Best student loans of 2025
Updated . Federal loans first, private loans when you need more.
Federal loans first: Always exhaust federal student loan options before considering private loans. Federal loans offer income-driven repayment, loan forgiveness programs, and better borrower protections that private loans don't match.
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Our top student loan picks
How we picked: We prioritized interest rates, repayment flexibility, borrower benefits, and cosigner options for private loans, while emphasizing federal loan advantages.
Always start here: Federal Direct Loans
Why they're essential: Federal loans offer unmatched borrower protections, income-driven repayment plans, and potential loan forgiveness. These should always be your first choice for education funding.
- Fixed rates: 5.50% for undergrad, 7.05% for grad Direct Loans (2024-25 rates).
- No credit check: Most federal loans don't require credit approval or cosigners.
- Income-driven repayment: Payments based on income and family size.
- Loan forgiveness: Public Service Loan Forgiveness and other programs available.
- Deferment/forbearance: Options to pause payments during financial hardship.
- Annual limits: $5,500-$12,500 for undergrads, $20,500 for grad students.
Best private rates: SoFi
Why it stands out: Competitive rates for borrowers with strong credit profiles, plus member benefits like career coaching and unemployment protection. No fees and flexible repayment options.
- Competitive rates: Variable rates from 5.99%, fixed from 6.99% (with autopay).
- No fees: No origination, application, or prepayment fees.
- Member benefits: Career services, financial planning, and networking events.
- Unemployment protection: Temporary payment pause if you lose your job.
- Cosigner release: Remove cosigner after 12 on-time payments and credit review.
- Loan amounts: $5,000 minimum, up to total cost of attendance.
Best for parents: College Ave
Why it stands out: Specializes in education lending with options for both students and parents. Flexible repayment terms and competitive rates for parent borrowers.
- Parent-focused: Dedicated parent loan products with flexible terms.
- Flexible repayment: Choose from 5, 8, 10, or 15-year terms.
- Rate options: Both fixed and variable rate loans available.
- Quick decisions: Approval decisions typically within minutes.
- School certification: Works directly with schools for loan certification.
- Cosigner options: Students can add cosigner; parents can borrow solo.
Best variable rates: Earnest
Why it stands out: Uses holistic underwriting considering savings, spending habits, and career trajectory. Offers some of the lowest variable rates and unique customization options.
- Low variable rates: Starting rates as low as 5.28% variable.
- Holistic underwriting: Considers bank account history and earning potential.
- Customizable terms: Choose exact monthly payment and term length.
- Rate beat: Will match or beat competitor rates in some cases.
- Skip payments: Skip one payment per year without penalty.
- Precision pricing: Rates to the hundredth of a percent.
Best for bad credit: Ascent
Why it stands out: Offers loans for students without cosigners based on school, program, and career outcomes. Good option for students who can't get cosigners or qualify elsewhere.
- No cosigner options: Some loans available without cosigner based on school/major.
- Outcomes-based: Considers your school's graduation rates and career outcomes.
- Credit building: Reports payments to credit bureaus to help build credit.
- Flexible terms: 5, 7, 10, 12, or 15-year repayment options.
- Rate discounts: 0.25% autopay discount and graduation rewards.
- Junior/senior focus: No-cosigner options typically for upperclassmen.
Best credit union: PenFed
Why it stands out: Member-owned institution offering competitive rates and personalized service. Easy membership requirements and often better rates than commercial lenders.
- Competitive rates: Often 0.25-0.50% lower than comparable private lenders.
- Easy membership: Open to anyone with small donation to military charity.
- No fees: No origination, application, or prepayment fees.
- Member service: Personalized customer service and financial guidance.
- Cosigner release: Available after 12 consecutive on-time payments.
- Rate discounts: Additional discounts for existing PenFed members.
Federal vs Private Student Loans
| Feature | Federal Loans | Private Loans |
|---|---|---|
| Interest Rates | Fixed rates set by Congress | Variable or fixed, based on credit |
| Credit Check | No credit check (except PLUS) | Credit check required |
| Cosigner | Not required | Often required for students |
| Loan Limits | Annual and lifetime limits | Up to cost of attendance |
| Repayment Plans | Income-driven options available | Standard repayment typically |
| Loan Forgiveness | Multiple programs available | Limited or none |
| Forbearance | Generous options | Limited options |
How we picked these student loan options
We evaluated federal loan benefits first, then compared private lenders on interest rates, fees, repayment flexibility, borrower protections, cosigner policies, and unique benefits for students and families.
What you should know about student loans
Student loans are a long-term financial commitment that can significantly impact your future. Federal loans should always be your first choice due to superior borrower protections and repayment options.
Before borrowing
- Complete FAFSA: File the Free Application for Federal Student Aid to access all federal aid.
- Explore grants/scholarships: Free money that doesn't need to be repaid.
- Consider work-study: Earn money while in school to reduce borrowing needs.
- Borrow only what you need: Just because you're approved doesn't mean you should take the full amount.
- Understand total costs: Consider interest that will accrue over the life of the loan.
Student loan terms to compare
Interest rates
Federal rates are fixed and set annually. Private rates can be fixed or variable and depend on creditworthiness. Variable rates may start lower but can increase.
Fees
- Federal loan fees: 1.057% for Direct Loans, 4.228% for PLUS loans.
- Private loan fees: Many have no fees, but some charge origination fees.
- Late payment fees: Understand penalties for missed payments.
Repayment terms
Federal loans offer multiple repayment plans including income-driven options. Private loans typically offer 5-20 year terms with fixed monthly payments.
Borrower protections
- Deferment/forbearance options
- Death/disability discharge
- Loan forgiveness programs
- Income-driven repayment plans
Tips for student loan borrowers
- Maximize federal aid first: Always exhaust federal options before private loans.
- Understand your future earnings: Research typical salaries in your field of study.
- Keep total debt reasonable: Try to keep total student loans below your expected first-year salary.
- Consider your major: Some fields justify higher debt levels due to earning potential.
- Make interest payments: Pay interest while in school if possible to reduce total cost.
- Keep detailed records: Track all loans, servicers, and payment history.
Student loan red flags
- Lenders that aren't transparent about rates, fees, or terms.
- Promises of guaranteed approval without credit or income verification.
- Pressure to borrow the maximum amount available.
- Lenders that don't work with your school for certification.
- Companies charging fees for federal loan applications or assistance.
- Rates that seem too good to be true for your credit profile.
- Limited or no customer service options.
Types of student loans explained
Federal Direct Subsidized Loans
Need-based loans for undergraduates. Government pays interest while you're in school at least half-time. Best federal loan option.
Federal Direct Unsubsidized Loans
Available to all students regardless of need. Interest accrues while in school. Still better than private loans due to federal protections.
Federal PLUS Loans
For graduate students and parents of undergraduates. Credit check required but not as strict as private loans. Higher rates than Direct Loans.
Private Student Loans
From banks, credit unions, and online lenders. Rates based on credit scores. Use only after exhausting federal options.
State-Based Loans
Some states offer their own student loan programs with competitive rates for residents. Research options in your state.
Managing student loan debt
While in school
- Track your borrowing: Use your school's financial aid office to monitor total debt.
- Consider paying interest: Prevents capitalization when repayment begins.
- Look for scholarships: Continue applying for aid throughout college.
After graduation
- Know your grace period: Usually 6 months before payments begin.
- Choose the right repayment plan: Consider income-driven plans for federal loans.
- Set up autopay: Often provides interest rate discounts.
- Pay extra toward principal: Reduces total interest paid over loan life.
Avoid Student Loan Scams: Never pay upfront fees for loan forgiveness, consolidation, or federal aid applications. The government provides these services for free. Be wary of companies promising instant loan forgiveness or dramatic payment reductions.
Questions about student loans
- Should I choose federal or private student loans?
- Always choose federal loans first. They offer income-driven repayment, loan forgiveness options, and better borrower protections. Only consider private loans after exhausting federal aid.
- How much should I borrow for college?
- A common guideline is to keep total student loan debt below your expected first-year salary after graduation. Research typical earnings in your field to set reasonable borrowing limits.
- Do I need a cosigner for student loans?
- Federal loans typically don't require cosigners. Most private lenders require cosigners for students due to limited credit history. Some lenders offer cosigner release after a period of on-time payments.
- What's the difference between subsidized and unsubsidized loans?
- Subsidized loans are need-based and the government pays interest while you're in school. Unsubsidized loans accrue interest from disbursement but are available regardless of financial need.
- Can I change my repayment plan after graduation?
- Yes, federal loans offer multiple repayment plans you can switch between. Private loans typically have fixed repayment terms, though some lenders offer modification options during hardship.
- What happens if I can't make my student loan payments?
- Contact your loan servicer immediately. Federal loans offer deferment, forbearance, and income-driven repayment options. Private lenders have more limited options but may work with borrowers facing hardship.
- Are student loans forgiven when you die?
- Federal loans are discharged upon death. Private loan policies vary—some discharge the debt while others may require payment from the estate. Life insurance can help protect cosigners.
Important information: Federal student loan rates are set annually by Congress and apply to loans disbursed during that academic year. Private loan rates vary by lender and are based on creditworthiness. Always complete the FAFSA to access federal aid before considering private loans. Student loans generally cannot be discharged in bankruptcy and represent a long-term financial commitment.
Federal Aid Priority: This guide emphasizes federal loans first due to superior borrower protections, income-driven repayment options, and potential loan forgiveness programs that private loans cannot match. Consider private loans only when federal aid is insufficient for educational costs.
