Direct-to-consumer student loans have become increasingly popular in recent years, as they offer students more control over their financial aid and borrowing decisions. With a variety of options available, it can be hard to know which lender is the best choice for your specific needs. In this article, we will explore some of the best direct-to-consumer student loan options on the market, including Earnest, Juno, Credible, Ascent, Citizens Bank, and MPower.

When considering applying for a direct-to-consumer student loan, it is important to be aware of the basic admission requirements that may be necessary to qualify for these loans. Most lenders will require applicants to be enrolled in an eligible degree program at an accredited institution, to be a U.S. citizen or permanent resident, and to have a good credit history or a co-signer with a strong credit history. Additionally, some lenders may have specific requirements for certain types of borrowers, such as DACA recipients or graduate students.

The admission process for direct-to-consumer student loans will vary depending on the lender you choose, but in general, you can expect to fill out an online application, provide documentation of your enrollment and financial information, and undergo a credit check. It is important to carefully review the terms and conditions of each loan offer before accepting any funds, to ensure that you understand the repayment terms, interest rates, and other important details. By doing your research and comparing multiple loan options, you can find the best direct-to-consumer student loan for your individual needs and circumstances.

What’s the Best Student Loan to Get?

Federal student loans—and most private student loans—don’t show up as one big check in the mail. Typically, borrowed funds go to the school before the student.

If you’re not familiar with how student loans work, you might be expecting a big check in the mail after being approved. But in most cases, the school you’re attending is actually in charge of managing those funds.

Which loan is best for international students? Best International Student Loans of 2024 Best Overall: Earnest. Best for DACA Recipients: Juno. Student Loan Marketplace: Credible. Best Interest Rates: Ascent. Best for Graduate Students With a Co-Signer: Citizens Bank. Best for Undergraduate Students Without a Co-Signer: MPower.

Student Loans for Bad Credit or No Credit

Lender	NerdWallet Rating	Min. credit score	Fixed APR	Variable APR	Learn more
Federal Subsidized/Unsubsidized Loan	5.0/5Best for Student loan for bad credit	None	5.50-7.05%	N/A	READ REVIEW
Ascent Non-Cosigned Student Loan	5.0/5Best for Private loans for no credit	Low-Mid 600s	13.20-15.13%	13.26-15.22%	CHECK RATEon Ascent’s websiteon Ascent’s website
College Ave Undergraduate Student Loan	5.0/5Best for Private loans for bad credit	Mid-600s	4.07-15.48%	5.59-16.69%	CHECK RATEon College Ave’s websiteon College Ave’s website

Read on for a more in-depth explanation of student loan disbursal, including situations where student loan funds may be distributed directly to the borrower.

Student loans paid directly to a student

There are two ways that a student loan can be disbursed: direct-to-consumer or school-channel. A direct-to-consumer loan is when the lender sends borrowed funds directly to the student. A school-channel loan is when the lender sends the funds to the college or university. 

All federal student loans and most private loans are school-channel loans. If there is money left over after tuition, fees, and other necessary expenses have been paid, the student may receive those extra funds as a check or bank deposit. If you end up receiving extra funds, you generally should use them for expenses related to your education or necessary living expenses, like buying groceries, textbooks, or software.

Direct-to-consumer loans often have higher interest rates and fees because the money is going directly to the student instead of the institution. 

Students are still required to report how much they receive in direct-to-consumer loans to the financial aid department at their school. The department will use those figures to determine how much aid a student qualifies for. Taking out too much in direct-to-consumer loans can cause you to lose eligibility for other types of funding.

Federal Subsidized/Unsubsidized Loan

1. Best for Student loan for bad credit


2. None


3. Fixed APR: 5.50-7.05%


4. Variable APR: N/A

Ascent Non-Cosigned Student Loan

1. Best for Private loans for no credit


2. Min. credit score: Low-Mid 600s


3. Fixed APR: 13.20-15.13%


4. Variable APR: 13.26-15.22%

College Ave Undergraduate Student Loan

1. Best for Private loans for bad credit


2. Min. credit score: Mid-600s


3. Fixed APR: 4.07-15.48%


4. Variable APR: 5.59-16.69%

Funding U Private Student Loan

1. Min. credit score: None


2. Fixed APR: 6.99-12.99%


3. Variable APR: N/A

A.M. Money Private Student Loan

1. Min. credit score: None


2. Fixed APR: 7.53-8.85%


3. Variable APR: N/A

ISL Private Student Loan

1. Min. credit score: 660


2. Fixed APR: 3.85-8.40%


3. Variable APR: 5.59-10.71%

MPOWER Private Student Loan

1. Min. credit score: None


2. Fixed APR: 13.74-15.01%


3. Variable APR: N/A

Edly Non-Cosigner Student Loan

1. Min. credit score: Varies


2. Variable APR: 9.40-23.00%

Income disbursement from a work-study job 

Work study is a type of aid offered to students who qualify based on financial need. With work study, students get a job on campus or with an organization affiliated with the school. They usually work between 10 and 15 hours a week and are paid minimum wage or slightly more. 

The money a student earns is sent to them directly, and they can use it to cover textbooks, living expenses, or anything else related to school or not.

Employers may pay students with a physical check or directly deposit the funds into a bank account, just like with a traditional job. However, students can also request that the money be sent directly to the school to pay for tuition or other expenses. The payment frequency for a work-study job depends on the provider but is usually every two weeks.

How student loan disbursement works 

Federal student loans are disbursed to the school before the beginning of the semester. Students are notified when disbursal occurs. If you don’t receive a notice about disbursement, make sure your contact information is correctly listed on your Federal Student Aid (FSA) online account.

The money is applied to tuition, fees, and other school-related expenses. If you’re living on campus, the loan funds may be used to pay for room and board. If you’re taking lab classes, they may be used to pay lab fees. Parking permits and optional cafeteria plans may also be covered by your loan funds.

Most lenders pay schools first because it’s easier for both the school and the student. A student doesn’t have to worry about transferring large amounts of money, and the school doesn’t have to worry about getting paid on time.

Before your first federal student loan is disbursed, you have to complete entrance counseling. Entrance counseling helps you understand how student loans work, what the terms mean, how interest is calculated, and more. The U.S. Department of Education requires just one 30-minute online session, but your school may require additional counseling.

Returning student loans

If you receive extra funds that you don’t need, you may be able to return them and avoid paying interest. The time frame for when you can return those funds depends on the lender.

For federal student loans, you can cancel all or part of the loan 120 days after receiving it and no interest or fees will be charged.

If you take out private student loans and want to return the money, contact the lender directly. It’s usually harder to return money to a private lender. In this case, your best option is to keep the money to use for future expenses and ask for a lower loan amount next semester.

who offers direct to consumer student loans

Finding a Private Student Loan

There are generally two ways to find a private student loan, using information provided by your school or using information that you obtain yourself. While you can always use just one method, you should use both and compare all of the available loans. This way you can find the best price for your loan and find the best loan that meets your needs.

Information from your school

Most schools will publish information about private loans with tuition bills or with financial aid packages. These so-called “preferred lender lists” are in some disrepute because of conflicts of interest that arose in the way some schools chose lenders. Some schools accepted referral commissions from lenders in exchange for listing them in school mailings, creating a conflict of interest. This is now illegal. Despite this historical problem, you should pay special attention to any recommendation made by your school, because most schools actively shop for the best price in student loans. This is especially true if your school publishes comparative price charts for multiple lenders and/or explains how it picked the lenders it recommends. If your school has conducted a comparative shopping effort, you should take advantage of it.

Loans obtained on referral from the school usually involve lender cooperation with the school. The lender will ask the school to verify your enrollment and, in some cases, your financial need. This may limit the amount of money you can borrower to your Expected Family Contribution as computed under the FAFSA process.

Direct-to-Consumer (DTC) Marketing

If you Google “student loan,” you will get listings of thousands of websites offering private student loans. These sites include banks, student loan marketing companies and other businesses that have partnered with student loan providers to reach consumers directly. These direct-to-consumer (DTC) loans are marketed on the Internet, by direct mail, by phone and even TV. DTC loans are generally processed and paid directly to the applicants, without school involvement. Because they are produced through paid marketing efforts (as opposed to shopping by the school), they generally cost more than loans referred through a school.

When you shop for a student loan on the web you will also find sites commonly known as “aggregators.” Examples include www.simpletuition.com and www.lendingtree.com. These “aggregator” sites list dozens of loan sources and provide you with comparative shopping tools that allow you to sort the options by price and other criteria. They can be very useful. However, you should read the fine print on these websites. Many of these aggregators accept referral fees from some of the lenders on their list and will give preferential treatment to those “sponsors” in the way they show price comparisons and other features. A good plan is to select at least two aggregators, run comparisons on their systems and print out their results to compare side-by-side. After you have found the most attractive offers, you can go directly to the websites of the student loan providers making those offers. Don’t rush into it. Never rush directly from an aggregator site to an on-line application form.

What is a Direct-to-Consumer Private Student Loan

A direct-to-consumer private student loan is a form of student financing which does not need to be certified by the college or university in able for an individual to avail student funds from private lenders. With this type of loan, all transactions are exclusively negotiated between the lending company and the student-borrower.

Benefits of the Loan

A direct-to-consumer private student loan offers many advantages to undergraduate or graduate students to cover their course program expenses. Some of the benefits they can reap from this loan are:

• the student can freely decide and pick which lender to choose without the approval of the school he is enrolled in
• the loan application and approval process is easier and quicker
• unlike government-guaranteed educational loans which disbursement schedules are set periodically, the student can request for funding anytime the need arises
• funds can be used to offset school related expenditures that are not covered by the federal government student loans

Eligibility Requirements

Compared to the federal student financing programs wherein the financial need of the applicant is highly considered, the direct-to-consumer private student loans do not look into the borrower’s economic deficiency in able to get approved for a loan. Other basic requirements are:

• a co-signer with positive credit history
• creditworthiness of the borrower
• social security number
• borrower’s personal information

Best Student Loans Without a Co-Signer of June 2022

You may not need a co-signer to get a student loan, even if you have a thin credit history.

Advertising Disclosure: Some of the loan offers on this site are from companies who are advertising clients of U.S. News. Advertising considerations may impact where offers appear on the site but do not affect our editorial independence.

You can get student financial aid options without a co-signer, including scholarships, grants and federal student loans. But if you need private student loans without a co-signer, your options will be limited. This guide explains how to find private student loan providers and financial aid options when you don’t have a co-signer.

What you’ll learn:

• Do you need a co-signer for a student loan?
• How can you get a student loan without a co-signer?
• What is the minimum credit score for a student loan?
• Where can you get a student loan without a co-signer?

Best Student Loans Without a Co-Signer

LENDER	LEARN MORE	FIXED APR	MAX. LOAN AMOUNT	MIN. CREDIT SCORE
View DisclosureEarnest4.7	See Offers	3.24% to 12.78% with autopay	No maximum	650
View DisclosureCollege Ave4.7	See Offers	3.49% to 12.99% with autopay	Cost of attendance, minus aid	Mid 600s
View DisclosureSallie Mae4.6	See Offers	3.75% to 12.85% with autopay	Cost of attendance, minus aid	Mid 600s
View DisclosureSoFi4.5	See Offers	3.22% to 12.30% with autopay	Cost of attendance, minus aid	640
View DisclosureAscent Funding4.4	See Offers	4.81% to 12.79% with autopay	$200,000	540
View DisclosureLendKey4.1	See Offers	3.99% to 8.49% with autopay	Cost of attendance, minus aid	Not disclosed
View DisclosureCitizens4.5	See Offers	3.47% to 9.35% with auto and loyalty discount*	Up to $350,000	Not disclosed
View DisclosurePurefy4.5	See Offers	3.26% to 14.50% with autopay	Not disclosed	Not disclosed
View DisclosureSparrow Student Loans4.7	See Offers	2.99% to 14.98% with autopay	Cost of attendance, minus aid	No minimum
View DisclosureEducation Loan Finance4.6	See Offers	3.20% to 11.99%	Cost of attendance, minus aid	680

See More Lenders

Our Student Loans Methodology

U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.

To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. The scoring factors for private student loan providers are customer service ratings, fixed APR, variable APR, loan product availability, minimum and maximum loan terms, minimum and maximum loan amounts, minimum FICO score, and online features.

The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.

To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.

best federal student loans

Private student loans make up a small percentage of the total education debt. According to The Institute for College Access & Success, just 11% of bachelor’s degree students took out private student loans to pay for college. 

But with skyrocketing college costs, private student loans can play a pivotal role in financing your education. Other forms of financial aid, including grants, scholarships, and federal student loans, may not be enough to cover the total cost of your degree, so private student loans can help cover your remaining expenses. 

The best private student loans offer low interest rates, multiple in-school repayment options, and, in some cases, borrower perks. See the best loans from the best lenders here.

Best Student Loans of January 2023

• Best Overall Lender: Earnest
• Best Runner Up: Juno
• Site for Comparing Student Loan Offers: Credible
• Best for Graduate Students: Iowa Student Loan (ISL) Education Lending
• Best Without a Co-Signer: Funding U
• Best for Flexible Repayment Options: College Ave
• Best for Parent Student Loans: SoFi
• Best for International/DACA Student Loans: MPower
• Best for Refinancing: Splash Financial
• Best for Fair Credit: Ascent

Private student loans tend to have higher interest rates and fewer benefits than federal student loans. Before applying for a private loan, fill out the Free Application for Federal Student Aid (FAFSA) and contact your college’s financial aid office to ensure you exhaust all other financial aid options.

Best Student Loans

BEST OVERALL LENDEREarnest

The Balance’s Rating

4.9

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Pros & Cons

Pros

• Borrow up to the total cost of attendance
• Long grace period
• International students eligible with co-signer
• Rate match guarantee

Cons

• Not available in all states
• Does not allow co-signer releases
• Good to excellent credit required

Why We Chose It

With federal undergraduate student loans and some private loans, there are annual and lifetime limits on how much you can borrow. But with Earnest, you can borrow up to the total cost of attendance, and you can have up to 15 years to repay your loan. 

Earnest offers a longer-than-usual grace period. Instead of six months like you get with federal loans, Earnest gives you nine months after graduating or leaving school before you have to start making full principal and interest payments. 

Earnest has competitive variable and fixed interest rates, and it backs its rates with a guarantee. It will match any competitor’s rate and give you a $100 Amazon gift card once your rate match is complete. 

Earnest also offers student loan refinancing and parent loan refinancing. 

Repayment Options

Earnest has multiple in-school repayment options, including: 

• Fixed $25 payments: While you’re in school, you pay just $25 per month. 
• Interest-only payments: While you’re in school, you make payments against the interest that accrues. 
• Deferred payments: With this option, you defer your payments until nine months after you graduate or leave school. Interest will still accrue.
• Immediate repayment: If you opt for immediate repayment, you make full payments against the principal and interest while you’re in school. 

Eligibility Requirements

To qualify for an undergraduate loan from Earnest, you must meet the following requirements: 

• You must be the age of majority in your state
• You must be a U.S. citizen or permanent resident; international students may be eligible for a loan with a creditworthy co-signer who is a U.S. citizen
• You must be enrolled at least half-time at a four-year, non-profit school
• You or your co-signer must have a credit score of 650 or higher
• You or your co-signer must earn at least $35,000 per year

Earnest does not issue loans to residents of Nevada.

BEST RUNNER UPJuno

The Balance’s Rating

5.0

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Pros & Cons

Pros

• Special discounts and bonus offers
• Rate match guarantee
• Lower rates than you may get on your own
• Loan options for international and DACA students

Cons

• Limited list of partners
• No pre-qualification option
• Process takes longer

Why We Chose It

With typical student loan marketplaces, you submit a pre-qualification form, undergo a soft credit check, and are shown offers from the platform’s partner lenders. There isn’t usually an advantage to using a marketplace other than being able to compare offers from several lenders at once. 

Juno works differently. When you join Juno, it places you in a group of similar borrowers. It uses that group to negotiate loan terms with its partner lenders. As a result, you may be eligible for lower interest rates than you’d get shopping on your own. 

Keep in mind that Juno works by negotiating as a group, so you cannot get a loan instantly. Make sure you start the process well ahead of time so you have the money you need to pay for school. 

Some of Juno’s partners offer additional incentives, such as cash-back bonuses. And if you find a lower rate elsewhere, Juno’s partners will match that rate and give you 1% of the loan amount as a cash-back bonus. 

Juno connects borrowers to loans from leading lenders, and it also works with lenders that lend to international and DACA students. 

Repayment Options

Repayment options vary based on the lender issuing the loan. Generally, you may have access to the following options: 

• Fixed payments
• Interest-only payments
• Deferred payments
• Immediate repayment

Eligibility Requirements

To qualify for a loan through Juno, you must meet the following requirements: 

• You must be the age of majority
• You must be enrolled in a four-year, Title IV, non-profit university or college
• You must be pursuing a bachelor’s or graduate degree

Both international and DACA students are eligible. Most students, regardless of their citizenship status, will need a co-signer to qualify for a loan. 

SITE FOR COMPARING STUDENT LOAN OFFERSCredible

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Pros & Cons

Pros

• Compare several offers at once
• Multiple loan types available
• $200 best rate guarantee

Cons

• Repayment options and policies vary
• Does not partner with all major lenders
• Eligibility requirements vary by partner lender

Why We Chose It

When it comes to private student loans, eligibility requirements, repayment options, and rates can vary between lenders, so it pays to shop around. But reviewing offers from several lenders can be time-consuming; that’s where Credible comes in. 

Credible isn’t a lender; it’s a marketplace that allows you to get quotes from several leading lenders at once with just a soft credit inquiry. It connects borrowers to several different types of loans, including loans for undergraduates, graduate students, and parent borrowers. 

Repayment Options

Repayment options vary by lender, but you may be able to choose from the following: 

• Fixed payments
• Interest-only payments
• Deferred payments
• Immediate repayment

Eligibility Requirements

Eligibility requirements vary by Credible’s partner lender, but you generally need to be enrolled at a four-year school at least half-time. You typically need to be a U.S. citizen or permanent resident, or have a creditworthy co-signer that is.

BEST FOR GRADUATE STUDENTSIowa Student Loan (ISL) Education Lending

The Balance’s Rating

4.5

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Pros & Cons

Pros

• Non-co-signed options available
• No origination fees
• Financial hardship programs

Cons

• Good to excellent credit required
• Not available to residents of Maine
• International students not eligible 

Why We Chose It

For graduate students exploring their financing options, ISL Lending could be a valuable option. It offers loans with interest rates that can be lower than those of federal graduate loans, and it allows students to borrow up to the total cost of attendance. Unlike federal graduate loans, ISL Lending doesn’t charge origination or disbursement fees. 

While most private student loan companies require borrowers to have co-signers, ISL Lending has an option specifically designed for graduate students who don’t have one. Its non-co-signed graduate loan has higher rates than co-signed options, but it provides loans to graduate students who may not have access to a creditworthy co-signer. 

Repayment Options

ISL Lending offers three repayment options: 

• Interest-only payments
• Deferred payments
• Immediate full repayment

Eligibility Requirements

To qualify for a loan from ISL Lending, you must meet the following requirements: 

• You must have a credit score of 660 or higher (or have a creditworthy co-signer)
• You must be the age of majority in your state
• You must be enrolled at least half-time at a four-year, Title IV, non-profit school
• You must be a U.S. citizen or permanent resident

ISL does not issue loans to residents of Maine. 

BEST WITHOUT A CO-SIGNERFunding U

The Balance’s Rating

3.2

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Pros & Cons

Pros

• Loans without co-signers
• No origination fees
• DACA students eligible

Cons

• Doesn’t have variable rates
• Does not offer loans for graduate school
• Not available in all states
• Low loan maximums

Why We Chose It

If you’re an undergraduate student, qualifying for a private student loan on your own can be difficult. Most lenders require strong credit histories and full-time salaries, or you may need a co-signer. If you don’t have a relative or friend who can co-sign your loan, Funding U can be a useful option. 

Funding U offers fixed-rate loans exclusively for undergraduate students who don’t have co-signers. You can borrow up to $20,000 per academic year, and there are no application or origination fees. 

Repayment Options

All Funding U loans have 10-year repayment terms. There are two repayment options:  

• Fixed $20 payments while in school
• Interest-only payments while in school

Full loan repayment begins six months after graduating or leaving school. 

Eligibility Requirements

To qualify for a loan from Funding U, you must meet the following requirements:

• You must be a U.S. citizen, permanent resident, or DACA student
• You must be enrolled full-time as an undergraduate student at an eligible school
• You must be at least 18 

Funding U isn’t available in all states. To qualify, you must be a resident of one of the following states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin. 

BEST FOR FLEXIBLE REPAYMENT OPTIONSCollege Ave

The Balance’s Rating

4.3

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Pros & Cons

Pros

• Loans available for associate programs
• Multiple repayment options
• Extended repayment terms for health professionals

Cons

• Strict requirements for co-signer releases
• Unclear eligibility requirements

Why We Chose It

With College Ave Student Loans, you borrow money to pay for associates, bachelor’s, or graduate programs, and you can pick from several repayment options and terms. You can choose a loan term of 5, 8, 10, or 15 years—more options than some other lenders offer—to get an in-school repayment plan that works for you. 

College Ave is especially helpful for students in health professions. With a health professions loan, you can defer your payments for up to 48 months after you leave school if you participate in a medical residency or fellowship. 

While College Ave allows you to apply with a co-signer, its requirements for co-signer releases are more strict than other lenders. You can only apply for co-signer release after more than half of your repayment term is over. For example, if you have a 10-year term, you can only apply after at least five years have passed. 

Repayment Options

College Ave Student Loans offers the following repayment options: 

• Fixed $25 payments
• Interest-only payments
• Deferred payments
• Immediate full repayment 

Eligibility Requirements

College Ave Student Loans doesn’t disclose its credit or income requirements, but it does say that most students will need a co-signer to qualify for a loan. 

To be eligible for a loan, you must meet the following requirements: 

• You must be at least 16 years old
• You must be enrolled in a qualifying school
• You must have a valid Social Security number

BEST FOR PARENT STUDENT LOANSSoFi

The Balance’s Rating

4.8

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Pros & Cons

Pros

• No fees
• Interest-only repayment available
• No loan caps

Cons

• Not available to associate degree students
• Unclear borrower credit or income requirements
• Students must be enrolled at least half-time

Why We Chose It

Although federal loans usually have lower interest rates than private loans, parent loans can be the exception. Federal Parent PLUS Loans have the highest interest rate of all federal loans; Parent PLUS Loans disbursed for the 2022–2023 academic year have a rate of 7.54%. Plus, they have a 4.228% disbursement fee. 

SoFi’s parent loans may be a cost-effective alternative. Borrowers with excellent credit may qualify for a loan with a lower rate than Parent PLUS loans, and SoFi doesn’t charge origination, disbursement, or late fees. 

Repayment Options

While SoFi offers several repayment options for student borrowers, there are just two repayment options for parents: 

• Interest-only repayment: While your child is in school, you only make payments against the interest that accrues. 
• Immediate repayment: You make payments against the interest and principal as soon as the loan is disbursed. 

Eligibility Requirements

To qualify for a parent student loan from SoFi, you and your child must meet the following requirements: 

• You must be the age of majority in your state
• You must be a U.S. citizen, permanent resident, or non-permanent resident alien with a valid Green Card
• The student must be enrolled at least half-time at a four-year school pursuing a bachelor’s degree or higher

BEST FOR INTERNATIONAL/DACA STUDENT LOANSMPower

The Balance’s Rating

3.8

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Pros & Cons

Pros

• No co-signers required
• Autopay discount
• Graduation and employment discount

Cons

• Higher APRs
• Must be within two years of graduation
• Must attend a participating school

Why We Chose It

If you’re an international or DACA student, qualifying for a private student loan in the U.S. can be challenging. While some lenders will work with non-citizens, they usually require applicants to have a co-signer who is a U.S. citizen or permanent resident. 

But with MPOWER Finance, students can qualify for a private student loan without a co-signer. Students can borrow up to $50,000 per year—up to $100,000 over their lifetimes—and have 10 years to repay their loans. Plus, MPOWER offers discounts for automatic payments and for providing proof of graduation and employment.

Repayment Options

All MPOWER Finance loans offer interest-only payments while the student is in school and for six months after graduation. After that, the loan has a 10-year repayment term with fixed monthly payments. 

Eligibility Requirements

To qualify for an MPOWER Finance loan, you must meet the following requirements: 

• You must attend one of MPOWER Finance’s partner schools.
• You must be an undergraduate or graduate student within two years of your graduation date.

BEST FOR REFINANCINGSplash Financial

The Balance’s Rating

3.7

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Pros & Cons

Pros

• Compare multiple offers at once
• Spousal loan refinancing available
• No loan maximum

Cons

• No additional discounts or bonuses
• Repayment terms and policies vary by lender
• Degree required

Why We Chose It

Student loan refinancing is a way to lower the interest rates on your student loan debt and save money. Splash Financial is our choice as the best company for refinancing because it’s a mini-marketplace that allows you to compare offers from multiple lenders at once, and may provide some very low rates. 

By filling out one form, you can review refinancing options from several banks and credit unions. Splash allows you to refinance undergraduate and graduate student loans. And some of Splash Financial’s partners even offer spousal loan refinancing, so you can combine your debt with your partner’s. 

Repayment Options

Splash Financial’s refinancing options have loan terms from 5 to 20 years. Repayment options in cases of financial hardship are dependent on the lender that issued you your loan. 

Eligibility Requirements

To qualify for student loan refinancing through Slash Financial, you must meet the following requirements: 

• You must have graduated with at least an associate degree.
• You must have good to excellent credit (Splash Financial recommends a score of 700 or higher).
• You must be a U.S. citizen or permanent resident.
• You must have a debt-to-income ratio that is 30% or less.

BEST FOR FAIR CREDITAscent

The Balance’s Rating

4.5

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Pros & Cons

Pros

• Qualify without established credit
• Co-signers not required
• Discounts and bonuses available

Cons

• Limited options for first- and second-year students
• High APRs
• Limited repayment options

Why We Chose It

With private student loans, you usually need good to excellent credit or a co-signer to qualify for a loan. Ascent Funding is one of the few lenders that doesn’t require a co-signer. It offers an outcomes-based loan for borrowers who have insufficient credit histories and don’t have any credit. 

The outcomes-based loan is available to college juniors or seniors and graduate students, and you can have up to 15 years to repay your loan. 

Depending on the type of loan you choose, you may qualify for an autopay discount that reduces your interest rate by as much as 1.00%. Or, you may qualify for a 1% cash-back reward once you graduate. 

Direct subsidized and unsubsidized loans—federal loans for graduate and undergraduate students—don’t have minimum credit or income requirements, and they have much lower interest rates than most private loans.

Repayment Options

Ascent Funding’s co-signed loans have repayment terms ranging from 5 to 15 years, and you can choose between fixed payments, deferred payments, and interest-only payments. 

Outcomes-based loans are more limited. The loan term options are 10 or 15 years, and the only repayment option is deferred repayment. Your payments will begin nine months after graduating or leaving school. 

Eligibility Requirements

To qualify for Ascent’s outcomes-based loan without a co-signer, you must meet the following requirements: 

• You must be a college junior or senior.
• You must have a GPA of 2.9 or higher.
• You must not have enough credit history to generate a credit score.
• You must be a U.S. citizen or permanent resident.

If you have a credit score, you must apply for a credit-based loan or a co-signed loan. To qualify, you must meet the following requirements: 

• You must be enrolled at least half-time.
• You must be a U.S. citizen, permanent resident, or DACA student.
• You must have at least two years credit history.

Final Verdict

If you reach the borrowing limits for federal student loans or aren’t eligible for federal aid, private loans can be a tool you can use to finance your education. There are many private student loan companies out there. Some, such as Credible or Splash Financial, are marketplaces that connect you to multiple lenders. Others, such as ISL Lending, are direct lenders for undergraduate and graduate students. 

Our pick for the best overall lender is Earnest. It offers a range of loan options for students and parent borrowers, and it even offers student loan refinancing. By taking out a loan through Earnest, you can borrow up to the total cost of attendance and take advantage of an extended grace period.

How to Choose the Best Student Loan Provider

If you need to borrow student loans, spend time getting to know how student loans work. This can help you figure out what you need and want in a student loan to make an informed decision.

As you compare federal and private student loan offerings, focus on the costs of borrowing. The interest rates and fees you’ll face will determine how much it will cost you to repay this debt in the future. Choosing a student loan with lower monthly costs can save you hundreds or thousands of dollars in interest over the life of your loan.

Beyond cost, look at other factors that may affect how affordable or burdensome this debt will be to repay:

• In-school deferment that ensures you can focus on your studies
• Loan terms have a direct impact on your monthly payments
• Deferment or forbearance options to protect you from default in cases of financial hardship
• Options to add or release a co-signer for more access and options
• Features and benefits specific to the type of loan or degree you’re pursuing, such as deferment during residency for medical school loans
• Fees such as late fees, origination fees, and more 

Federal Student Loans vs. Private Student Loans

Federal student loans are the more common form of student loans. The U.S. Department of Education offers and funds them, and they are not credit-based loans. On the other hand, private student loans are credit-based options offered by banks or other private lenders.

Federal student loans often offer students a more affordable and accessible way to borrow. Still, private student loans are an important tool that can be used to fill in student aid gaps for students who hit borrowing limits on federal student loans. They can also be a more cost-effective alternative to the terms offered on federal direct PLUS loans.

Private student loans may include options for international students, funding above the federal loan limits, no origination fees, and potentially better rates. However, because they are private loans, they are not eligible for the Public Student Loan Forgiveness program, there are fewer repayment options, and because they are credit-driven, you will need good credit (or have a co-signer with good credit) to take advantage of the best rates and terms.

What Is a Student Loan?

A student loan is a form of aid that helps students pay for a college education, from vocational training to a bachelor’s degree up to a doctorate degree. Students then use these funds to pay for their education-related costs including tuition, books, school supplies, and even living expenses like food or transportation.

Student loans can be offered and originated by a number of lenders. The Department of Education’s Office of Federal Student Aid offers federal student loans, and many state governments run student loan programs. Colleges may offer their own student loan programs, along with other nonprofit organizations. Banks and other private lenders also commonly offer student loans.

How Do Student Loans Work?

To get student loans, you’ll need to apply for them. For federal student loans, this includes submitting the Free Application for Federal Student Aid (FAFSA). For private student loans, that means completing an application with the lender of your choice. These lenders will require that you prove you’re a student, and you may be able to borrow up to the full costs of your educational degree or program.

Once the repayment period starts, you are responsible for paying back the student loan principal and interest. You’ll face a monthly payment amount designed to repay the loan in full within your loan term.

As they are loans, student loans are not gifted aid (like scholarships), and they must be paid back. Student loans are typically deferred while the student is enrolled in college and for a grace period after enrollment ends. Be aware that interest may accrue during this deferment period. The exception is interest on federal direct subsidized loans, which is paid through a federal subsidy.

And, also of note, although student loans have lower interest rates and costs than other loans, they are harder to discharge in bankruptcy.

Is Student Loan Interest Tax Deductible?

The short answer is yes: You can deduct up to $2,500 in student loan interest that you paid to lower your taxable income. Both private and federal student loans can qualify for the student loan interest deduction.

If you paid more than $600 in interest on a student loan that qualifies for this deduction, your lender is required to send you a Form 1098-E to certify what you paid. However, you can still claim this deduction if you paid less or didn’t receive a 1098-E.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of student loan lenders. We collected thousands of data points across 30 lenders—including loan types, interest rates, fees, loan amounts, and repayment terms—to ensure that we help readers make the right borrowing decision for their education needs.