Financing higher education is a major investment that often requires borrowing to pay for costs not covered by savings, scholarships, or financial aid. With tuition, housing, books, and other expenses, student loans are necessary for many students and parents.
In evaluating the best student loans, key factors to consider include interest rates, fees, borrower protections, forgiveness options, and more. Federal student loans generally offer the most benefits but also have borrowing limits. Beyond federal loans, private student loans can provide additional financing with more flexible limits, though fewer protections.
In this comprehensive guide, we’ll highlight the top student loans across both federal and private options to consider in 2023.
Overview of Student Loan Types
There are two main categories of student loans:
Federal Student Loans
- Originated by the U.S. Department of Education
- Fixed interest rates set by Congress
- No credit check required
- Income-driven repayment and forgiveness options
- Aggregate borrowing limits apply
Private Student Loans
- Originated by banks, credit unions, and online lenders
- Variable and fixed rate options
- Credit check required
- No income protections
- Co-signers often required
Many borrowers utilize both federal and private student loans together to fully cover college costs. But federal options generally provide the best terms and should be maxed out first before considering private loans.
Now let’s dive into the top student loans in each category.
Best Federal Student Loans
1. Direct Subsidized Loans
Direct Subsidized Loans are federal student loans issued by the Department of Education and should be the first option explored by undergraduate students in need of financial aid.
These loans offer numerous borrower benefits including fixed interest rates, subsidized interest that does not accrue while enrolled, access to income-driven repayment plans, and the potential for public service loan forgiveness. For students with demonstrated financial need, Direct Subsidized Loans provide affordable financing options to cover college costs.
Key Features
- Fixed interest rate of 4.99% (2022-23)
- The federal government pays interest while enrolled
- A low origination fee of 1.062%
- Payment is not required while in college
- Multiple repayment plans including income-driven
- Eligible for Public Service Loan Forgiveness (PSLF)
Subsidized federal loans help limit how much interest accrues while getting your degree. Borrow up to limits based on grade level and dependency status.
2. Direct Unsubsidized Loans
Direct Unsubsidized Loans are federal loans with flexible eligibility that are not based on financial need. Available to both undergraduate and graduate students, Direct Unsubsidized Loans offer fixed interest rates set by Congress along with the standard federal borrower benefits.
Students are responsible for interest during all periods but have access to the same predictable rates and repayment plans as other federal loans. Unsubsidized Direct Loans allow students to borrow up to the full cost of college attendance minus other aid.
Key Features
- Fixed rate of 4.99% (undergraduates)
- The federal government does not pay interest while enrolled
- Origination fee of 1.062%
- Payment is not required while in college
- Up to $57,500 aggregate loan limit
- Eligible for PSLF and income-driven repayment
Unsubsidized loans allow students to borrow up to the full cost of attendance minus other aid received. Eligibility is not based on financial need.
3. PLUS Loans for Parents
Parent PLUS Loans are federal loans issued to the parents of undergraduate students to finance gaps in college costs not covered by other aid. Eligibility for Parent PLUS Loans depends on the parent borrower passing a standard credit check.
Parent PLUS Loans offer the stability of fixed interest rates but at a higher percentage rate than standard federal student loans. With Parent PLUS Loans, parents can borrow up to the full cost of their child’s college attendance and are responsible for making repayments.
Key Features
- Fixed interest rate of 7.54%
- Origination fee of 4.228%
- Parents are borrowers responsible for repayment
- Credit check approval required
- Can borrow up to the full cost of attendance
- Interest accrues immediately and repayment begins after disbursement
PLUS Loans involve a higher credit standard but provide a valuable option for parents to cover any gaps.
4. PLUS Loans for Graduate Students
Grad PLUS Loans allow graduate and professional students to borrow flexible amounts beyond standard federal loans. These federal loans require the student borrower to pass a credit check for approval.
Graduate PLUS Loans carry higher interest rates but offer essential supplemental funding up to the full cost of attendance. Ideal for graduate and professional programs, Grad PLUS Loans provide options for financing high-level degrees when Stafford loans are exhausted.
Key Features
- The current fixed interest rate of 7.54%
- For graduate and professional students
- Borrow up to full cost of attendance minus other aid
- 4.228% origination fee
- Credit check required
- Accrues interest immediately with a variety of repayment options
Grad PLUS Loans provide critical financing for graduate school when Stafford loans are exhausted.
For any federal student loan, apply through the FAFSA process and your college financial aid office.
Now let’s look at the best private student loans.
Best Private Student Loans
Private student loans can help bridge financing gaps beyond your federal options. Here are some top picks:
5. Sallie Mae Career Loan
The Sallie Mae Career Loan stands out as a private loan option tailored specifically to meet the needs of graduate students. With competitive variable and fixed interest rates and no burdensome fees, the Sallie Mae Career Loan enables flexible borrowing on graduate school costs.
Loan limits up to the full cost of attendance make this loan ideal for graduate and professional degrees. Features like interest-only payments while enrolled, deferred repayment options and no cosigner requirement for qualifying borrowers make the Sallie Mae Career Loan a top choice.
Key Perks
- Competitive variable and fixed rates from 2.63% to 11.26% APR
- No origination fee or prepayment penalties
- Option for interest-only payments while enrolled
- Deferment and forbearance options available
- Lenient credit requirements
- No cosigner is required for high-credit applicants
With high loan limits, flexible repayment, and no fees, the Sallie Mae Career Loan is a top choice for graduate and parent borrowers.
6. Ascent Student Loans
Ascent Student Loans offer competitive variable and fixed rates combined with incentives for responsible borrowers. Unique options like annual cosigner release upon request and a 2% graduation cash reward provide motivation for making timely payments and earning your degree.
With no origination fees or prepayment penalties, Ascent seeks to create a seamless financing experience catered to the needs of real students and graduates. Flexible limits of up to 100% of school-certified costs make Ascent great for filling gaps.
Top Features
- Variable and fixed rates from 2.25% to 12.95% APR
- Annual and quarterly cosigner release options
- A cash reward of 2% of the balance for graduation
- 0.25% rate reduction for auto-pay enrollment
- Loans up to 100% of school-certified costs
- No origination fee or prepayment penalties
Ascent makes it rewarding to be a responsible borrower and provides a clear path to solo repayment.
7. College Ave Undergraduate Loan
College Ave issues private student loans designed for undergraduates with needs not fully covered by federal options. With competitive interest rates, flexible repayment timelines, and unique incentives, College Ave prioritizes ease and transparency in lending directly to students.
No fees for origination, application, or prepayment combined with options for deferred repayment make College Ave an affordable solution. Eligible undergraduate borrowers can build credit through responsible usage of College Ave loans. Auto-release options for co-signers and rewards for good grades provide student-focused perks.
Standout Benefits
- Competitive variable and fixed rates from 2.66% to 12.99% APR
- No origination fee, application fee, or prepayment penalties
- Four repayment options including deferred while in school
- Co-signer auto-release available
- Low minimum $1,000 loan amounts
- Cash reward for graduating with honors
College Ave makes borrowing easy and rewarding for undergrads with great perks.
8. Citizens Bank Undergraduate Loan
Citizens Bank offers private student loans tailored for undergraduates seeking financing beyond federal aid. Competitive variable and fixed interest rates plus incentives like a 0.25% auto-pay rate discount provide cost savings.
Citizens Bank offers flexible loan amounts covering gaps up to the full cost of attendance. With multiple in-school repayment options, undergrad borrowers can build responsible habits. Cosigner release within 36 on-time payments and no excessive fees make Citizens Bank great for students establishing their credit history.
Top Features
- Variable and fixed rates from 3.12% to 11.97% APR
- 0.25% rate discount for enrolling in auto-pay
- Loans from $1,000 up to $295,000 total
- Multiple in-school repayment options available
- Cosigner release option available after 36 on-time payments
- No application, origination, or disbursement fees
Citizens Bank provides strong undergraduate and graduate borrowing options.
9. Discover Undergraduate Loans
Discover’s private student loans focus on undergraduates through competitive rates and cash reward bonuses. Variable and fixed rate options with zero fees make Discover a cost-effective choice. Unique rewards of 1% cash back for maintaining good grades and another 1% cash back upon graduation help offset costs for responsible student borrowers.
Discover combines online efficiency with personalized service to create a rewarding finance experience. Cosigner release availability and multiple repayment programs provide flexibility.
Key Advantages
- Competitive variable and fixed rates from 3.49% to 11.24% APR
- No fees including origination, application, disbursement, or prepayment fees
- 1% cash reward for good grades and another 1% for graduating
- Deferment and forbearance options available
- Loans from $2,001 up to $100,000
- Cosigner release available
Discover offers top rates and rewards programs unique in student lending.
10. Rhode Island Student Loan Authority (RISLA)
RISLA offers fixed and variable-rate private student loans for qualifying borrowers through New England education agencies. Competitive interest rates across undergrad and graduate products are combined with responsible features like graduated repayment plans.
Specific options for students with Rhode Island ties, RISLA provides localized student lending up to $200,000 in aggregate. Serviced by New England Loan Marketing Corporation, RISLA loans offer credit-worthy borrowers financing for college with no burdensome fees.
Why Choose RISLA
- Fixed rates from 5.95% to 8.95% APR and variable rates from 2.65% to 9.65% APR
- No prepayment penalties or disbursement fees
- Loans from $1,000 up to $200,000 aggregate based on degree
- In-school deferment options available
- Rhode Island residency requirements for loan eligibility in most cases
- Loans serviced by New England Loan Marketing Corporation (NELM)
RISLA provides students and families with competitive rates and terms through New England higher education agencies.
With private student loans, shop around and compare options across multiple lenders to find the best fit based on your needs and financial situation.
Factors to Consider When Choosing a Student Loan
Here are some key factors to evaluate:
- Interest rates – Lower is better for saving on costs. Compare fixed vs variable options.
- Fees – Origination and application fees add to your loan balance.
- Borrower benefits – Rewards for good grades or auto-pay enrollment can save you money.
- Repayment options – Prefer loans with in-school deferment and graduated plans.
- Forgiveness programs – Federal loans offer income-driven repayment and public service loan forgiveness options.
- Cosigner release policies – Provides a path to solo repayment and removes cosigner liability.
- Credit requirements – Federal loans have no credit check. Income matters more than the score for private loans.
- Aggregate loan limits – Know federal annual and lifetime maximums for borrowing.
- Eligibility and qualifications – Federal loans have broad eligibility while private lenders may impose restrictions.
Weighing these key considerations will help you select the best loan for your needs.
Next Steps: How to Apply for Student Loans
Ready to move forward with borrowing student loans for college? Here’s how to apply:
Federal Student Loans
- Annually complete the Free Application for Federal Student Aid (FAFSA) to assess your eligibility.
- Accept your federal student loan types and amounts as part of your college financial aid award package.
- Complete entrance counseling and sign your Master Promissory Note with the Department of Education.
- Loans will be disbursed directly to your college account each semester.
Private Student Loans
- Shop and compare loan options from multiple private lenders.
- Choose a loan provider and complete an online application with the required documents.
- Get prequalified to view your loan offer and interest rate.
- Agree to the loan terms and complete the signing of your promissory note.
- Loan funds are disbursed to your college account.
Using federal grants, scholarships, work-study programs, your own savings, and student loans together can help cover the full costs of college. With strategic planning, borrowing, and responsible repayment, getting an excellent education is possible.
The Bottom Line
College is a worthy investment that often requires taking on student loan debt. However, not all loans are created equal. Be sure to exhaust federal student loans first to take advantage of their borrower protections and benefits. Then complete your financing with private student loans, prioritizing competitive interest rates, incentives, and overall affordability.
Using this list of the top student loans for 2023 as a guide gives you a head start on making smart borrowing choices so you can focus on reaching your college dreams.