you may want to refinance if a significantly lower interest rate is available. You can also combine multiple loans with varying interest rates into one loan with refinancing.

Start by taking a look at what interest rates the lenders are currently advertising. If the rates are significantly better than the rates you’re paying on your loan, it’s worth investigating. Keep in mind that not everyone will qualify for those lower rates — you’ll need a healthy credit score and solid finances.

This is a basic outline of the steps it takes to refinance your loan:

1. Shop around for the best interest rate and terms. Make sure you can prequalify to know the rate you’ll be offered without a hard pull on your credit.
2. If your credit score is limited or low, ask a family member or trusted friend to cosign your student loan. If they have good credit, you’ll get a better interest rate.
3. Compare your offers and apply for the best one using the lender’s online application. In most cases, the process takes just a few minutes from start to approval.
4. Once you’re approved, ask for your 10-day payoff amount from your current lender, so you can pay off the loan without incurring any new interest charges.
5. Keep making payments to the original lender until the refinancing process is complete.

[Read: The Best Student Loan Refinance Companies in 2020]

We welcome your feedback on this article and would love to hear about your experience with the student loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.