The Federal Reserve is likely to temporarily pause its aggressive interest rate hikes when it meets next week, experts predict. But consumers may not see any relief.
The central bank has raised interest rates 10 times since last year — the fastest pace of tightening since the early 1980s — only to see inflation stay well above its 2% target.
“We are living in uncharted territory,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. “The combination of rising interest rates and elevated inflation, while not uncommon from a historical perspective, is an unfamiliar experience for many consumers.”
“A pause is not going to make things better,” he added.
More from Personal Finance: Even as inflation rate subsides, prices may stay higher Here’s the inflation breakdown for April 2023, in one chart Who does inflation hit hardest? Experts weigh in
Although the Fed’s rate-hiking cycle has started to cool inflation, higher prices have caused real wages to decline. That’s squeezed household budgets, pushing more people into debt just when borrowing rates reach record highs.
Even with a pause, “interest rates are the highest they’ve been in years, borrowing costs have gone up dramatically and that isn’t going to change,” said Greg McBride, chief financial analyst at Bankrate.com.
Here’s a breakdown of how the benchmark rate has already impacted the rates consumers pay:
Credit card rates top 20%
The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
For starters, most credit cards come with a variable rate, which hasa direct connection to the Fed’s benchmark rate.
After the previous rate hikes, the average credit card rate is now more than 20% — an all-time high, while balances are higher and nearly half of credit card holders carry the debt from month to month, according to a Bankrate report.
Mortgage rates are near 7%
Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.9%, according to Bankrate, up from 5.27% one year ago and only slightly below October’s high of 7.12%.
Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rose, the prime rate did, as well, and these rates followed suit.
Now, the average rate for a HELOC is up to 8.3%, the highest in 22 years, according to Bankrate. “While typically thought of as a low-cost way to borrow, it no longer is,” McBride said.
Auto loan rates are close to 7%
Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average rate on a five-year new car loan is now 6.87%, the highest since 2010, according to Bankrate.
Keeping up with the higher cost has become a challenge, research shows, with more borrowers falling behind on their monthly loan payments.
Federal student loans are set to rise to 5.5%
Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But as of July, undergraduate students who take out new direct federal student loans will see interest rates rise to 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects could happen in the fall.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.
Deposit rates at some banks are up to 5%
While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.4%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now over 5%, the highest since 2008’s financial crisis, according to Bankrate.
However, if the Fed skips a rate hike at its June meeting, then those deposit rate increases are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.
Higher education is rapidly becoming a necessity. Degree holders have better odds in the job market, and the right degree is a great way to follow a passion and make yourself marketable at the same time.
But the costs of college and graduate school are only climbing upward. In order to afford your dreams, you may have to join the 45 million Americans who have student loans.
Borrowing to pay for an education is a definite financial risk, but it can be affordable and manageable if you do it wisely. Ultimately only you can make a decision —and preferably a highly considered decision — about whether you should go into debt to advance your education.
What’s Ahead:
What Are Student Loans?
Student loans are sums of money you borrow for your education and then pay back over time — in most cases, with interest.
Loans will often be part of your financial aid offer from the school you attend. Look for grants and scholarships first, since those don’t have to be repaid. But if you don’t get a full ride, loans can make up the difference.
Types of Student Loans
In the U.S., there are two categories of student loans: federal and private.
How Do Federal Student Loans Work?
Federal student loans are offered by the federal government, and they account for about 92% of student loan debt in the United States.
There are different types of federal student loans available to different types of students, with varying loan terms.
Direct Subsidized Loans
With a subsidized loan, the government pays the interest while you’re in school and during any periods of deferment (“subsidizing” your education by offsetting the cost). Subsidized loans are available only to undergraduates with demonstrated financial need. The amount is capped to only cover your financial need, as determined by the FAFSA.
Direct Unsubsidized Loans
With an unsubsidized loan, the borrower is responsible for any interest that accrues while they’re in school and afterward. Unsubsidized loans are available to any undergraduate or graduate student. The amount is determined by the cost of attendance at your school and any other aid you’re receiving.
You may hear Direct Subsidized and Unsubsidized Loans referred to as Stafford Loans.
Read more: Subsidized vs. Unsubsidized Loans
Direct PLUS Loans
The U.S. Department of Education offers Direct PLUS Loans to graduate or professional students. They require a credit check and decent credit history. The amount is intended to cover any expenses other aid does not cover.
Direct Consolidation Loans
If you have multiple federal loans, you can combine them into a single loan from a single servicer. The new loan is known as a Direct Consolidation Loan.
Some Facts About Federal Loans:
In most cases, you won’t need a co-signer.
Unless you’re taking out a PLUS loan, you won’t need a credit check.
Interest rates are usually fixed (they stay the same over the life of the loan).
Interest is tax deductible.
How Do Private Student Loans Work?
Private student loans come from lenders not affiliated with the government, such as a bank, a credit union, a school, or a state organization. The amount you can take out and the options for repayment are up to the lender.
Federal loans are typically a better option than private loans since private loans offer much less flexibility.
Some Facts About Private Loans:
You may have to begin payments while still in school.
The loans may require a credit check and a co-signer.
The interest rates can be variable (fluctuating with the financial market).
Some private loan interest rates can be as high as 15%.
Interest might not be tax deductible.
How Do You Apply for Student Loans?
While you’re applying to schools, you’ll fill out a FAFSA, or Free Application for Federal Student Aid. Pay attention to the FAFSA deadlines, which change each year (the deadline is June 30, 2023 for the 2022-23 Academic Year). Usually, the FAFSA will be available starting in the fall for the next fall’s school year.
Read more: Guide to Filling Out the FAFSA
Applying for Federal Student Loans
The federal student aid website has a forecaster tool to predict what level of federal student aid you’ll be eligible for, and what your Expected Family Contribution (EFC) might be. This can give you an idea of how much you’ll likely need to pay out of pocket for your education, and it might also influence the schools you apply to.
When the time comes to fill out the FAFSA itself, gather your tax returns for the previous tax year, current bank and investment account statements, and pay stubs or employment info. If you’re a dependent student, use your parents’ or guardians’ financial information. If you’re an independent student, use your own.
If you’re admitted to a program, your school will send a financial aid offer that may include federal loans. Before receiving federal loan funds, you will:
Complete entrance counseling either in person or online with a financial counselor. You’ll learn your rights and responsibilities as a borrower.
Sign a Promissory Note or Master Promissory Note. This is a legally binding document that lists the terms and conditions under which you will repay the loan. Keep a copy of this document! You’ll need it later.
Applying for Private Student Loans
You can apply for a private student loan directly with the lender, and you don’t need to fill out a FAFSA. Because private student loan interest rates can vary widely, it’s a good idea to compare a number of different lenders before applying.
You can compare multiple private loans simultaneously via a loan marketplace like Credible. With a loan marketplace you enter some of your personal information and you’ll be matched with a list of lenders that are likely to approve your loan. The whole process takes just a few minutes, and it’s a convenient way to check private lenders’ interest rates and loan terms side by side.
Some private lenders, like Stride Funding, offer ISAs (Income Share Agreements) to students rather than traditional interest-based loans. With an ISA you agree to pay your lender a set percentage of your income after graduation for a specific period of time. It’s a good idea to check ISA options if the interest rates you’re quoted for traditional private student loans are exorbitantly high.
Read more: Best Private Student Loans of 2022
What Is the Maximum Student Loan Amount?
Private loan amounts typically won’t exceed your school’s total cost of attendance. Your individual loan amount will be influenced by your credit score, existing debt levels, professional prospects in your field of study, and the financial strength of your cosigner.
Federal loan maximums vary as follows:
Undergrads
Direct Subsidized Loans and Direct Unsubsidized Loans
Undergraduate students can borrow between $5,500 and $12,500 per year, up to an aggregate limit of $31,000 to $57,500.
Specific maximums vary depending on the year of schooling and the student’s status as dependent or independent.
Grad Students
Direct Unsubsidized Loans
Graduate students can borrow up to $20,500 annually and $138,500 aggregate.
Direct PLUS Loans
PLUS loans can cover the remainder of your college costs (the cost of attendance) not already covered by financial aid.
What’s the Maximum Amount You Should Actually Borrow?
Just because you can borrow the maximum amount doesn’t mean you should.
The financial aid offer will estimate your living expenses, and you can turn down a loan or request a lower amount if you feel their estimate is too high. Borrow only what you need. It’s a good idea to calculate your estimated living expenses yourself, with a cushion for the unexpected.
One rule of thumb is not to take out more loans than the anticipated first year’s salary in your field. You can check out our list of the best salary information websites to get a ballpark salary expectation for your profession.
Remember, you’ll still be expected to pay back the loan even if you can’t find work in your field, or if your plans change.
What Can Student Loans Be Used For?
Many students operate under the assumption that their loans can be used to pay for any living expense incurred while they are an enrolled student. They might be surprised to find out that the Federal Student Aid handbook technically limits the use of federal student loans to covering a student’s ‘cost of attendance.’ Permitted expenses include:
Tuition.
Books and other course supplies.
Purchase or rental costs for educational equipment, like a computer.
Exam and portfolio evaluation fees.
On or off-campus housing expenses, like rent or utilities.
Food, like a college meal plan or groceries.
Dependent care expenses, e.g., daycare expenses for your kids while you’re in class.
Licenses or certifications required for coursework.
Study abroad costs, like student visas.
Disability-related expenses.
Public transit expenses to and from school, like bus passes or train tickets.
Operation and maintenance expenses for a vehicle used to transport students to and from school (*not including* car payments or other costs for purchasing a vehicle).
Most private loan contracts include spending guidelines similar to the above.
Of course, your lender is unlikely to monitor how you utilize your student loan disbursements. But treating student loans as a free-for-all is a recipe for overspending and overborrowing.
You can minimize the amount of debt you incur while studying if you use your loans only for bonafide educational necessities. So hold off on that Cancun vacation until after you’ve graduated and landed a high-paying job.
How Does Student Loan Interest Work?
Remember calculating interest rates in middle or high school math classes? Fortunately, you don’t need to dust off your SAT prep book before taking out a loan, but you should know how interest rates affect your finances before you borrow.
Interest is money paid to a lender at a particular rate in exchange for borrowing a given sum. An interest rate is calculated as a percentage of your unpaid loan amount, also known as the principal. You are responsible for paying interest on any unsubsidized loans.
Federal Student Loan Interest Rates
The interest rates for federal loans are fixed, meaning the rates won’t change over the life of the loan. The rates are determined by Congress, and they vary depending on when the loan was first disbursed.
Below are the rates for loans disbursed after July 1, 2022, and before July 1, 2023.
Direct Subsidized and Unsubsidized Loans for undergraduates: 4.99%.
Direct Unsubsidized Loans for graduate and professional students: 6.54%.
Direct PLUS Loans: 7.54%.
Private Student Loan Interest Rates
Private loan interest rates are determined by the lender, and they may be fixed or variable. With a variable interest rate, the rate may change over the life of the loan.
Private student loan interest rates may range from 1% to 15%, depending on the borrower’s credit score. As of July 25, 2022, Credible reports that 5-year variable-rate private student loans average 4.78% interest. 10-year fixed-rate private student loans average 7.22% interest.
How to Calculate Student Loan Interest
To calculate the amount of interest that accrues on your student loan, divide the loan’s interest rate by 365.25 — the number of days in the year, including Leap Year. This number is the interest rate factor, or the daily rate on your loan.
For instance, a loan with a 5% interest rate (.05 divided by 365.25) would have a daily rate of 0.00013689253.
You can use the interest rate factor to calculate how much interest accrues on your loan from month to month. Use the daily interest formula:
Outstanding principal balance (how much of the loan remains unpaid) x the number of days since your last payment x the interest rate factor you figured out above = interest amount.
You can also use MU30’s loan calculator to determine how much interest a given loan will accrue.
When Does Student Loan Repayment Start?
Repayment options are flexible (especially for federal loans) and can change as your life situation changes.
You can apply for deferment or forbearance — a period of time where you don’t have to pay back the loan — on federal loans and some private loans. If you have an unsubsidized loan, the interest will keep accumulating during deferment.
Paying Back Federal Student Loans
If you have federal loans, you won’t need to pay them back as long as you’re in school at least half time. You can start paying back early if you choose. There are no prepayment penalties.
After graduation, you’ll usually have a six-month grace period before your repayment schedule begins. Then your lender will ask you to choose a repayment option.
Each option requires you to pay a different amount per month. The more you can pay per month, the less you’ll pay overall.
Remember the daily interest formula above — if you make larger payments, you’re chipping away faster at the unpaid principal, which results in less accrued interest. By the same token, if you make smaller payments, you’re likely to pay more money overall, since the interest will add up.
The repayment plans below apply to every federal loan except Perkins Loans. If you have a Perkins Loan, the school (your lender) should inform you about repayment options, which will vary.
Standard Repayment Plan
You pay a fixed monthly amount with the goal of paying your loan off in 10 years (30 years for a Direct Consolidation Loan, which tends to be larger).
Graduated Repayment Plan
You start out with smaller payments, which then increase every two years — again, with the goal of paying off the loan in 10 years (30 years for a Direct Consolidation Loan).
Extended Repayment Plan
You pay monthly on a fixed or graduated plan with the goal of paying the loan in 25 years. This option is only available to borrowers with $30,000 or more in debt.
Revised Pay As You Earn Plan (REPAYE)
Your payments are capped at 10% of your discretionary income. Discretionary income is the difference between your income and 150% of the poverty guidelines for your state and family size.
Income-Based Repayment Plan (IBR)
You pay, monthly, either 10% or 15% of discretionary income, based on the date you received your first loans. You’ll never pay more than what you would have paid under the standard plan.
With this plan, the amount of your payments is reassessed every year based on how your income and household have changed. After 20-25 years, any outstanding balance on your loans will be forgiven.
Income-Contingent Repayment Plan
Each month, you’ll pay the lesser of20% of your discretionary income or the amount you’d pay monthly with a fixed payment over 12 years. Payments are recalculated each year based on your income and family size. Any amount not repaid in 25 years will be forgiven.
Income-Sensitive Repayment Plan
You make monthly payments based on your annual income for up to 10 years.
If you find you can’t afford your payments, get in touch with your loan servicer and see if you can switch to a more affordable plan. Nonpayment will hurt your credit and may eventually lead to default.
Paying Back Private Student Loans
Immediate Repayment Plans
Some private loans may require payment while you’re in school, but this isn’t cut and dried. You may find that you can pay interest only or make a reduced payment during the time you’re in school. Some private loans require that you make the same full payments whether you’re still in college or not.
Deferred Repayment Plans
Many private lenders now let you delay payment until graduation. You may even find they give you a grace period of six months or longer after graduation to start making payments. This can help take some of the pressure off while you’re looking for that first job.
Flexible Deferment Plans
With some lenders, you can occasionally skip a payment or put off paying for a while when you’re going through a tough time.Another benefit you may get with some private loans is the ability to renegotiate (refinance) a high variable interest rate.
Refinancing Student Loans
Refinancing a loan is when you replace your current loan with a new loan that offers more favorable terms. Whether you have a private or federal student loan, refinancing is always an option.
Refinancing is particularly attractive when your new loan offers a significantly lower interest rate than your existing loan. But it can also be a good idea if you have multiple loans that you want to combine into one, as it’s easier to stay on top of only one payment.
When considering refinancing, it’s important to take a close look at any fees you’ll be charged. While you can save on interest by refinancing, hefty origination fees might eat into those savings considerably.
Read more: Student Loan Refinancing Options
Summary
As tuition skyrockets and a college degree becomes more necessary for a middle-class life, student loans play a bigger and bigger part in most people’s financial lives.
Student loans can be scary, overwhelming, and painfully tedious to contemplate. But knowing what you’re getting into — in terms of interest rates and repayment plans — can take some of the terror out of borrowing large sums to finance your future.
When you choose a bank for your daily checking and savings needs, you can choose between a national bank, a smaller regional bank, credit unions of varying sizes, and even online banks and financial technology companies.
Since early 2023, when Signature Bank and Silicon Valley Bank both experienced failures after customers pulled out large amounts of money during bank runs, banking customers may feel more comfortable choosing a national bank.
Although the U.S. government took extraordinary measures to protect the assets of SVB and Signature Bank customers, and deposits held in the accounts were FDIC insured, many customers were still rightfully concerned about gaining access to their money in a timely manner.
After the banking crisis of 2008, the Federal government declared banks like JPMorgan Chase, Bank of America, Citibank, and Wells Fargo as “too big to fail.” But these aren’t the only national banks or credit unions available.
You might think that smaller online banks may have lower fees, while small local banks are known for friendly and responsive customer service. But the national banks on this list blend the best of all worlds: low fees, high marks for customer satisfaction, ways to avoid overdraft fees, convenient ATM networks, and a variety of banking products.
16 Best National Banks
Here are the 16 best national banks that offer exceptional services, excellent customer support, and innovative banking solutions to meet all of your financial needs.
1. SoFi – Best for Digital Banking & High Yields
SoFi became a nationally chartered online bank in 2022, after acquiring Golden Pacific Bancorp, Member FDIC. Originally known for its vast array of loan products, including private student loans, today SoFi has a combination checking and savings account, or a cash management account, with no monthly service fee.
SoFi also has no minimum balance requirements, no overdraft fee, and overdraft protection up to $50 with qualifying direct deposits each month. You can bank for free at any of 55,000+ fee free Allpoint ATMs nationwide.
As an online bank, SoFi offers higher interest rates than you may find at brick and mortar banks. Earn up to 4.20% APY on your savings account balance and 1.20% on money in your checking account. When you use your SoFi debit card at select local businesses, you can earn up to 15% cash back.
SoFi offers two tiers of accounts: SoFi and SoFi Plus. To qualify for the “freemium” SoFi Plus membership, bank customers must have qualifying direct deposits. Plus, when you sign up before December 31, 2023, you can earn a cash bonus of $250 when you set up direct deposits of $5,000 or $50 with a direct deposit as low as $1,000.
SoFi Plus members receive loan rate discounts, bonus rewards, access to special entertainment events and more, making SoFi a unique company when it comes to online banks.
2. Discover Bank – Best for Cash Back
Discover may be best known for cashback and rewards credit cards. But its online banking products are some of the best you’ll find among national banks.
With no monthly fees and no minimum balance, your Discover Cashback checking account pays 1% cashback on up to $3,000 worth of debit card purchases monthly. You’ll never pay overdraft charges, and you can withdraw cash at a network of 60,000+ fee free ATMs.
You can qualify for overdraft protection by linking your Discover Bank savings account. Discover Savings pays a high 3.90% APY with no minimum deposit required.
Other Discover Bank deposit accounts include CDs with terms from 3 months to 10 years, and a money market account that pays 3.80% APY for balances under $100,000 and 3.85% on balances $100,000 and up.
For questions or help with your account, you can reach a U.S.-based customer service representative for Discover Bank by phone, 24/7/365.
3. Chase Bank – Best for Credit Card Rewards & Referral Bonuses
As the world’s largest national bank, JPMorgan Chase Bank doesn’t need to do much to entice customers. People will choose Chase based on its name, reputation, and more than 4,700 convenient branch locations across the U.S.
However, Chase happens to have one of the best bonuses for new customers and a generous referral bonus program when existing customers refer their friends. This, coupled with a robust and easy-to-use mobile app and a variety of checking, savings and investment services, puts Chase on our list of top national banks in the U.S.
Chase is currently offering new Chase Total Checking customers a $200 bonus when they open a new account and set up direct deposit within the first 90 days.
New or upgrading Chase Private Client customers can earn a $3,000 bonus with a deposit of $500,000 or more within the first 45 days of account opening. Deposits of $150,000 to $249,999 earn $1,000 and cash deposits of $250,000 to $499,999 earn $2,000. You must keep the money in your J.P. Morgan Wealth Management or JPMorgan Chase deposit accounts for 90 days to qualify.
In addition to Chase Total Checking, the bank’s most popular checking account, and Private Client services, Chase also offers other checking and savings accounts.
Chase Secure Banking has a $4.95 monthly fee and no overdraft fees. Chase Premier Plus Checking offers a few added benefits beyond Chase Total Checking, including ATM fee rebates up to four times per statement cycle, a linked personal checking account with no monthly fees, and a 0.01% interest rate on balances.
Chase also offers bank accounts for kids, teens, and college students, as well as CDs, savings and money market accounts, mortgages, loan products, and a full array of top-rated rewards credit cards.
If you have multiple Chase accounts, it’s easy to manage them all within the mobile app.
4. Chime – Best for Building Credit
Chime is a financial technology company backed by Stride Bank, Member FDIC, and Bancorp Bank, Member FDIC. It is not a bank, itself, but offers some of the same features, including online banking, a debit card, and direct deposit up to two days earlier than some other banks.
Chime has no monthly service fee, no overdraft fee, and no minimum balance requirements. For customers who need a little boost to make it from paycheck to paycheck, Chime offers fee-free overdraft up to $200 through the SpotMe5 program and a credit builder secured Visa credit card with no annual fees, interest or minimum security deposit.
Use your Chime debit card at any of 60,000+ fee free1 ATMs in the Allpoint, MoneyPass or Visa Plus Alliance ATM networks. Out of network ATM fees may apply, otherwise.
You can qualify for Chime’s SpotMe program with a single direct deposit of $200 or more during any monthly statement period. If you process a transaction that would put you into overdraft, Chime will accept the transaction even if it puts your balance into the negative by up to $200.
The Credit Builder Secured Visa card carries the same requirements of a $200 monthly minimum direct deposit. You can build your credit and raise your credit score with responsible use of the card.
5. Citi® – Best for Large Cash Deposits
The third of the four largest national banks in the U.S. based on assets, Citi, owned by Citigroup, is best for high net worth customers or those with large cash deposits divided among Citi checking, savings, and other accounts.
Currently, you can earn a generous cash bonus of $200 to $2,000 when you open a qualifying Citi checking account and meet specific minimum opening deposit requirements. Your bonus will be determined by your account balance on the 20th day after opening the account. Funds must remain in the account for an additional 60 days after the 21st day.
Citi offers multiple checking accounts to meet various customers’ financial needs, all with monthly fees that are easy to waive if you hold the required minimum balance. The bank accounts include:
Citibank
Citi Priority, which includes travel perks and access Citi Personal Wealth Management advisors
Citigold, relationship banking and investment services
Basic Banking and ATM access
Access Account, a debit account with no paper checks
For the Basic Checking account, you’ll need to maintain a $1,500 minimum balance to waive the fees. The other accounts have larger minimum balance requirements to avoid monthly maintenance fees and take advantage of other perks, up to $200,000 for a Citigold account.
All accounts provide access to personal banking at Citi branches and access to more than 65,000 fee free ATMs across the U.S. All accounts except for Basic and Access accounts also have no fees at ATMs outside the Citi network.
Like all the larger national banks on this list, Citi has a full gamut of rewards credit cards, savings and money market accounts, and high-yield CDs.
6. CIT Bank – Best for High Interest Rates
CIT Bank, a division of First Citizens Bank, has earned awards and accolades for customer satisfaction, rated by American Banker as #1 for “delivering the most humanized experience in banking.”
You should be aware that deposits in First Citizens Bank & Trust Company, Member FDIC, are not separately insured. This only matters if you hold more than $250,000 in any single account type, such as checking or savings, in both First Citizens Bank and in CIT Bank.
CIT is the online only banking arm of First Citizens Bank, with high-yield savings accounts, CDs, money markets, and eChecking, all with no monthly fees and no overdraft fees. You won’t pay any ATM fees at CIT Bank machines, and CIT Bank reimburses up to $30 per month when you use out-of-network ATMs.
CIT offers 0.25% APY on checking when you hold more than $25,000 in your account, and 0.10% APY on balances under $25,000. The bank has high interest rates for savings, offering customers a 4.85% APY on balances of $5,000 or more with the Platinum Savings account.
CIT Bank has two other savings accounts as well:
Savings Connect, with a 4.60% APY
Savings Builder, which requires a minimum balance of $25,000 or a $100 monthly deposit to earn 1.00% APY
You’ll need a $100 minimum deposit to open a checking or savings account at CIT Bank.
7. Bank of America – Best for College Students
As the second largest of the best national banks, behind Chase, Bank of America has the full gamut of banking products, with three checking accounts plus a student account, savings, CDs, and investment products.
It’s easy to waive monthly maintenance fees on a checking account with a minimum daily balance, direct deposits, combined balances across eligible linked Bank of America accounts, or by enrolling in their Preferred Rewards programs.
We like the Advantage SafeBalance banking for kids, teens, and college students under 25 years old. They have no monthly fee and no overdraft fees. Teens ages 16+ can have sole ownership of the account.
For everyone else, the bank offers Advantage Plus and Advantage Relationship checking accounts with easy ways to waive the monthly fees with direct deposit or a minimum daily balance.
When you open a new checking account, you can qualify for a $100 bonus when you receive qualifying direct deposits of at least $1,000 within 90 days of opening the account.
Of course, Bank of America also has CDs, and a savings and money market account. Plus you can invest with Merrill. All of these deposit accounts count toward your Preferred Rewards membership.
When you have a combined average daily balance of at least $20,000 for three months, you’ll qualify for the rewards program.
8. U.S. Bank – Best for Military Members & High Balance Savings
U.S. Bank offers the Bank Smartly checking account so you can earn interest on your money. The current interest rate is just 0.01% APY on all checking balances. You’ll pay a $6.95 maintenance fee, but this is waived if you meet minimum deposit requirements or if you are a member of the U.S. military.
You can link your Bank Smartly checking account to a standard savings account or Elite Money Market to earn even more. To avoid fees on your savings account, you’ll want to keep a $300 minimum daily balance or a $1,000 average monthly collected balance. If you are already a Bank Smartly customer, you can enroll in Smart Rewards to waive savings account fees.
The Elite account is better for those with high balances. You can earn up to 4% APY on balances from $25,000 up to just under $500,000.
The appeal of U.S. Bank is in its high ratings for banking satisfaction across the board from customers. U.S. Bank earned accolades for having the best mobile app, the best digital mortgage tools, the best customer service features, and best mobile check deposit capabilities. These factors all contribute to its ranking as a best national bank.
9. Axos Bank – Best Online Bank
Axos is an online only bank with a rewards checking account that delivers up to 3.30% APY, with no fees and unlimited ATM fee rebates for out-of-network ATMs.
To earn the maximum APY, you’ll need to set up direct deposit and Axos Bank’s free Personal Finance Manager for 0.70% interest. Then, open an investment account and take out an Axos personal loan or auto loan and earn another 2.60% annual percentage yield on your checking account balance.
Axos also offers an Essential Checking account with early direct deposit and no fees, and a Cashback Checking account, which gives you 1% cash back on debit card purchases, along with no maintenance fees and unlimited domestic ATM fee reimbursements.
Voted the best online bank by many top personal finance sites, Axos Bank offers more than just high interest, no fee checking.
Axos Bank offers CDs with terms between 3 and 60 months and a savings account with 0.61% annual percentage yield, with interest compounded daily. You can also find personal loans, car loans, mortgages, and investment products.
Like other national banks, Axos Bank provides FDIC insurance up to $250,000 or $500,000 for joint account holders. But you can expand your coverage up to $150 million with Axos Bank InsureGuard+ Savings from IntraFi Network Deposits.
Axos splits up your large deposit into multiple accounts across several banks, each covered up to $250,000. If you are dealing with a substantial amount of cash and want your savings protected at a single bank, Axos may be a good choice for you.
New customers can earn a $100 welcome bonus by opening an account with just a $50 minimum opening deposit.
10. Truist Bank – Best for Relationship Banking & Innovative Savings Perks
Truist Bank is one of the top 10 largest national banks, formed as a merger between BB&T and SunTrust in 2019. Called “the biggest bank you’ve never heard of” by CNN Business, Truist holds assets of $574 billion and has been growing steadily since the merger.
Truist offers checking and savings accounts, CDs, and credit cards. Truist checking and savings customers can earn perks and benefits. This includes access to Long Game, a savings game app that lets you earn cash when depositing into your Truist savings account. It also includes bonus rewards on your Truist credit cards.
Truist has four levels of relationship banking in its Truist One checking account. This means the more you deposit, the more perks you will receive, up to a 50% loyalty bonus on Truist credit cards, and a discounted annual fee for a Delta SkyMiles debit card. Benefits for relationship banking begin at $10,000 in combined average monthly balances for Truist deposit accounts.
Your Truist checking account has a $12 monthly fee, which is easy to waive with $500 or more in direct deposits each month or a $500 minimum balance across all Truist deposit accounts. Truist personal loan, mortgage or credit card customers also pay no fees on their Truist checking account.
You can also waive the monthly fee with a linked Small Business checking account or if you are a student under the age of 25. You’ll need a $25 minimum opening deposit for a Truist One checking.
Customers with lower income or just getting started establishing their finances can benefit from Truist Confidence checking and savings accounts. The account has just a $5 monthly maintenance fee, which is easily waived.
11. Capital One – Best for High Interest Rates at a Brick and Mortar Bank
Like Chase Bank, Capital One is well known for its top-rated rewards credit cards. The company is also one of the best national banks with a savings account and CDs offering interest rates higher than the national average.
Capital One Performance 360 savings has a 3.90% APY, no monthly maintenance fees, and no minimum deposit to open your account. A Capital One 360 Performance checking account, similarly, has no monthly maintenance fee, overdraft protection through your linked savings account, and early direct deposit.
You can bank with no fees at a network of 70,000+ ATMs nationwide, and can deposit cash easily at CVS retail locations. Although you must open your Capital One Performance account online, you can receive personalized service and deposit cash at any Capital One bank branches or Capital One Cafes.
12. PNC Bank – Best in East and Southwest
PNC Bank is a large, national bank with branch locations across 29 states. Most branches are in the east, south, and southwest, although you will also find branch locations in some Midwest states.
PNC Bank’s online checking account is called Spend and it links to the PNC VirtualWallet. You can add a savings account, called Reserve, or upgrade to the Performance Select product with two tiers of savings and double layer overdraft protection.
When you set up your VirtualWallet with PNC Bank and open your Spend account, you can earn a $50 bonus.
Combining your Spend account with a PNC Bank Reserve account yields even more benefits. Earn a $200 bonus when you qualify. Finally, if you open a Performance Select VirtualWallet, you could earn $400.
Each account comes with a low monthly fee that is easily waived through qualifying monthly direct deposits or by meeting minimum balance requirements.
13. Wells Fargo – Best for Checking Account Options
Wells Fargo, one of the “big four,” is the fourth largest of the best national banks in the U.S. It is known for having many convenient bank locations, with 4,700 branch locations.
The vast number of branches across the country puts it top on our list for in-person banking and customer satisfaction.
Plus, we also rated it best for various checking account choices for everyone from children to retail investors.
Like the other national banks on this list, Wells Fargo has checking, savings, and CD accounts. The bank has four checking account options for consumers at various stages of their financial lives:
Clear Access Banking, with no overdraft fee and a low $5 monthly fee, waived for teens and young adults ages 13 to 24
Everyday Checking, the most popular bank account, with optional overdraft protection
Prime Checking, offering discounted interest rates for loans and higher interest rates for linked CDs and savings accounts
Premier Checking, a relationship banking service with 24/7 support and discounts on investing services
It’s easy to waive the $10 fee on Everyday Checking with a $500 minimum daily balance or $500 in monthly direct deposits. Waive the $25 fee on your Prime checking with $20,000 in linked balances. Similarly, your Premier Checking account will be free with $250,000 in linked balances, including investments with the bank’s Advisors.
You’ll need a $25 minimum opening deposit to open your account.
14. Ally Bank – Best Online Only Bank for Savings
Ally Bank is widely recognized as one of the best national online banks. It has very few fees, including no maintenance fee, no overdraft fee, and no ACH fee (even on expedited transfers). Plus, you’ll earn interest of 0.25% in your checking account and 3.85% APY on savings, including money you have allocated into various buckets.
We rated Ally Bank as the best online only bank for savings, not just because of the high interest rate, but because it offers so many ways to manage your money and ramp up your savings efforts.
You can set up recurring transfers into your savings account for specific goals or just to build up your emergency coffers. You can choose to round up transactions made with your Ally Bank debit card, or even electronic payments and checks. When Ally Bank finds at least $5 in “round-up” savings, it will be transferred automatically to your checking account.
Finally, Ally Bank analyzes your checking account periodically to reveal extra funds that are “safe to save.” Ally Bank automatically transfers that money for you. But you can transfer it back whenever you’d like.
In addition to these savings benefits, Ally Bank lets you access your money with your debit card with no fees at any of 43,000+ Allpoint ATMs. The online bank also refunds up to $10 in fees charged by out-of-network ATMs.
You can avoid stress and overspending with the Overdraft Transfer Service, which automatically transfers money from your Ally Bank savings account into checking. If you exceed six transfers or six savings withdrawals per month, Ally Bank will reimburse those fees, too.
You can also apply for CoverDraft℠ Coverage, which will cover up to $250 in charges that would put your account in the negative. You’ll qualify 30 days after you deposit at least $100 into your checking account. If you receive qualifying direct deposits of at least $250 two months in a row, you can increase your coverage to $250.
15. TD Bank – Best for Overall Banking Satisfaction
TD Bank, deemed America’s most convenient bank for its number of branches, branch hours and excellent customer service, blends the best of brick and mortar banks with easy online banking.
Most TD Bank locations are open seven days a week, including Sundays, with extended hours beyond what most brick and mortar banks provide. Most TD Bank branches are located across the East Coast, with locations in 15 different states and Washington, D.C.
TD Bank is the 7th largest bank in the U.S. based on deposits, with 1,668 branch locations nationwide. You can also reach customer service by phone, 24/7/365, which earns TD Bank high marks for banking satisfaction.
TD Bank offers six checking accounts for customers in various life stages:
TD Essential Banking
TD Convenience Checking
TD Beyond Checking
TD Simple Checking
TD 60 Plus Checking
TD Student Checking (for ages 17 to 23)
Currently, TD Bank is offering sign-on bonuses for new customers who open a TD Beyond or TD Convenience bank account. You’ll need a qualifying direct deposit (or more than one) totaling $2,500 within the first 60 days to earn $300 with TD Beyond, and a direct deposit of just $500 within the first 60 days to earn $200 with TD Convenience.
16. Schwab Bank – Best for Investors
Schwab may be best known as an investment service, but the bank was rated highest in banking satisfaction with checking accounts from J.D. Power & Associates four years running.
If you have a Schwab investment account, or are considering opening one, Schwab could be the best choice in banking for you.
The Schwab Bank Investor checking account has no foreign transaction fees, no minimums, and unlimited ATM fee rebates. Plus, earn 0.45% annual percentage yield on checking. Schwab’s savings account offers 0.48% APY.
Schwab also offers exceptionally high interest rates for CDs, with up to 5.40% APY and terms as short as 30 days. You’ll receive FDIC protection exceeding the federal maximum because you can purchase CDs from multiple banks, all through Schwab investment.
Methodology: How We Chose the Best National Banks
We evaluated a variety of banks and credit cards, taking into consideration the:
Variety of products
Interest rates
Monthly fees
ATM fees and ATM fee reimbursement
Branch locations and number of branches
Minimum deposit requirements
Fraud protection and security
We also looked at consumer reviews, and drew on the general reputation of each bank to find the best national bank.
Finding the Best National Bank
Now that we’ve explored the specifics of the best online banks and brick and mortar banks nationwide, you probably still have questions about which one is really the best national bank.
Let’s compare the three largest in the U.S. based on number of branches, interest rates, and overall banking satisfaction.
Chase vs. Wells Fargo
For the largest nationwide bank, Chase offers excellent banking satisfaction with an A+ rating from the Better Business Bureau, 4,800 branch locations, and an easy and intuitive mobile app. If you are shopping for a bank credit card, Chase also offers some of the best rewards cards available today.
Wells Fargo rivals Chase when it comes to number of branches, with roughly 4,700 locations across the U.S. It’s somewhat easier to waive the checking account fees at Wells Fargo. Wells Fargo offers higher interest rates for savings, with a 0.15% APY compared to Chase’s 0.01%.
Both banks have lower interest rates than you might find at online banks. However, if you are looking for national banks with a solid reputation, many branches, and high marks in banking satisfaction, either Chase or Wells Fargo would be a good choice.
Wells Fargo vs. Bank of America
Bank of America and Wells Fargo are the second and third-largest banks in the U.S. based on assets. BofA only has 4,000 branches compared to Fargo’s 4,700, but BofA boasts more ATMs nationwide.
BofA stands out when you join the Preferred Rewards program because you can waive the fees on your bank account and enjoy perks, bonus rewards on BofA credit cards, and rate discounts on loans.
If you have a large balance or are looking for an investing platform through your bank, BofA may be your best choice. On the other hand, Wells Fargo offers high interest rates on savings and convenient branch locations nationwide.
Common Questions
People have many questions related to whether an online bank is better than a traditional bank or whether a local bank is better than one of the largest national banks. We break it all down here.
Which is better, an online bank or a brick-and-mortar bank?
If you are looking for the highest interest rates and generous rewards programs, you are highly likely to find them at online banks. However, there are some advantages to a brick and mortar bank, including in-person service at local branches, the availability of paper checks, and easy ways to deposit cash in person or at branch ATMs.
You should expect the best national online banks and the best brick and mortar banks to have robust mobile apps, easy-to-waive fees, and fraud protection.
Make sure whatever bank you choose is “Member FDIC,” which means your deposits are insured up to $250,000 per account holder, per account type. That means joint accounts have $500,000 worth of FDIC insurance protection.
Is my money safer in a national bank vs. a regional bank (or a national credit union vs. a regional credit union)?
All banks on this list are Member FDIC, which means they are insured to the maximum allowable limit of $250,000 per account holder, per account type. Credit unions are covered up to the same limits by the National Credit Union Administration.
Many online banks are insured up to $2 million or more. These financial institutions divide cash deposits among multiple partner banks. Each bank insures deposits up to the maximum limit allowed by the Federal Deposit Insurance Corp. Read the fine print to determine your coverage limits when you choose a bank.
Beyond that, your money should be equally safe in a national bank, a smaller bank, or a credit union of any size. Also look for features such as fraud protection, fraud alerts via text, email or in the mobile app, and enhanced website security measures. You should also be able to lock and unlock your debit card in the mobile app if you misplace it or believe it may have been stolen.
What makes big banks different from smaller banks?
By definition, big banks will have larger market capitalization, which represents the total value of a bank’s stocks. Big banks will also hold more assets. For instance, Chase, which is the world’s largest financial institution, holds $3.2 trillion in assets. The second-largest national bank, Bank of America, possesses $2.41 trillion in assets. Larger financial institutions may also have more bank branches.
In many other ways, big national banks and smaller banks are similar, especially today. Customers want specific features and are unwilling to compromise on things like fee-free ATMs, no monthly fees, early direct deposit, and an intuitive mobile app.
How much interest do the best big banks pay?
In general, some of the largest national banks do not have the highest interest rates for savings and very few offer interest earning checking accounts.
Capital One 360 and Discover are two of the best national banks that offer interest on checking. To earn a higher APY with one of the largest national banks, you might want to consider CDs.
Are national banks better than other kinds of banks?
National banks aren’t necessarily better or worse than other kinds of banks. They may have more convenient branch locations, a higher number of branches, and a greater variety of products, but they might also have higher fees. Decide what’s most important to you when you choose a bank.
If you’d prefer to trust your money with one of the largest national banks, with a large market capitalization, high value, and branches nationwide, consider opening your checking and savings accounts with one of the best national banks on this list.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
The Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
5. Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
With the average cost of college currently at $35,551 per year, most students have no choice but to take out student loans. Whether you go to a public or private university in or out of state, you’ll probably need at least a little help. And we’re here to help you get it.
Students might turn to private student loans instead of or in addition to federal student loans to help cover the cost of tuition and boarding. So how do you choose between the many private lenders — including banks, credit unions, and online marketplaces — out there? We’ve compared many of the top lenders to find those with the best rates, repayment terms, range of options, and more.
But enough suspense. Let’s dive into the best private student loans for you.
What’s Ahead:
Best private student loans
Best for flexible repayment terms: SoFi
Best for low rates: Credible
Best for no cosigner: Ascent
Best for cosigner: Earnest
Best for graduate students: Sallie Mae
Best for student loan refinancing: Splash Financial
Best for multi-year approval: Citizens Bank
Best for flexible repayment terms: SoFi
Fixed APR range – 3.99% – 8.24% APR (including auto-pay discount of 0.25%)
Variable APR range – 3.99% – 8.24% APR (including auto-pay discount of 0.25%)
Fees – None
Prepayment penalty – None
Minimum – Minimum $1,000
Maximum – Full cost of attendance
Loan terms – 5, 7, 10, or 15 years
Forbearance – Up to 12 months
Minimum credit score – 650
SoFi is a peer-to-peer lender offering private student loans for both graduate and undergraduate students. They also provide private and federal student loan refinancing for those who meet citizenship, employment, credit, and income requirements (minimum $5,000).
SoFi stands out for offering more repayment terms than most as well as the option to put membership points toward your loan balance. You have four repayment choices:
Defer monthly payments until six months after you graduate
Pay only interest while in school
Make fixed monthly payments of $25 while in school
Start making regular monthly payments toward the full balance right away
And should you need student loan relief, SoFi provides Unemployment Protection of up to 12 months to qualified borrowers.
There are two discounts available that can help reduce the cost of your loans. The first is a 0.25% interest rate discount when you schedule automatic payments and the second is a 0.125% rate discount for previous SoFi borrowers.
You’ll need at least fair credit to qualify for a private student loan with SoFi, or you can apply with a cosigner for a better chance of approval. We encourage you to check your rate with no effect on your credit. SoFi offers cosigner release after you’ve made 24 consecutive payments toward the principal and interest.
Read our full review.
Best for low rates: Credible
Interest rate range – starting at 4.44% fixed APR (with autopay)* and 4.74% Var. APR (with autopay), See Terms*
Fees – None
Prepayment penalty – None
Minimum – $1,000
Maximum – Full cost of attendance
Loan terms – 5 – 20 years
Forbearance – Varies by lender
Minimum credit score – Varies by lender
Though not a direct lender, Credible is a good place to go if you’re looking for a private student loan. Credible is an aggregator that partners with top lenders including Sallie Mae, Citizens, Ascent, and more to show you many student loan offers in one place. This is an especially great option if you don’t really know where to start because the platform begins by asking you questions to understand your needs, then shows you what you might qualify for.
To compare your options, you’ll fill out a single application to receive offers from up to eight different lenders. This will show you personalized rates you prequalify for to help you easily find the lowest ones. Although you won’t know your final rate until you actually apply to borrow with your chosen lender, this can give you a good idea of what you might pay. Using Credible to shop loans and check your rate does not affect your credit and the application takes just a couple of minutes to complete.
The Credible Best Rate Guarantee means that if you find a lower interest rate with another lender, you may be eligible for a $200 “Best Rate Reward.”
Credible’s partners do not charge origination fees or prepayment penalties. Also, all eight make it easy to apply with a cosigner and offer cosigner release to eligible borrowers.
Read our full review.
Credible Credit Disclosure – To check the rates and terms you qualify for, Credible or our partner lender(s) conduct a soft credit pull that will not affect your credit score. However, when you apply for credit, your full credit report from one or more consumer reporting agencies will be requested, which is considered a hard credit pull and will affect your credit.
Maximum – $200,000 ($20,000 for Non-Cosigned Outcomes-Based loans)
Loan terms – 5, 7, 10, 12, or 15 years
Forbearance – Up to 24 months
Minimum credit score – Varies
Ascent is a unique private lender for those looking to avoid using a cosigner. They specifically cater to those who want to apply on their own by offering a couple of ways to qualify. There are two types of non-cosigned loans from this lender: credit-based loans and outcomes-based loans. You’ll need at least two years of credit history and an income of $24,000 or more to qualify for a credit-based loan, but you may be eligible for an outcomes-based loan without any credit at all.
Ascent’s outcomes-based private student loans take your future income, not your current income, into consideration. When you apply for this loan, Ascent looks at your GPA, anticipated graduation date, school, program, and more to determine your eligibility. The better your grades and higher-paying your career path, the better your chances. You must be a junior or senior attending school full-time to qualify.
Interest rates are higher for non-cosigned loans, but there are discounts available. These include a 0.25% autopay discount and a 1% cash-back graduation reward.
While in school, you can pay $25 each month or make interest payments only. Alternatively, you can defer payments for up to nine months after you graduate. You may qualify for up to 24 months of Temporary Hardship Forbearance if you find yourself unable to make payments.
Read our full review.
Ascent Disclosure:Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 4/17/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
If you already know you want or need to apply for private student loans with a cosigner, Earnest has excellent cosigned loans. Earnest is a direct lender offering private student loans with low rates and forgiving terms to make repayment easier for student borrowers.
Applicants must have a credit score of at least 650, an income of at least $35,000, and U.S citizenship to qualify. These might be difficult requirements for a college student to meet, which is why Earnest encourages cosigners. In fact, 66% of Earnest borrowers use a cosigner. However, Earnest does not offer cosigner release, but you may qualify to refinance with this lender under only your name when you graduate.
If you have a great cosigner willing to help you out, Earnest will make it easier for you to hold up your end of the bargain with alternatives to the standard repayment plan. In addition to four different repayment options, they give all borrowers a nine-month grace period after graduation before monthly payments are due and the option to skip a payment once a year if needed. You may also qualify for one of the following assistance programs:
Rate Reduction Program – decreased rates and monthly payments for six months
Extended Term Program – loan term extension of up to 30 years to reduce payments
Earnest also has more generous loan forgiveness and discharge policies than most.
Read our full review.
Earnest SLR Disclosure – Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 9.13% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.21%. For loan terms over 15 years, the interest rate will never exceed 9.24%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
Best for graduate students: Sallie Mae
Fixed APR range – 4.25% – 12.92% (for graduate loans, including 0.25% auto debit discount)
Variable APR range – 3.87% – 13.50% (for graduate loans, including 0.25% auto debit discount)
Fees – None
Prepayment penalty – None
Minimum – $1,000
Maximum – Full cost of attendance
Loan terms – Up to 15 years
Forbearance – Determined on a case-by-case basis
Minimum credit score – 650
Sallie Mae offers a variety of different loans for both undergraduate and graduate students, but this lender is especially great for graduate private student loans. Let’s get into what makes this option different than others for higher education.
First, Sallie Mae offers 100% coverage for all of your tuition and living expenses from classes to travel with no cap. After graduating, you can defer payments up to 48 months if you’re going right from school to a fellowship or internship. And unlike most loans of this type, you do not need to be enrolled full-time or even half-time to qualify to borrow.
You’ll have a 94% chance of being approved if you’ve already had a Sallie Mae student loan and you apply for a new one with a cosigner. And if you do use a cosigner, you may be eligible to release them after just 12 consecutive monthly payments made on time.
You can either defer your payments for six months after you graduate, make fixed monthly payments of $25 while you’re in school, or pay just the interest while you’re in school and during the six-month grace period after graduation. While Sallie Mae’s interest rates are a little higher than some, you can get a 0.25% rate discount for setting up automatic payments.
Read our full review.
Sallie Mae Disclosures: Borrow responsibly. We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan. Sallie Mae loans are subject to credit approval, identity verification, signed loan documents, and school certification. Smart Option Student Loans are for students at participating schools and are not intended for students pursuing a graduate degree. Graduate student loans are available for students at participating degree-granting graduate schools. Graduate Certificate/Continuing Education coursework is not eligible for MBA, Medical, Dental, and Law School Loans. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000. 1 Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. Payments may be required during the grace/separation period depending on the repayment option selected. Variable rates may increase over the life of the loan. Undergraduate – Advertised variable rates reflect the starting range of rates and may vary outside of that range over the life of the loan. Advertised APRs assume a $10,000 loan to a borrower who attends school for 4 years and has no prior Sallie Mae loans. Associate & Trade School – Advertised APRs assume a $10,000 loan to a borrower who attends school for 1 year and has $10,000 in prior Sallie Mae loans. All Advertised APRs assume a $10,000 loan. Medical School Loan and Dental School Loan APRs assume 4 years in school. Law School Loan APRs assume 3 years in school. MBA Loan, Graduate School Loan for Health Professions, and Graduate School Loan APRs assume 2 years in school. 2 Loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Sallie Mae reserves the right to approve a lower loan amount than the school-certified amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. 3 Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 9.63% fixed APR, 51 payments of $25.00, 119 payments of $172.95 and one payment of $121.42, for a Total Loan Cost of $21,977.47. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.07% fixed APR, 27 payments of $25.00, 179 payments of $125.36 and one payment of $49.52 for a total loan cost of $23,163.96. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 2-year in-school period, it works out to a 10.02% fixed APR, 27 payments of $25.00, 119 payments of $153.59 and one payment of $108.14, for a Total Loan Cost of $19,060.35. For a borrower with $10,000 in prior loans and a 1-year in-school period, it works out to a 10.19% fixed APR, 15 payments of $25.00, 179 payments of $117.46 and one payment of $46.27 for a total loan cost of $21,446.61. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. 4 Example of a typical transaction for a $10,000 Graduate School Loan with the most common fixed rate, Fixed Repayment Option, and two disbursements. For borrowers with a 27-month in-school and separation period, it works out to 12.78% fixed APR, 27 payments of $25.00, 178 payments of $154.24 and one payment of $152.19, for a total loan cost of $28,281.91. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 15 years.
Best for student loan refinancing: Splash Financial
Refinancing your student loans is a good way to lock in a lower interest rate for your existing loans, reduce your monthly payments, and consolidate your debt. As a loan marketplace, Splash Financial offers some of the best refinancing options currently available.
To find a loan with Splash Financial, you’ll complete one application and compare your available offers from a variety of banks and credit unions. Using Splash Financial’s marketplace does not affect your credit or cost anything. If you see an offer you like, you can begin an application directly with a lender partner.
If you didn’t get the rates you wanted the first time around when applying for student loans as a new borrower, refinancing can help you save on interest and simplify repayment. It can also let you assume full responsibility for your loans if you originally borrowed with a cosigner. And if you’re recently married, you can refinance with a partner to combine your balances.
Read our full review.
Best for multi-year approval: Citizens Bank
Fixed APR range – 4.74% – 12.06%
Variable APR range – 3.75% – 11.21%
Fees – None
Prepayment penalty – None
Minimum – $1,000
Maximum – Full cost of attendance ($150,000 for all undergraduate and most graduate degrees)
Loan terms – 5, 10, or 15 years
Forbearance – Up to 12 months at a time
Minimum credit score – Not disclosed
If you like the idea of applying once for private student loans and not having to again, you might want to check out Citizens Bank.
This lender provides multi-year approval for between four and six years to eligible borrowers. If you qualify, you’ll be approved for all the money you need to complete your degree upfront. Instead of filling out a new application each year (and adding hard credit pulls to your report), you’ll request more funding when you need it and Citizens will use only a soft pull to confirm you’re still eligible. Citizens will let you know if you qualify for Multi-Year Approval after you submit your application.
You can enroll in autopay for a 0.25% interest rate discount. may also be eligible for a loyalty discount, an interest rate reduction of 0.25%, if you’re already a Citizens customer with a qualifying savings account, checking account, credit card, or loan (or if your cosigner is a customer).
99% of borrowers with Citizens use a cosigner. You can apply for cosigner release after you’ve made 36 on-time, full payments in a row if your credit profile is found to be satisfactory. Can defer payments until after graduation but Citizens does not offer income-based repayment.
Federal vs. private student loans
Federal student loans offer many benefits over private student loans and you should go with this option before you even consider private student loans.
But you may not end up choosing one or the other — in fact, it’s not uncommon for a person to have both federal and private student loans. You’ll want to make sure to understand the (many) differences between federal student loans and private student loans and how they work before applying for either.
Requirements to qualify
Overall, federal student loans are a lot easier to get than private student loans. Federal loans are administered by the federal government, not companies or lenders. They do not require a credit check at all when you’re applying, so it doesn’t matter how low your score is. To assess your eligibility, the U.S. Department of Education will determine your financial need and this will be used to create your loan offer.
In contrast, a lot of private lenders are looking for a credit score in the 670 range, which is considered good. It’s pretty hard to have good credit when you’ve never borrowed before, and by “pretty hard” we mean not possible. This is why so many students use a cosigner for private loans – because they need to.
Repayment and relief options
Federal student loans also provide more wiggle room than private loans by offering more opportunities for relief and support.
Both federal and private loans may qualify for forbearance if you’re unable to make payments due to financial hardship, but only federal loans can be forgiven completely.
Most private loans are not eligible for forgiveness or income-based repayment plans. Income-based repayment plans ensure that your monthly payments make sense for your financial situation and are widely available for federal loans.
Borrowing limits
One advantage of private student loans is higher borrowing limits. Federal loans are given based on your financial need, but you may not qualify to have the full cost of your education covered (even if you can’t pay). Many private loans do not have a maximum borrowing limit and will let you borrow up to the full cost of your education or certificated cost of attendance (COA).
Interest
Federal student loans always have lower interest rates. And because they don’t check your credit, you don’t need a perfect credit history to qualify for the best rates. Even the best private loans come with steep APRs by comparison.
Also, interest on federal loans is more likely to be tax deductible than interest on private loans.
Fees
This is one where private loans come out on top. Unlike federal student loans, many private student loans don’t charge origination fees. These are fees charged as a percentage of your loan and deducted from your total disbursement.
Should you get a private student loan?
The first question you should ask yourself when looking for ways to fund your education is not whether you should get a private student loan but whether you’ve taken full of advantage of (much cheaper) federal funding and alternatives.
Federal student loans are a better option than private loans for almost everyone due to the fact that they’re less expensive and more flexible. They don’t require a credit check so you can qualify without any credit, and you’ll spend less over the life of the loan.
With that said, you may need to take out a private student loan if you can’t get all the funding you need from federal loans. This is fairly common, especially if you’re attending a costlier college or university.
But student loans aren’t your only option.
Alternatives to student loans
Student loans are just one way to pay for college. If you’d like to avoid taking out a private student loan or want to reduce the amount of debt you’re taking on, look into these options first.
Financial aid
Maximizing your financial aid should be your first priority when you’re thinking of borrowing money for college. After all, avoiding student loan debt is the goal. With financial aid, you probably don’t have to pay the money back. The Federal Pell Grant, for example, given to students who show exceptional financial need, doesn’t need to be repaid.
You might qualify for federal student aid even if you don’t think you do.
You can apply for federal aid through the U.S. Department of Education by completing the Free Application for Federal Student Aid (FAFSA). The FAFSA assesses your financial situation to determine if you are a good candidate to receive help from the government. This is also the form you’ll complete when applying to see how much you qualify to borrow in federal loans.
Unfortunately, international students are less likely to qualify for most financial aid.
Read more: How to read a financial aid award letter
Scholarships
Scholarships are just another way to get free money. Some student loan borrowers don’t know how to apply for scholarships or think they definitely won’t qualify and don’t bother. But the fact of the matter is that there are foundations just waiting for someone like you to come along so they can hand you money. True story.
Between merit-based and need-based scholarships, there’s usually something for everybody. There are also a variety of options specifically for different types of students such as graduate students, international students, or even those enrolled in particular programs like pre-med or education.
Many private lenders even have scholarship programs you can apply for when applying for a loan. This can help soften the blow a bit when applying for a loan.
Parent PLUS loans
Parent PLUS loans are a type of unsubsidized federal loan parents can take out on behalf of their dependents. Only biological or adoptive parents with clean credit histories (e.g. no delinquencies) can qualify.
PLUS loans are usually used alongside other forms of loans and funding, not as a primary source.
Work-study
If you qualify for federal financial aid, you may also qualify for Federal Work-Study.
Work-study is a well-named program through the Department of Education that lets you work while you study and earn money for college. Work-study jobs are often on campus and may even be in the academic buildings you’re already visiting, and they’re designed to be flexible for students. You can use the money however you need to, for the most part, and it does not count toward your financial aid. You also don’t have to pay it back – it’s yours free and clear.
How to choose a student loan
Student borrowers should consider the following factors when comparing different private and federal student loans.
Fixed vs. variable loans
Student loans can be either fixed for the entire term of the loan or variable. Fixed means that the interest rate is locked in for the length of the loan and variable means that the interest rate is subject to change.
Should you choose a fixed or variable interest rate?
This is an important question to ask yourself because it’ll ultimately determine how much you’ll pay in interest when all is said and done and your loan is paid off.
Generally speaking, variable rates on student loans are lower. But long-term, fixed-rate loans often carry less interest. Variable-rate loans will fluctuate over time and there’s the potential for rate hikes, making this the riskier choice.
Note that federal student loans only offer fixed rates while private loans might offer the choice between fixed or variable rates.
Maximum loan amounts
For federal student loans, the maximum loan amounts are between $31,000 and $57,500 for undergraduates and up to $138,500 for graduate students.
Private student loans can have maximum limits of anywhere from $150,000 to $500,000 or may allow you to borrow up to the full cost of your education (including tuition, boarding, and more).
As mentioned, many students require a mix of both federal and private loans.
Term lengths
For federal student loans, terms are typically available between 10 and 30 years. Most private loan terms are between five and 20 years.
While it might be tempting to just choose the shortest loan term available to get your student loans over with, you need to consider what monthly payments you can realistically take on when they come due.
Repayment terms
There are many different options for repaying your student loan debt. Most private lenders will let you choose to make interest-only payments, fixed payments of a certain amount (such as $25), or full payments while you’re still in school or wait until you’ve graduated to start making monthly payments.
Each type of repayment comes with its own set of advantages and disadvantages. Interest-only payments, for example, will reduce the amount of interest you pay but will mean that it takes you longer to repay your loan than if you were making payments toward the principal too.
It’s important to consider all of your repayment options and take advantage of tools such as calculators to understand what you’ll be paying and when.
Read more: 20 terms for understanding student loan debt
Fees
Federal student loans require origination fees, which currently range between 1.057% and 4.228% of the loan amount taken. Origination fees are deducted from your total payout. Private student loans normally don’t charge origination fees or other types of application fees.
Neither federal nor private student loans charge prepayment penalties if you decide to make your payments early or pay more than what’s due each month.
APR
The annual percentage rate, or APR, is the effective rate on a loan. It includes both the base interest rate and any required fees added to the calculation.
For example, if you borrow $100,000 and pay a 2% origination fee, the net proceeds of the loan will be $98,000. When a 5% interest rate is calculated on the loan, the APR will be slightly higher due to the reduced net loan proceeds.
Your APR will depend on your credit history and the terms of your loan. You may qualify for a discount through some lenders for activities such as enabling autopay or having another account with a bank.
Deferment options
With private student loans, you might have anywhere from six months to a year after graduating before you’re required to start making repayments. With federal student loans, you don’t need to start making payments until six months after you graduate. When payments are due, you may need to defer or pause them if you’re not able to pay.
Student loans may come with a variety of deferment options. For example, federal student loans come with the option to defer payments if you graduate and have trouble finding a job. Private student loans may offer deferment on a case-by-case basis, but the deferment period will vary by lender.
Just note that interest may still continue to accrue during deferment and factor this into your repayment plan.
Forbearance and loan forgiveness policies
Federal student loans offer both forbearance and loan forgiveness. For example, under the Income-Driven Repayment plan, your monthly payment can be reduced to a small percentage — usually 10 or 15% — of your monthly income.
Under a Public Service Loan Forgiveness plan, your debt can be completely forgiven if you make 120 monthly payments while working full-time for either a government agency or a qualifying nonprofit organization.
With private student loans, loan forgiveness is not an option. However, some will provide forbearance if you experience economic hardship, such as unemployment. Your options depend on which lender you’ve chosen and it’s worth looking into this before borrowing.
Cosigner release terms
You probably won’t need to use a cosigner for federal loans because these don’t have credit requirements, so cosigner release doesn’t apply. However, cosigners are common with private student loans, and you may decide to use one.
If you decide to use a cosigner, they might not be stuck on your student loans until your debt is fully paid off. Many lenders provide a cosigner release option that lets you release your cosigner and continue on the loan alone. If a lender does provide the option for cosigner release, you’ll need to apply and qualify for it by meeting repayment and credit requirements.
Look into the cosigner release terms for any loan you think about taking out and be sure to have a conversation with your cosigner about this too.
How to qualify for a private student loan
If you’ve exhausted all of your options from federal loans to financial aid and scholarships, you might decide it’s time to apply for a private loan. Here’s what you need to know.
Your credit history and income will be used to determine your loan eligibility. If you have a really limited credit history — which is common for first-time student loan borrowers — you may not be able to qualify for a private loan on your own with the terms and interest rate you want. Lenders will also look at your income as a way of determining how risky it is to loan money to you and if you have the financial means to pay them back. Again, many new borrowers don’t meet minimum income requirements.
Some lenders will let you check to see if you prequalify for a loan and show you what rates you might receive with no effect on your credit. If you have this option, use it to avoid submitting more applications than you need to.
If you can’t qualify by yourself, you might want to think about using a cosigner.
When you use a cosigner, their credit history and income will count in your favor because lenders will look at this information as an extension of your application.
Should you use a cosigner?
Applying for student loans with a cosigner makes you look better to lenders. Using a cosigner means choosing a person with more credit than yourself — such as an older relative or parent — to assume responsibility for your loan along with you. This means that their credit profile will be used to determine your eligibility and interest rates.
A cosigner must be someone more creditworthy (i.e. less risky to lenders) than yourself. Someone with a good credit score and high income is a good candidate to cosign.
Your cosigner is only partially responsible for your loan when applying. But if you fail to pay your loan back, they become fully responsible for repaying the debt.
There are several factors to consider when you’re making the decision to use or not use a cosigner on your private student loans. Beyond the financial implications of signing their name to your debt, there are personal implications as well. Asking someone to be responsible for your debt is more than just a favor and a decision that shouldn’t be made lightly.
And if you do end up applying with a cosigner, you might want to have the option to release them as soon as possible. Cosigner release gives you the flexibility to assume full responsibility for your student loan after applying. To qualify for cosigner release, you usually need to make a certain number of consecutive monthly payments – such as 12 or 24 – toward both the principal and interest of your loan. Then, your eligibility as an individual can be reassessed.
Summary
Navigating the process of taking out a private student loan for the first time is a tricky business. But while it isn’t our idea of a good time, it’s definitely worth sitting down and comparing your options before signing your name to thousands of dollars of student loan debt.
If you start with these private lenders and take your time to make the right decision, you should be in good shape to get the loan you need and borrow responsibly.
Millions of Americans struggle to pay off their student loan balance, and our collective educational debt has now reached an officially-out-of-control $1.75 trillion. Yikes. But if you have a solid credit history and a consistent income, a good student loan refinance could cut down your debt stress in a major way. Student loan refinancing consolidates … [Read more…]
In the private student loan marketplace, Discover Bank provides some of the most tried-and-true options, including loans for undergraduate, graduate, and multiple pre-professional programs.
Discover also offers competitive interest rates and some of the most flexible repayment options of any private lender. And there’s one bonus that makes Discover stand out: borrowers get cash rewards for good grades.
What’s Ahead:
Pros & Cons of Discover Student Loans
Pros
No loan fees — Discover doesn’t charge the fees that can ratchet up the cost of other servicers’ loans, like origination, application, and late fees. They don’t even charge prepayment penalties.
Multiple repayment options — Student loans from Discover have deferment and forbearance extensions, and eased repayment options for borrowers experiencing economic hardship. This kind of flexibility is rare for private lenders.
Large loan limits — With many loans Discover offers, including undergraduate and graduate loans, you can borrow up to the full cost of your education. However, there are aggregate limits for all Discover loans; Discover makes sure you don’t borrow more than you need, and you may not be able to borrow above a certain maximum.
Cons
Cosigners can’t be released — Unlike several private lenders, Discover keeps cosigners on the hook for repayment responsibility until the loan is fully repaid. If your loan is supported by a cosigner, this is important to keep in mind.
Narrow loan terms — While some lenders offer a range of short and long repayment term options, Discover repayment terms are limited to 15 or 20 years. This means you could potentially accumulate more interest.
No prequalification process — With prequalification, you can check if you qualify for a loan without going through a hard credit check. Discover requires the hard credit check, which “dings” your credit temporarily.
Read more: Soft Pull vs. Hard Pull – How Each Affects Your Credit
Types of Student Loans Discover Offers
Undergraduate Programs
If you’re enrolled at least half-time in an associate’s or bachelor’s degree program, Discover can help you out with costs. One unique feature of Discover’s undergraduate loans is the multi-year option, where you can pre-qualify to borrow loans for future semesters at the same school and in the same degree program. Since most Bachelor’s degree programs take at least four years, this could save you a ton of time.
Freshmen are also eligible for extra good-grade perks. In addition to the 1% cash reward Discover offers all its borrowers for 3.0 GPAs or higher, undergraduate freshmen can get an additional 1% of their loan amount as a cash reward.
APRs: Fixed: 5.49%–13.99%; Variable: 2.99%–12.59%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 15 years
Graduate Programs (Master’s and PhD Degrees)
These loans are for students enrolled at least half-time in eligible master’s or PhD programs in a range of subjects. Eligibility may depend on a credit check, but qualified borrowers can take out up to 100% of their cost of attendance, which can be substantial for graduate school.
APRs: Fixed: 5.49%–14.99%; Variable: 3.99%–13.99%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 20 years
MBA Programs
Like other graduate programs, business school can be pricey; fortunately, it has its own Discover loan options. Eligible borrowers should be enrolled at least half-time in a business school program leading to an MBA.
APRs: Fixed: 5.49%–11.99%; Variable: 4.24%–10.99%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 20 years
Medical School
Discover supports medical students in these specialties: allopathy, dentistry, nursing, occupational therapy, optometry, osteopathy, pharmacy, physical therapy, physician assistant, podiatry, and veterinary medicine. If you’re in an eligible program for a specialty on this list, you may qualify.
APRs: Fixed: 5.49%–9.99%; Variable: 3.99%–8.59%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 20 years
Medical Residency and Relocation
These loans help cover the costs of post-grad medical residencies and internships, including moving costs. The eligible amounts differ based on the specific programs, but a variety of graduate health profession programs are included, as are veterinary and dental residencies.
APRs: Fixed: 5.99%–8.99%; Variable: 4.49%–7.24%
Loan amounts: $1,000 to $18,000 for allopathy, dentistry, optometry, osteopathy, pharmacy, podiatry, and veterinary medicine programs. $1,000 to $5,000 for nursing, occupational therapy, physical therapy and physician assistant programs.
Loan terms: 20 years
Law School
Students enrolled at least half-time in a degree-granting law school graduate program are eligible to borrow up to 100% of their school costs for each year of school.
APRs: Fixed: 5.49%–13.99%; Variable: 3.99%–12.59%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 20 years
Bar Exam Expenses for Law Students
Recent law school grads, or students in their final year of law school, are eligible for this loan that gives them resources and time to study for the all-important bar exam.
APRs: Fixed: 6.49%–13.99%; Variable: 4.99%–12.99%
Loan amounts: $1,000 to $16,000
Loan terms: 20 years
Parent Student Loans
For students whose parents are helping out with their education, Discover has parent-specific private loans with competitive terms. Parent loans can cover either undergraduate or graduate student costs.
APRs: Fixed: 9.49%–14.49%; Variable: 7.99%–13.49%
Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
Loan terms: 15 years
Consolidation Loans
Discover also offers private consolidation loans. Technically, these are refinanced loans rather than consolidated loans, but you still get a potential lower monthly payment and a simplified payback process.
Read more: Student Loan Consolidation and Refinancing Guide
Borrowers who choose this option should be aware Discover has longer payback terms for refinanced loans — 10-year or 20-year terms—compared to most lenders. You might make smaller monthly payments, but at the expense of racking up more interest.
APRs: Fixed: 4.99%–9.49%; Variable: 3.99%–7.99%
Loan amounts: Minimum $5,000; maximum up to the aggregate amount of your loan debt
Loan terms: 10 or 20 years
Eligibility
To apply for a Discover loan, you must:
Be enrolled at least half-time and on track towards a degree
Be making “satisfactory academic progress” according to your school
Pass a credit check — as with most private loans, your credit rating helps determine the interest rate you can get
Be a U.S. citizen, permanent resident, or international student with a citizen/resident cosigner
Be 16 years of age or older
In many cases, especially with undergraduate loans, you’ll need a cosigner. Make sure your cosigner is in it for the long haul, since Discover requires cosigners to keep their name on the loan until it’s paid.
Read more: What Does Being a Cosigner Really Mean?
Interest Rates
Discover provides a range of interest rates competitive with the industry average for private student loans, though on the higher end of the spectrum.
Borrowers can choose between fixed and variable rates. Fixed rates stay the same over the life of the loan. Variable rates may rise or fall within a predetermined range depending on the market.
You’re eligible for lower interest rates if you or your cosigner have good credit (think high 600s or above). Rates also vary based on the amount of the loan and the length of the term.
Perks and Benefits of Discover Student Loans
Rewards for Good Grades
Discover wants you to do well! As long as your GPA is 3.0 or higher for the year, you’ll get a 1% cash reward for each loan. The reward applies annually if you take out a loan each year. And you can spend the extra cash any way you want.
No Fees
You don’t pay application or late fees — every payment you make goes toward the loan.
Auto Debit Rewards
For enrolling in automatic payment during your repayment period you’ll get a 0.25% reduction on your interest rate.
Repayment Terms
Private loans are known for having less flexible repayment terms than federal loans, but Discover is one exception. The bank makes multiple forms of repayment assistance available to borrowers, including payment extensions and reduced payments as needed.
Interest-Only or Fixed Plans
For in-school repayment you can choose an interest-only plan or a fixed plan. On the interest-only plan you make payments on the interest but not the principal while in school. You’re rewarded with a 0.35% interest rate discount.
The fixed plan requires monthly payments of $25, saving you money on interest later. Those who want to pay early can do so — there’s no prepayment penalty.
Deferment
Deferment lets you delay payments while in school and during your six-month grace period. This option accumulates more interest than the in-school repayment plans.
You can defer for longer periods of time during a medical residency, active military duty or qualifying public service.
Forbearance
Forbearance gives you a chance to postpone loan payments for up to 12 months during times of financial hardship. As with deferment, interest continues to accrue.
For borrowers struggling to make payments, Discover has a few more choices beyond forbearance:
A temporary interest rate reduction gives you a lower interest rate and payment (a $50 monthly minimum) for up to six months.
A temporary payment reduction allows you to pay down the interest only (a $50 monthly minimum) for up to six months. To get this reduction you should be less than 60 days behind on payments.
Early repayment assistance lets you postpone payments for three months (within the first three months of your repayment period).
Payment extension is for people who are at least 60 days behind on their loan payments — if you make three minimum monthly payments within 90 days, your loan will be brought back to “current” status.
Alternatives to Discover Student Loans
Discover isn’t the only private lender option for students out there. Here’s how Discover stacks up against some of the competition.
Earnest
<img decoding="async" class="alignright size-full wp-image-67137" src="https://www.moneyunder30.com/wp-content/uploads/2019/01/Earnest_210x100.jpg" alt="Best Personal Loans Of March 2021
Paying off student loan debt may seem like a small step on your financial path – but for some people, it’s a lengthy journey all on its own. A 2013 survey found that the average borrower took over 20 years to pay back their loans.
If you’d like to become debt free in your 20s, you’ll need a plan that takes into account your personal circumstances and all available repayment options. We’ll help you come up with the best strategy in the article below.
What’s Ahead:
Pros and cons of paying off student loans early
Pros
Save on total interest
Remove the psychological burden of student loans
Make it easier to qualify for other loans
Cons
May earn more money by investing extra funds
Can delay other financial and personal milestones
May miss out on future loan forgiveness opportunities
How to pay off student loans early
Paying off your student loans early is just like paying off any other debt. You’ll need to get your information together so you know you what you’re dealing with. Then you’ll choose a loan to focus on and start paying them off one a time, paying as much extra as you can.
Two things that can make the pay off go even faster are lowering your interest rate on private loans and increasing your income. Lower interest rates means more money goes to your balance and more income will mean you can make larger payments.
Organize your loans
If you recently graduated and don’t know how to find your student loan information, log onto the Federal Student Aid (FSA) website to locate your federal loans. You will need your FSA ID and password. If you don’t remember your username or are having trouble logging in, contact the FSA at 1-800-433-3243.
The FSA website will only list your federal loans. To find your private student loans, check your official credit report from all three credit bureaus at www.AnnualCreditReport.com. Your credit report should list any private student loans taken out.
Before you start throwing extra money toward your student loans, you should figure out how much you owe. Open a spreadsheet and write down the following information for each loan:
Lender name
Monthly payment
Interest rate
Total loan amount
Federal or private loan
Having all the information in one place will help you determine the most efficient debt payoff strategy.
Research loan forgiveness options
If you have federal student loans, you may be eligible for several loan repayment and forgiveness programs. Taking advantage of these programs can help you pay less each month while also saving on total interest.
The Public Service Loan Forgiveness (PSLF) program will cancel any remaining balance after 120 monthly payments while working for an eligible nonprofit or government organization. Borrowers must be on an income-driven repayment plan during that time to qualify for PSLF, so their monthly payments will be lower than normal.
There are also many loan repayment programs geared toward professionals in the healthcare and legal fields. You can have tens of thousands of loans forgiven in exchange for working in an underserved community for a few years.
Choose a loan repayment strategy
If you want to pay off your loans ahead of schedule, you can choose between the debt snowball or debt avalanche method.
The debt snowball method involves paying extra on the loan with the lowest loan balance. Once that loan is paid off, you will add extra money to the loan with the next smallest balance. The debt snowball method has been proven to be more motivating to borrowers.
The debt avalanche method means adding extra to the loan with the highest interest rate. Once you pay off that loan, you will focus on the loan with the next highest interest rate. The avalanche strategy will result in saving the most money on total interest, though it may take you more time to repay individual loan balances.
Refinance private student loans
Borrowers with private student loans may be able to refinance those loans to a lower interest rate, saving them more interest in the long run. Start by comparing your current interest rates to overall market rates. If your rates are higher than what other lenders are offering, it may be time to refinance. Use our student loan refinancing calculator to see how much you could save.
If you have multiple private loans with high interest rates, you may be able to refinance all of those loans into one loan with the same lender. This will also simplify repayment.
Borrowers with federal student loans should think twice before refinancing, as those loans will then be converted into private loans. Once you refinance federal loans, you will lose all the perks and benefits like income-driven repayment plans, loan forgiveness programs and long deferment and forbearance options. It’s best to leave federal loans as they are.
If you need to refinance your private student loans here’s our list the best companies for student loan refinancing.
When making extra student loan payments, it’s important to ensure that these funds are being diverted correctly. Some lenders will take the extra funds and apply it to the next monthly payment instead of adding it to the principal.
Contact the lender and ask them how to ensure your extra payment will go toward the principal. Then, double check each month to verify that your payment has been applied correctly.
Find ways to earn more money
If you can’t afford to pay extra on your loans and want to, it’s time to evaluate your budget. But as inflation continues to plague regular Americans, cutting expenses may not be enough. Getting a side hustle or increasing your salary may be the only way to funnel more money toward your loans.
Here are some ideas for how to make extra money.
What about Biden’s student loan forgiveness program?
As of early this year, there is a new plan being discussed for those on income driven paymen plans. With this new plan, payments for undergrad would be set at 5% of your discretionary income (this is government speak for “take home pay minus a small amount for basic living expenses”) and after you’ve made payments for 20 years any remaining balance is forgiven.
Graduate loan payments would be 10% of discretionary income and those who borrowed less than $12,000 would only have to make payments for 10 years before forgiveness would set in.
Summary
Paying off your student loans early may seem like the best financial decision you can make – but don’t do it at the expense of your other life goals. For example, if you want to buy a house, you will have to save for a down payment. If you want to quit your job and become self-employed, you may need some start-up funds.
Also, don’t forget to invest for retirement while paying off your loans. The power of compound interest means you can reap huge rewards when you start investing early. You should also have a substantial emergency fund in place before you pay extra on your loans. This will prevent you from having to take on more debt if something unexpected happens.
Last Updated: May 28, 2023 BY Michelle Schroeder-Gardner – 29 Comments
Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.
Are you looking to start refinancing student loans? The average 2015 college graduate has slightly over $35,000 in student loan debt.
And, if you have a law or medical degree, you may find yourself with an average of around $150,000 or $200,000 in student loan debt, respectively.
That’s a lot of money!
One thing I haven’t talked about much here on Making Sense of Cents is that there are many options for paying off your debt, such as by consolidating or refinancing your student loans.
Many don’t realize that they may be able to refinance or consolidate their student loans. I personally know this because I never once thought about either back when I had student loan debt.
Before you make the leap of consolidating or refinancing student loans, though, there are many things to think about. Continue reading below to determine if either consolidating or refinancing student loans is the right decision for you.
Related: How I Paid Off $40,000 In Student Loan Debt In 7 Months
Consolidating Student Loans – Positives And Negatives
Consolidating your student loans is when you combine your student loans into one single loan.
If you have federal student loans, you may be able to do a federal loan consolidation. While federal student loan consolidation most likely won’t help you save money by combining, it may help you to better manage your loan payments. This is due to the fact that you will only have one bill each month after you consolidate (this is why it’s called “consolidation”).
Many graduates have over five different student loans to pay each month, which can cause a huge mess if you forget to pay one!
Disclosure: We receive compensation from the companies below if you click on a link. Amount of compensation does not impact the ranking or placement of a particular product. Not all available financial products and offers from all financial institutions have been reviewed by this website. This content is not provided by Credible or any of the Providers on the Credible website. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by Credible.
Related tip: I highly recommend Credible for student loan refinancing (they are the top student loan refinancing company and have great customer service!). You can lower the interest rate on your student loans significantly by using Credible which may help you shave thousands off your student loan bill over time. Through Credible, you may be able to refinance your student loans to a rate as low as 2.47%! Plus, it’s free to apply.
Refinancing Student Loans: Positives And Negatives
Student loan refinancing is when you apply for a new loan that is then used to pay off your other student loans.
This is usually a great option if your credit history or credit score are better than when they were when you originally took out your student loans.
By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.
The positives of refinancing student loans include:
Companies, such as Credible (this is an affiliate link and I highly recommend them), allow you to refinance your federal student loans as well as your private student loans into one. The average person who refinances can save thousands of dollars on their loan, which is a great amount! You can save a lot of money through student loan consolidation such as with Credible, especially if you have high interest federal or private loans.
Before refinancing a federal student loan, though, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans, loan forgiveness for those who have certain public service jobs (such as certain jobs at public schools, the military, Peace Corps, and more). By refinancing federal student loans, you are giving up any future option to these.
However, keep in mind that by refinancing student loans, you may receive lower monthly payments, lower interest rates, and more. This may help you pay off your debt a lot more quickly.
Things you should think about before you take your next step.
Before you take your next step, I wanted to recap the above so that you are clear about what your choices are.
If you are able to take advantage of deferment, loan forgiveness, or some other sort of federal student loan program, you may want to think twice before you refinance federal student loans.
Be careful with variable interest rates. While they may seem appealing at times, remember that your interest rate may fluctuate. If you currently have a variable rate, you may want to refinance into a fixed-rate and this may make refinancing a great decision for you.
Consolidating your student loans usually leads to increasing your loan term, which may lead to lower monthly payments. However, it can also lead to higher interest charges over the life of your loan.
If your credit is better than it was when you first took out your student loans, you may be able to qualify for better terms and a better interest rate by refinancing student loans. I recommend shopping around to see what you can get. Start out by checking out Credible!
Do you have student loan debt? What’s your action plan to pay off student loans? Do you plan on refinancing your student loans?
Failing one class does not mean you’ll automatically lose access to federal financial aid. But these funds do have academic eligibility requirements, as outlined in your school’s satisfactory academic progress (SAP) guidelines. So if you fail to meet the SAP requirements set by your school’s financial aid office, you could be cut off from future aid.
Federal aid — any aid you received by submitting the Free Application for Federal Student Aid (FAFSA) — could include need-based grants, work-study and federal student loans. These could be taken away if you violate your school’s SAP policy.
Each institution defines its own SAP policy, so requirements could vary. But many schools follow these guidelines.
Students must:
Maintain a minimum cumulative GPA between 1.6 and 2.0.
Complete at least 67% of all attempted credit hours.
Finish a degree in no more than 150% of the program’s average number of required credit hours. (If the degree typically requires 120 credits, you can only get financial aid for 180 credits — including classes that you failed or dropped.)
Contact your school’s financial aid office for information on your specific SAP requirements.
What happens if you fall below your school’s SAP requirement?
Before cutting your access to federal financial aid, a school may issue a warning and put you on probation. You may still have access to federal funds during this time, but your grades, for example, are expected to improve. If you do not achieve SAP standards by the conclusion of your probation, you will be unable to receive federal funds until you do. How long you’re ineligible for aid depends on how often the school evaluates student performance.
Some schools only offer SAP probation if you fail to meet academic guidelines due to extenuating circumstances, such as a death in the family or serious illness or injury. By submitting a satisfactory academic progress appeal, you can explain why you could not meet SAP standards and why you believe you will be able to meet those standards in the future. If your appeal is approved, you may be able to maintain financial aid eligibility while the college monitors your progress.
How to regain eligibility for financial aid
To regain access to federal aid, you’ll need to show your institution that you can make satisfactory academic progress as outlined by the financial aid office. You might need to:
File a satisfactory academic progress appeal. Depending on the school’s process, filing an approved SAP appeal could help you regain access to aid faster by placing you on probation, where your performance is evaluated more frequently.
Retake courses at your current school. To improve your GPA or pass more classes, you may need to retake what you previously failed. This can be hard to do without federal financial aid. You may need to consider private student loans to close the temporary gap in funding — but only if you have a solid plan to improve your grades and meet SAP standards.
Transfer to a less expensive college. Improving your grades without financial aid is no small feat. Consider transferring to a less expensive university or community college while you raise your GPA and accumulate enough credits to meet SAP requirements. You can also enroll part-time so that you can work while taking classes.
Submit the FAFSA every year. Your completed FAFSA is valid for one academic year. Complete the FAFSA each year to qualify for federal aid, especially if you’re in better academic standing and are now meeting SAP requirements.
There’s almost nothing as ominous as the phrase “finals week.” Cue the thoughts of cramming, sleep deprivation, and high anxiety. The stress the two words can induce is almost universal among college students.
However, students can both survive and succeed during finals week as long as they prepare. Here are four tips to help students get ready for finals week.
Getting organized is a great way to feel in control before finals begin. College finals week doesn’t have to blindside students, forcing them into all-nighters and sleepovers in the library. There are a couple of things students can do to get set up for finals week.
Memorize Your Finals Schedule
The dates for finals week are usually available from the beginning of a semester. This may vary by school, but students can sometimes find their finals information in their syllabus.
Memorizing the schedule and writing it down will ensure that students don’t forget to study for any exams and can budget enough time for each test.
Make a Study Plan
Once students have their finals schedule memorized, they can start mapping out their study strategy. Students can base their study tips on which finals will require the most studying and the dates they occur.
It is recommended that students avoid long cram sessions. Studying ahead of time in shorter increments helps to retain information. This is why mapping out a study plan ahead of time can be helpful.
When making a plan, there are different strategies students can use. They can create a schedule based on the difficulty level of the tests, choosing to set aside more time to study for the finals that will be the most challenging for them.
They can also plan their schedule based on the order of their finals, saving more time later on to study for the last exams.
Having a plan can help students avoid cramming, spending too much time studying for one final over another, or forgetting to study for one altogether.
Recommended: Do Grades Affect Student Loans?
2. Keep Your Body Healthy
As tempting as it is to stay in the library 24/7 living on ramen and coffee, staying physically healthy during finals week is important for bringing home those good grades.
Eating a balanced diet — yes, that means fruits and veggies too, before and during finals week — can help students stay focused and avoid getting sick during finals.
Drinking water is also a good idea when plotting to ace those finals. Dehydration can have many negative effects, like tiredness, headaches, reduced alertness, and diminished concentration, which could affect test performance. Even drinking water during an exam can lead to better performance.
Another important piece of staying healthy is getting enough sleep. It’s common to see students pulling all-nighters in the library during finals week, but a lack of sleep can result in a worse memory and therefore, an inability to remember what has been studied. Missing out on a full night’s sleep can be detrimental to students’ ability to pass their exams.
Exercising is also often deprioritized during finals week. Students are so focused on studying that it’s easy to skip that 30-minute workout. Exercise, though, needs to find a place in a hectic schedule because it will benefit a student during this stressful time. Exercise can both lower stress and maintain high-level brain functioning, leading to a better chance of crushing those exams.
3. Keep Your Mind Healthy
Maintaining good mental health during the school year may already be a challenge, but especially during finals week it’s important to pay attention to and take care of mental health.
Even students who don’t regularly have anxiety may experience it during finals week. There are many calming techniques available to ease anxiety, and each student should see what feels best. Here are a few techniques they can try.
• Breathing. There are tons of breathing techniques out there that can help with anxiety or stress. Students should look up a few simple ones and see what works best for them.
• Grounding. This is a technique where students focus on their senses, naming five things they can see, four things they can feel, three things they can hear, two things they can smell, and one thing they can taste. Doing this can reduce anxiety or panic and help students stay focused.
• Meditation. Taking up a daily meditation practice before studying and before exams start could help a person stay calm during stressful events. There are lots of meditation apps available as well as guided meditations online.
Another piece of maintaining mental health during finals week is taking breaks. Breaks are beneficial both for studying ability and mental health. Taking a break to do something enjoyable can decrease stress and keep a student’s mind in a good place.
Anyone experiencing high levels of anxiety can reach out to school counselors and see about making an appointment. Students may also benefit from talking about their stress with friends, family members, or professors. Leaning on a social support network during this stressful time may alleviate some of the nervousness that comes with finals week.
Lastly, students should ask for help if they need it. Most colleges have mental health services on campus.
4. Team Up
Students should remember that they’re not going through finals alone. They have a whole class of students struggling right alongside them. This can be a huge asset come finals week.
Instead of studying alone, students can form study groups.Study groups can help students be better prepared for finals. There may be some in the class who understand the material better and can teach it to others.
This helps both the student struggling and the student teaching. The struggling student gets new explanations for tricky material that may be easier to understand. The teaching student solidifies the material in their memory even more by explaining it to others.
Being in a study group can also help with accountability, so students are less likely to slack off and stop studying.
Those who need further support during finals week can visit their professors during office hours or consider getting a tutor. Professors want to see their students succeed, and though they can’t give answers to exam questions, they can help explain parts of the material that someone is struggling with.
No Pay, No Gain
Wait, so college students are paying to suffer through finals week? Technically, yes, because college costs money, of course, and even if the nightmare of finals week is still far off, it’s never too soon for students to start sorting out how they’re going to finance their entire college education.
There’s more than one resource available to students when it comes to funding college expenses. Here are a few, broken down in an easy-to-understand way.
Federal Aid
Students already in college might be familiar with the Free Application for Federal Student Aid, commonly known as the FAFSA.® Eligibility for undergraduates is usually based on parents’ income. Federal aid can come in the form of grants or loans. Grants usually don’t need to be repaid, but loans do.
Federal loans usually come with benefits that private loans don’t, such as income-driven repayments and lower fixed rates. It’s recommended that if students need to take out loans, they use federal loans before turning to private loans.
Is the FAFSA® one and done? Not at all. You must complete the application every year that you attend school if you hope to gain federal aid, and on time.
Free Money
The world of scholarships is vast. Though it can take some digging to find scholarships that students are eligible for, it’s money that usually doesn’t need to be repaid.
Scholarships can be need based or merit based, with the eligibility requirements different for each one. Scholarships come from colleges, corporations, local community organizations, religious organizations, and more.
Students might want to check if their college has any information available on scholarships. Usually, schools have a scholarship office or information about scholarships at their financial aid office.
Another Option
Private student loans are another way to help fund the college experience, when federal aid doesn’t cover all the bases, a student doesn’t qualify for federal aid, or someone has reached a limit on federal direct loans.
The eligibility for private student loans is usually based on a student’s income and credit history, or that of a cosigner. Each lender will have its own terms, including the interest rate and repayment methods, which merit research.
SoFi offers private student loans with attractive fixed or variable rates, no fees, and a quick online application.
See if you prequalify with SoFi in just two minutes.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. SOIS0523004