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Finding the best private student loan is not always an easy task. There are many institutions that are offering these loans, and some are trustworthy and reliable while others are not. However, we are here to give you a list of the top 5 best private student loans that are offered out there thus you can make an informed decision once you apply for a student loan.
In order to help you make a wise choice and get yourself a student loan, we will delve deep into each student loan plan by answering few questions about them. But before I do that, it’s good to know what exactly a student loan entails?
What makes a student loan different than any other type of loan “Is a student loan debt consolidation”?
A student loan differs from other types of debts as they have a specific purpose. Even though student loan debt cannot be negotiated, it can be consolidated to repay the loan over time.
How long does it take to pay off a student loan?
It takes about six years to fully repay a student loan if you have taken out a traditional student loan. In case you have applied for an education credit loan, it may take much longer.
Are student loans taxable income?
Student loans are considered to be similar to gifts; hence, they are exempt from taxes. When you file your tax return, you should report all your student loan payments (principal+interest) as non-taxable receipts.
When should students consider taking out student loans?
Students usually borrow money for educational purposes with the intention of paying the loan back when they no longer need the funds for education. If you want to pursue higher studies after graduation, then you should probably wait until you earn enough money to repay your student loan.
Which kind of student loan is the best?
The best option would be an education credit loan since interest rates are generally lower than those of a standard student loan.
What are the advantages of having a student loan?
Best Student Loans Private
Sallie Mae was created in 1970 under the name America’s Servicing Company. Prior to being named after founder James Sallie, the company’s name was Service Finance Corporation. In 1981, they changed their name to Sallie Mae once again. For many years, Sallie Mae was known as the largest student lender in the United States. Sallie Mae helps students and parents pay for college through financing, cash management services, and education funding. Sallie Mae offers two types of loans; Federal Family Education Loan (FFEL) and Direct Subsidized Unsubsidized Stafford Loans (DSUS). With a DSUS loan, the government pays the interest while the borrower pays back the principal. A FFEL loan requires both the federal government and the borrower to pay the interest. Sallie Mae’s parent company, SLM Corp., is based in Bethesda, Maryland. The company is publicly traded on NASDAQ under the symbol SLM.
AmeriLoan is owned by the same parent company as Sallie Mae, SLM Corp. AmeriLoan operates as a subsidiary of SLM Corp. According to the website, AmeriLoan was founded in 2000. The company primarily serves as a direct lender providing private student loans, and does not offer any federal financial aid products. AmeriLoan currently provides over $500 million in student loan debt annually, making them the fourth-largest student lender in North America.
FedLoan Servicing Corporation
The FedLoan Servicing Center is a subsidiary of the U.S. Department of Education that manages the servicing of Federal Family Educational Loan Program (FFELP), Direct Loans, and Perkins Loans. It was incorporated in 1974 as a non-profit corporation and moved its headquarters from Washington, D.C. to Falls Church, Virginia in 1998. The corporation is headquartered at 1301 New York Avenue, NW Suite 500, Washington, D.C., 20037. In addition to providing customer service and collection assistance, the center provides technical assistance to schools, colleges, and universities on behalf of the U.S Department of Education.
Navient is a Fortune 500 company that focuses on delivering technology solutions to help consumers manage finances. Founded in 1994, the company became the first federally chartered savings bank holding company in 1996, and a publicly traded company in 2002. According to the website, Navient started out as a small business lending firm before expanding into several other segments including online banking, mobile banking, automated clearing house (ACH) processing, payroll services, and electronic payments. In 2016, Navient had revenue of $8 billion and approximately 990 employees. The company has been criticized for allegedly profiting off of financially struggling borrowers who were unable to repay their debts. As of 2015, the CEO and president of Navient was Michael Williams.
Great Lakes Education Loan Corporation
Great Lakes Education Loan Corporation (GLELCO) is a nonprofit organization that provides educational loans and grants to low-income students. In 2012, GLELCO provided $26.2 billion in educational funds to nearly 1.9 million students. The company has been criticized by some groups for using tax dollars to fund private companies rather than helping low-income families complete school. In 2017, Great Lakes Education Loan Corporation announced that they would be moving offices from Detroit to Grand Rapids, Michigan. According to the company website, GLECO was established in 1986 to provide educational loans to students. The company began providing loans to students in 1988.
Nelnet is a company that specializes in offering consumer credit and collections services. Their primary focus is providing affordable home mortgages. Nelnet is one of the few major student loan providers in the United States. The company was founded in 1969 as First National Bank of Chicago. In 2003, Nelnet purchased the assets of National City Mortgage Co. On July 27, 2010, Nelnet acquired Credible, Inc. and assumed its operations. On October 12, 2011, Nelnet completed the acquisition of Allfirst, Inc., a California-based mortgage broker. Nelnet is headquartered in Chicago, Illinois, and is a subsidiary of Nationstar Mortgage LLC.
NelNet Credit Corporation, formerly called NelNet Credit Services, Inc., is a wholly owned subsidiary of NelNet. The company is dedicated to providing credit information to businesses and to individuals. Its mission is to protect consumers from unfair, deceptive, misleading and abusive practices. NelNet operates as a marketing agency for lenders and credit bureaus. The company also provides data analysis, market research, training, consulting, public relations, and web development.
Best Student Loans Private
Federal Direct Loans
Loans provided by the federal government are known as direct loans. These loans are provided by the Department of Education, and are generally administered through banks and credit unions. Direct funds have flexible repayment terms that allow students to pay back their loan over a period of time that’s best suited to them. Direct loans provide some of the lowest interest rates available, which makes it a good option for many people. However, interest rates do change often, making it important to keep track of changes in federal student loan interest rates.
Perkins Loans are federally backed student loans provided by the U.S Department of Agriculture (USDA). Eligible applicants can borrow money for education purposes at low interest rates. There are two types of Perkins Loan programs available. One program offers private loans through participating lenders and the other is a USDA-administered program. Students who qualify for these loans may also get additional financial aid.
Stafford Loans are the third type of student loan program offered by the Federal Government. Stafford Loans are need-based and the amount of Stafford loan you receive is based on how much free money you have left over after your eligibility is met. You don’t have to wait until the end of school to apply for Stafford Loans; they can be applied for any time throughout the year.
Parental PLUS Loans
PLUS stands for “Parent PLUS” and parental PLUS loans are funded through the US Department of Health and Human Services and are intended to help parents finance higher education costs. Parents can use PLUS loans to cover tuition and related fees while still remaining responsible for repaying the loan. When applying for a PLUS loan, you should first consult with the college financial aid office to ensure that you meet all requirements before submitting your application.
William D. Ford Direct Loan Program
The William D. Ford Direct Graduate Tuition Waiver Program provides eligible graduate students with access to zero percent financing for undergraduate tuition and mandatory fees at eligible four-year public universities and colleges. To be eligible, you must be enrolled in a degree program leading toward a bachelor’s degree or higher level academic credential. The maximum annual cost of attendance minus the grant will not exceed 8% of your total cost of attendance and will not exceed $20,000 for undergraduates and $40,000 for graduate/professional students. Applicants must submit documentation that confirms enrollment in a qualifying degree program.
William D. Ford Federal Work Study Program
This program helps students with financial need pay for school expenses by providing part-time employment opportunities in schools and libraries across the country. To participate, you must have completed 12 or more credits towards graduation. If accepted, you must agree to work 20 hours per week. Your weekly compensation will depend on your employer.
State grants can be useful if you live in a state that doesn’t offer enough funding to fully cover the cost of attending college. Grants vary depending on the state and institution attended; however, you should contact your local college for more information.
Best Student Loans Private
United States Department of Education
The U.S. Department of Education offers loans for undergraduate students. These loans have low interest rates and repayment plans. Students may use their loans to pay for college expenses including tuition, room and board, books, fees, and transportation. As a federal student loan program, the department cannot collect any fees from borrowers. Loan amounts are determined based on a student’s financial need. Borrowers qualify for subsidized loans if they meet income requirements. A borrower does not have to repay these loans while enrolled at least half-time. Repayment begins after graduation or dropping below half-time enrollment. The maximum annual loan amount is $31,500. Eligible borrowers may be able to get additional funding in the form of grants and work study opportunities. There is no grace period when repaying these types of loans.
Federal Stafford Loan
The Federal Stafford Loan provides funds directly to colleges and universities. The government covers costs associated with administrative and processing services. Interest accrues over time; however, there is no prepayment penalty. Depending on eligibility criteria, applicants may receive fixed rates between 6 percent and 8 percent per year. Graduates who attend schools eligible for IV aid (including 4-year public institutions) may apply for the Direct PLUS Loan. Unlike the Federal Perkins Loan, this program requires both parent and student payments. Parent payment options include salary deferment of up to six months or payroll deduction. Payment can be made monthly or annually. Parents can choose to make monthly payments or make a lump sum payment once a year. The minimum payment is the same whether making monthly payments or a single payment. Maximum annual loan amounts are capped at $23,000 for undergraduates.
Subsidized Federal Guaranteed Student Loan
Subsidized federal guaranteed student loans offer low interest rates and flexible repayment terms. However, borrowers must complete 120 credit hours before receiving the first disbursement of money. Students who earn less than $25,000 per year do not need to go through FAFSA. Once the application is submitted, the lender calculates how much to lend using data provided by the applicant. Applicants may be required to provide proof of assets. In order to receive the full subsidy benefit, the borrower must maintain satisfactory academic progress. If the student fails to reach this goal, the unsubsidized rate becomes effective. The borrower must start repaying the loan by the end of 12th grade. Undergraduate students may take out the Direct Consolidation Loan Program. This program consolidates all federal loans into one loan with a fixed interest rate. Students may opt to consolidate their loans under either standard or extended repayment terms.
Direct Unsubsidized Federal Student Loan
Direct unsubsidized federal loans offer higher interest rates compared to subsidized loans. Because the government pays the bill, the interest rate is set higher. This type of loan is designed for non-repayment for graduate school. The maximum amount of debt that a student may accumulate under this program is $20,500. To receive this type of loan, applicants must fill out the Free Application for Federal Student Aid (FAFSA). The lender determines what the borrower qualifies for based on their specific circumstances. The direct loan program is only available to those attending schools eligible for IV programs.
National Health Service Corps Loan
This loan is awarded to individuals who agree to serve two years working with underprivileged populations in underserved communities. Applicants are encouraged to participate in a community service project. Loans are funded through the U.S. Treasury Department. Interest accumulates at variable rates depending on the individual’s financial situation. Once the borrower completes their service obligation, private lenders often refund the remaining principal balance. Students seeking help paying for their education should discuss their options with a counselor.
Educational Credit Certificate
An Educational Credit certificate (ECC) enables graduates to obtain professional certifications without earning an associate degree. Certificates are issued through the American Council on Education (ACE), which evaluates candidates’ skills and knowledge. ECCs are granted upon completion of educational courses related to the certification. The student then submits the certification application along with transcripts of grades. The amount of the award varies based on the level of the certificate being sought and the institution where the course was completed.
Income Based Repayment Plan
Under the IBR plan, the total amount a borrower will pay back is determined by taking the cost of attendance plus a percentage of discretionary income. For example, if the annual cost of attendance is $20,000 and discretionary income is $30,000, the borrower would pay 25% ($5,000) toward the total repayment amount. The IBR plan includes three options. The Standard Pay option requires monthly payments starting five years after graduating. This amount increases each year until reaching 100% of the original loan amount. Then the rest of the payment is deferred until the ninth year, when it reaches 50%. After 10 years, the remainder of the loan is forgiven. The Extended Pay and No Payments options begin after 10 years. If a borrower chooses the Extended Pay option, the balance is paid off after 20 years. Under the No Payments option, the entire balance is forgiven after 15 years.
Best Student Loans Private
Educational loan (Scholarship)
A scholarship is a financial aid program funded by private institutions, governments, and corporations that provides student funding to students who have demonstrated academic excellence. Scholarships vary greatly in their eligibility requirements and may range from small personal loans to larger grants. Most scholarships require some sort of application process. Students may need to apply online, fill out paper applications, attend interviews or take tests in order to qualify for scholarships. In many cases, the amount awarded varies depending on academic achievements, extracurricular activities, leadership skills, and other factors. Scholarships are often given to people who would not otherwise be able to afford school.
Education credit card
Education Credit Cards are designed to help undergraduates pay for college expenses such as tuition, room and board, books, supplies and transportation. Many cards offer rewards for certain spending categories, such as dining, travel, entertainment, etc. Others simply offer cash back on purchases. These cards were originally targeted at parents looking for ways to assist their children with education-related costs while not taking advantage of them directly. However, since graduation rates have risen substantially over the past decade, many employers now use education credit cards to offer employee benefits to their employees.
Student loan refinancing
Student Loan Refinancing enables graduates to refinance their existing student loans. Typically, borrowers get a lower interest rate than what they currently have. This means that if you are paying more than 6% interest on your student loans, you may be eligible for a lower interest rate. If you’re willing to make some changes to your lifestyle, these loans could be helpful. You might consider consolidating your loans with bigger loans, changing payment options, or switching to income based repayment.
Education Savings Account
An Education Savings Account is a type of tax advantaged account offered by some schools. It is similar to a 529 College Savings Plan where money invested grows tax deferred and then is withdrawn to pay for qualified education expenses. There are restrictions on how the funds may be spent.
Federal Direct Stafford Loan
The Federal Direct Stafford Loan is a federal government backed loan offered to undergraduate and graduate students to help cover educational expenses. This loan covers all eligible educational expenses including tuition, mandatory fees, course materials, and approved housing. Eligible expenses do not include room and board, books and computer software. To receive this type of loan, students must meet several criteria. They must maintain satisfactory academic progress, meet financial need, demonstrate good moral character, avoid any adverse events, and graduate or leave without earning a degree before completing their enrollment period. Students who want to consolidate all types of educational loans should contact a lender specializing in student loans.
Income Based Repayment (IBR)
Income Based Repayment is a kind of student loan payment plan under which payments are graduated based on income. Since students’ monthly payments tend to be higher on average, IBR tends to save students money.
Parental Loan Consolidation
Parental loan consolidation gives families the opportunity to combine all outstanding education loans into one low fixed monthly payment. The major benefit of parental loan consolidation is that the family’s total monthly payment will likely become smaller.
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