Nearly 30% of undergraduates receive some type of federal student loan, according to the latest data from the National Center for Education Statistics. Depending on your situation, you might have access to federal Direct Subsidized Loans or Direct Unsubsidized Loans — or possibly both.
The main difference between subsidized and unsubsidized loans is the qualifying criteria and who is responsible for paying interest after disbursement. The government pays the interest charges on subsidized loans during certain periods, unlike unsubsidized loans. But subsidized loans are only available to undergraduate students who demonstrate financial need, while unsubsidized loans are for all students regardless of their financial situation.
Here’s what you need to know about subsidized vs. unsubsidized loans, eligibility, and how to plan your college financing accordingly.
| | |
|---|
| | Undergraduates and graduates |
Financial need requirement | Must demonstrate financial need | Don’t need to demonstrate financial need |
| | 5.50% for undergraduates; 7.05% for graduates |
| Government pays interest while in school and during a six-month grace period | Borrower pays for all accrued interest |
| | |
| | |
| Option to defer payments until six-months after graduation | Option to defer payments until six-months after graduation |
| | Loans are more accessible; you can borrow larger amounts |
Direct Subsidized Loans are only available to undergraduate students who’ve shown financial need on their Free Application for Federal Student Aid (FAFSA). If your financial aid package includes subsidized loans, the loan amount offered depends on your school's total cost of attendance and your Student Aid Index (SAI). Your SAI is calculated based on your family’s income, assets, and state of residence.
The biggest advantage of subsidized loans is that the government pays all of the interest that accrues while you’re in school, during your six-month grace period after leaving school, and during any other periods of deferment. The only downsides are that these loans are awarded based on financial-need, so they aren’t accessible to all undergraduate students, and loan amounts are the most limited out of all federal loans (see “Borrowing limits” below).
Your school’s financial aid office will use the information provided on the FAFSA to determine your financial need. Here are the factors they’ll consider:
- The school’s total cost of attendance (COA): COA includes tuition, fees, room and board, textbooks, supplies, and other educational expenses.
- Your Student Aid Index (SAI): Your SAI is an estimate of what your family could reasonably afford for your education based on total income, assets, and state of residence.
To calculate how much you can receive in subsidized loans, your school will take your SAI and subtract it from the school’s total cost of attendance.
Direct Unsubsidized Loans aren’t need-based, meaning you don’t have to demonstrate financial need on your FAFSA. Instead, you only need to meet the minimum requirements for federal aid to qualify — these include being a U.S. citizen or eligible noncitizen, pursuing an eligible program at least half-time, and maintaining satisfactory academic progress.
The benefit of Direct Unsubsidized Loans is that they offer higher loan amounts compared to subsidized loans. However, the amount you can borrow depends on other financial aid you receive. The downside of unsubsidized loans is you’re responsible for paying 100% of the interest on the loan. You don’t have to pay the interest charges immediately and it will automatically be deferred until you enter repayment — but interest will begin to accrue the moment you receive the loan funds.
Interest on both subsidized and unsubsidized student loans starts to accrue daily from the date of disbursement. The key difference lies in how this interest is handled:
- Subsidized student loans: Students eligible for subsidized loans can benefit from the government paying all of the interest that accrues on the loan while in school, and for the six months after graduation (the grace period). This generous interest subsidy can significantly reduce the overall cost of your loan.
- Unsubsidized student loans: Borrowers are responsible for paying all of the interest that accrues on unsubsidized loans from the moment of disbursement. There is an option to pause payments until your six-month grace period ends, but interest will continue to accrue during this time, and it will capitalize once repayment begins. This means the interest will get added to your principal loan balance — and you’ll owe interest on unpaid interest — making repayment more expensive.
Tip:
If you take out unsubsidized student loans, consider making interest-only payments while in school to prevent interest from capitalizing when repayment starts.
With both subsidized and unsubsidized loans, your school determines the amount you qualify for, but there are also borrowing limits based on your year in school and student status.
The aggregate subsidized loan limit for your undergraduate studies is $23,000. The aggregate borrowing limit for unsubsidized loans is $31,000 for dependent undergraduate students, $57,500 for independent undergraduates, and $138,500 for graduates and professionals (this includes loans borrowed for undergraduate programs).
Good to know:
The “aggregate limit” is the total amount you’re allowed to borrow while in school. There’s also a cap on how much you’re allowed to borrow each year.
| | Independent undergraduates | |
|---|
| | | |
| | | |
| | | $138,500 (includes undergrad loans) |
When you take out subsidized and unsubsidized student loans, you’re automatically placed on the Standard 10-year repayment plan. Depending on your financial needs, you might consider other plans that offer lower monthly payments. Here are your other options:
- Graduated plan: The Graduated Repayment Plan starts with lower monthly payments that gradually increase over 10 years. The plan is usually best for new graduates who expect their income to increase over time.
- Extended plan: The Extended Repayment Plan allows for a longer repayment term of up to 25 years. This plan is best for borrowers who need smaller monthly p[ayments spread over a longer period of time. Keep in mind, you’ll owe more interest under this plan.
- Income-driven repayment: Income-driven repayment (IDR) plans set your monthly payments based on your income and family size. They’re usually best for borrowers who have a lower income relative to their debt, as they can potentially qualify for loan forgiveness after 10 to 25 years of repayment. IDR plans include Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR).
Pros and cons
Pros
- Government pays your interest during school and the grace period
- Access to income-driven repayment and loan forgiveness
- Lowest interest rate out of all federal loans
Cons
- Not available to graduate students
- You must demonstrate financial need to qualify
- You can only borrow up to $23,000 total
Pros
- Available to both undergraduates and graduates
- Financial need isn’t a requirement
- Access to income-driven repayment and loan forgiveness
Cons
- Interest starts accruing while you’re in school
- You’re responsible for all interest charges
- Interest rates are higher for graduate students
If you qualify for both subsidized and unsubsidized federal loans, opt for subsidized loans first to maximize your interest savings. Then, consider unsubsidized loans — followed by private student loans, if necessary — to cover essential education costs.
When borrowing for college, it’s generally best to opt for federal student loans before private loans. Federal student loans offer many valuable benefits and protections for borrowers, such as low-fixed interest rates, access to income-driven repayment plans, and loan forgiveness options.
However, federal student loans have stricter borrowing limits which may not fully cover all of your educational expenses. If you find that federal unsubsidized and subsidized loans aren’t enough, private student loans can help bridge the gap since they usually cover up to the full cost of your attendance. Keep in mind that private loans are credit-based; so your interest rate will depend on your credit score and income. If you’re a dependent student without income or credit history, you’ll likely need a cosigner to qualify. The interest rate on your loan will then depend on the credit income of your cosigner, usually a parent or family member.
Bottom Line:
Try to maximize all federal subsidized and unsubsidized loan funds available to you before taking out a private student loan.
How to apply for subsidized and unsubsidized loans
To apply for subsidized or unsubsidized federal loans, follow these steps:
- Complete the FAFSA: You must submit the FAFSA for each year you need federal aid. You’ll fill out your personal information and financial details (including information from bank statements, tax returns, and other sources of income). If you’re a dependent student, you’ll also need to include a parent’s information.
- Review your financial aid package: Once your FAFSA has been processed, your school will send you a financial aid letter. Read through your school’s financial aid options to see if you qualified for subsidized or unsubsidized loans. If you did, you’ll also see the maximum amount offered for each type.
- Accept the loans and determine your amounts: You’re not required to accept every loan that’s offered, nor are you required to accept the full amount available. Borrow only what you reasonably need for the school year to avoid taking on needless student loan debt.
- Complete loan entrance counseling: If you’ve never received a Direct Loan, you’ll have to complete entrance counseling. It takes about 30 minutes and is designed to help you understand your education charges, ways to pay, and how to prepare for repayment in the future.
- Sign your Master Promissory Note: This is the official loan agreement that outlines the details of your loan and repayment expectations.
Once these steps are complete, the loan funds will be disbursed to your school’s financial aid office. Your school will apply the loans directly to any outstanding charges on your account, including tuition, fees, and room and board. Any remaining loan funds will be sent to you to use towards other educational expenses.
If you’re not eligible for Direct Subsidized or Unsubsidized Loans, explore other federal loan options, like Direct PLUS Loans. These loans are available to graduates and professionals (grad PLUS loans), as well as parents of dependent students (parent PLUS loans).
If federal loans aren’t an option or you’ve reached the borrowing limit, third-party lenders offer private student loans that can bridge the financial gap. Shop around with a handful of lenders to compare loan features and rates to ensure you find the right one for your needs.
Advertiser Disclosure$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers a simple three-minute application, and has loans for nearly every borrower, from undergraduates to law school students. It's a great option for graduate students, who can take advantage of extended grace periods. The lender offers multiple repayment plans, as well as a discount of 0.25 percentage points for autopay.
With College Ave's multiyear approval program, 95% of undergraduate students who apply with a cosigner are approved for additional student loans. On the downside, borrowers must complete at least half of their repayment term before they can release a cosigner. Parent borrowers also can't fully defer loans - they must pay at least the interest during school.
pros
- Graduate loans have grace periods up to 36 months
- Offers multiyear approval for efficient borrowing
- Discount of 0.25 percentage points for autopay
cons
- Cosigner release only available after half of your repayment term
- Parents can’t defer interest payments while child is in school
- Doesn’t disclose minimum credit score or income
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers a wide range of loans tailored to different needs, including those for undergraduates, graduates, MBA programs, law school, medical school, and health profession programs. It's also one of the few private lenders that provides loans for career training and trade schools.
If you apply with a cosigner, you might qualify for a lower interest rate. Sallie Mae has one of the shortest cosigner release periods—just 12 months—compared to other lenders. However, there's no option to prequalify and check your rates without affecting your credit. You'll need to complete a full application, which includes a hard credit inquiry that could temporarily lower your credit score.
pros
- Offers loans for certificate and trade school programs
- Cosigners can be released after just 12 months
- No prepayment, origination, or application fees
cons
- No prequalification options to check rates
- Must submit an application to view loan terms
- Does not offer parent loans
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
$1,000 up to cost of attendance
Overview
ELFI is a private student loan lender offering private student loans and refinancing for undergraduates, graduates, and parents. The lender, a division of Tennessee-based SouthEast Bank, offers loans starting at $1,000, with options to cover as much as the full cost of attendance.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. The lender offers multiple repayment terms and interest rates that are competitive in the industry. ELFI also provides support to borrowers through a Student Loan Advisor. You can borrow with a cosigner, but ELFI doesn't have a cosigner release option, nor does it offer any rate discounts.
pros
- One-on-one support available from a dedicated Student Loan Advisor
- Clearly discloses credit score and income required to qualify
- Wide range of repayment options
cons
- Loans only available for bachelor’s degree programs or higher
- Does not offer cosigner release
- No rate discounts for autopay
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Overview
Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option.
pros
- No application or origination fees
- Autopay discounts of 0.25 to 1.00 percentage points
- 1% cash back reward at graduation
- Extended grace periods of 9 to 36 months
cons
- Higher interest rates than some competitors
- International students can’t release their cosigner
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 to $350,000 (depending on degree)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
$1,001 up to 100% of school certified cost of attendance
Overview
INvestEd is a student loan provider that offers loans exclusively to Indiana state residents. Students in the state and their parents who can meet INvestEd's income and credit requirements, or who have an eligible cosigner, are eligible. Loans of as little as $1,001 or as much as the school's cost of attendance minus other aid are available.
Potential borrowers can find detailed information on eligibility on INvestEd's website so they can determine whether or not to apply. But there's no option to prequalify with a soft credit check that doesn't affect your credit score. Cosigners can be released after just 12 on-time payments, which is considerably less time than many other lenders.
pros
- Minimum borrowing amounts lower than some other lenders
- Offers a quarter-point rate discount for using autopay
- Cosigner release after as few as 12 on-time payments
- Qualification requirements are easy to see online
cons
- Only Indiana residents can qualify for loans
- Cannot prequalify to see rates without a hard credit pull
- International students not eligible
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) student loans fixed-rate options for undergraduate and graduate students across the country. MEFA's not-for-profit status helps it keep interest rates competitive, offering potentially lower borrowing costs than many other private lenders.
On the downside, flexibility is limited compared with some other lenders. Undergraduates can only choose between 10- or 15-year repayment terms, while graduate students must opt for a 15-year term. This might be restrictive if you're looking for more options. Cosigner release may also be a challenge. You'll need to make on-time payments for four consecutive years and meet specific credit and income criteria to release your cosigner.
pros
- No fees at any stage, including late payment fees
- Lower interest rates than many competitors
- Can cover your school’s full cost of attendance
cons
- Variable rate loans are not offered
- Fewer repayment term options than most lenders
- No autopay rate discount
- May be challenging to release a cosigner
- No option to prequalify with a soft credit check
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers a simple three-minute application, and has loans for nearly every borrower, from undergraduates to law school students. It's a great option for graduate students, who can take advantage of extended grace periods. The lender offers multiple repayment plans, as well as a discount of 0.25 percentage points for autopay.
With College Ave's multiyear approval program, 95% of undergraduate students who apply with a cosigner are approved for additional student loans. On the downside, borrowers must complete at least half of their repayment term before they can release a cosigner. Parent borrowers also can't fully defer loans - they must pay at least the interest during school.
pros
- Graduate loans have grace periods up to 36 months
- Offers multiyear approval for efficient borrowing
- Discount of 0.25 percentage points for autopay
cons
- Cosigner release only available after half of your repayment term
- Parents can’t defer interest payments while child is in school
- Doesn’t disclose minimum credit score or income
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers a wide range of loans tailored to different needs, including those for undergraduates, graduates, MBA programs, law school, medical school, and health profession programs. It's also one of the few private lenders that provides loans for career training and trade schools.
If you apply with a cosigner, you might qualify for a lower interest rate. Sallie Mae has one of the shortest cosigner release periods—just 12 months—compared to other lenders. However, there's no option to prequalify and check your rates without affecting your credit. You'll need to complete a full application, which includes a hard credit inquiry that could temporarily lower your credit score.
pros
- Offers loans for certificate and trade school programs
- Cosigners can be released after just 12 months
- No prepayment, origination, or application fees
cons
- No prequalification options to check rates
- Must submit an application to view loan terms
- Does not offer parent loans
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
Loan Amounts
$1,000 up to cost of attendance
Overview
ELFI is a private student loan lender offering private student loans and refinancing for undergraduates, graduates, and parents. The lender, a division of Tennessee-based SouthEast Bank, offers loans starting at $1,000, with options to cover as much as the full cost of attendance.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. The lender offers multiple repayment terms and interest rates that are competitive in the industry. ELFI also provides support to borrowers through a Student Loan Advisor. You can borrow with a cosigner, but ELFI doesn't have a cosigner release option, nor does it offer any rate discounts.
pros
- One-on-one support available from a dedicated Student Loan Advisor
- Clearly discloses credit score and income required to qualify
- Wide range of repayment options
cons
- Loans only available for bachelor’s degree programs or higher
- Does not offer cosigner release
- No rate discounts for autopay
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Overview
Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option.
pros
- No application or origination fees
- Autopay discounts of 0.25 to 1.00 percentage points
- 1% cash back reward at graduation
- Extended grace periods of 9 to 36 months
cons
- Higher interest rates than some competitors
- International students can’t release their cosigner
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 to $350,000 (depending on degree)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,001 up to 100% of school certified cost of attendance
Overview
INvestEd is a student loan provider that offers loans exclusively to Indiana state residents. Students in the state and their parents who can meet INvestEd's income and credit requirements, or who have an eligible cosigner, are eligible. Loans of as little as $1,001 or as much as the school's cost of attendance minus other aid are available.
Potential borrowers can find detailed information on eligibility on INvestEd's website so they can determine whether or not to apply. But there's no option to prequalify with a soft credit check that doesn't affect your credit score. Cosigners can be released after just 12 on-time payments, which is considerably less time than many other lenders.
pros
- Minimum borrowing amounts lower than some other lenders
- Offers a quarter-point rate discount for using autopay
- Cosigner release after as few as 12 on-time payments
- Qualification requirements are easy to see online
cons
- Only Indiana residents can qualify for loans
- Cannot prequalify to see rates without a hard credit pull
- International students not eligible
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
Loan Amounts
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) student loans fixed-rate options for undergraduate and graduate students across the country. MEFA's not-for-profit status helps it keep interest rates competitive, offering potentially lower borrowing costs than many other private lenders.
On the downside, flexibility is limited compared with some other lenders. Undergraduates can only choose between 10- or 15-year repayment terms, while graduate students must opt for a 15-year term. This might be restrictive if you're looking for more options. Cosigner release may also be a challenge. You'll need to make on-time payments for four consecutive years and meet specific credit and income criteria to release your cosigner.
pros
- No fees at any stage, including late payment fees
- Lower interest rates than many competitors
- Can cover your school’s full cost of attendance
cons
- Variable rate loans are not offered
- Fewer repayment term options than most lenders
- No autopay rate discount
- May be challenging to release a cosigner
- No option to prequalify with a soft credit check
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Fox Business does not make or arrange loans.
Meet the contributor:
Jennifer Calonia
Jennifer Calonia has spent over 10 years covering finance, with bylines at Yahoo Finance, USA TODAY Blueprint, Newsweek, and U.S. News & World Report.
