How We Rate Student Loans

Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.

If you’ve exhausted other financial aid offerings and still need more cash to cover the cost of your schooling, you may consider taking out a student loan. We critique the lenders available and their loan offerings in reviews and guides that help you make the best borrowing decision possible.

To ensure we evaluate all of them equally, we use a rating system that considers a range of factors from interest rates and fees to customer support and ethics. We consider the pros and cons of each company and product, comparing them with others that are available so you can decide which student loan matches your particular needs.

Insider’s Featured Student Loan Companies

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APR

Variable: 2.49% – 13.85%, Fixed: 3.22% – 13.95%

Editor’s Rating

4.5/5

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APR

Variable: 3.37% – 13.72%, Fixed: 3.75% – 13.72%

Editor’s Rating

3.25/5

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APR

Variable: 3.04% – 11.55%, Fixed: 4.12% – 14.27%

Editor’s Rating

3.5/5

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What we look for when rating student loans

We rate all student loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others. They are:

  • Interest rate (20% of rating)
  • Fees (20% of rating)
  • Term lengths (15% of rating)
  • Repayment options while in school (15% of rating)
  • Borrower accessibility (15% of rating)
  • Customer support (7.5% of rating)
  • Ethics (7.5% of rating)

Each category’s weighting is determined based on its importance to your borrowing experience. Rates and fees have the most significant impact on the total cost of your loan, so we weigh those the most heavily. Customer support and ethics are still crucial parts of the borrowing experience, but do not directly tie to a student loan’s terms, so they have less of an impact on the overall rating.

Interest rate (20%)

We look at the minimum and maximum rating a lender offers on its student loans to determine its rating. A low minimum rate is great for borrowers with excellent credit, while a low maximum caps the cost for borrowers with worse credit. We look at if a lender offers both fixed and variable rates. With variable rates, we consider how often the rate changes and what metrics are used to determine the adjustments.

Examples

  • A lender will receive 5 out of 5 if its minimum variable and fixed APRs are among of the lowest on the market (about 2.99% for variable and 3.25% for fixed) and maximum rates are low (12% for variable and 13% for fixed) and it keeps its rates relatively steady .
  • If a lender has a higher minimum APR but still has low rates (about 3.5% for variable and fixed) and a higher maximum APR (about 13.5% for variable and fixed) and changes its rates a little more frequently, it will earn 3 out of 5.
  • Lenders with significantly high rate ranges and frequently fluctuating rates will get 1 out of 5.

Fees (20%)

Lenders may hit you with a variety of fees, from origination fees to late payment penalties. We give high marks lenders that charge minimal or no fees.

Examples

  • If a lender charges no fees, it will get a 5 out of 5.
  • Lenders with a small origination fee and a reasonable late fee will receive 2.5 out of 5.
  • Lenders will get a 1 out of 5 if they charge hefty origination fees that take a significant portion out of your total loan amount and late fees that add up if you’re delayed on payments.

Term lengths (15% of rating)

We determine if the company has a variety of repayment term lengths, offering options for borrowers who want to pay off their loans quickly and save on interest, as well as those who want to spread their costs over more years. Longer terms generally come with a higher interest rate that you’ll have to pay for longer.

We also see if the company sets repayment terms or if the borrower is able to choose.

Examples

  • A lender will earn a 5 out of 5 if it offers several repayment term lengths and has many options to choose from.
  • Companies with fewer options for term lengths or a set repayment term length get a 3 out of 5.
  • Lenders will receive a 1 out of 5 if they have extremely tight loan amount ranges or select your term length for you from a limited number of options.

Repayment options while in school (15%)

The best lenders offer multiple options for repayment while in school, including deferred, fixed, interest-only, and full payment. The best repayment plan depends on your situation.

Examples

  • Lenders that have all four options will get 5 out of 5.
  • Lenders with three of the four options will earn 3 out of 5.
  • Lenders will receive a 1 out of 5 if they have only one option for the loans they make.

Borrower accessibility (15%)

Lenders may only cater to borrowers in certain states, or with certain credit scores and income levels. We look at how accessible the lender is for borrowers with a range of backgrounds. Some lenders also don’t require credit scores, making them even more accessible for students.

Examples

  • Lenders that are available in all states and have minimal or nonexistent credit requirements will get 5 out of 5.
  • A company that is available in almost every state or has slightly stricter eligibility requirements will receive a 3 out of 5.
  • Lenders will get a 1 out of 5 if they aren’t available in most states or if they have high barriers to entry for most borrowers.

Customer support (7.5% of rating)

We take stock of the different ways you’re able to contact customer support. For instance, we look at if you can contact someone over the phone, by live chat, through email, or regular mail. We also review customer service hours and give high marks for companies that offer around-the-clock service.

Examples

  • A lender will receive 5 out of 5 if it offers several means of contact it and is open seven days a week for a significant portion of the day.
  • A lender with customer support available six out of seven days and many ways for you to contact it will earn 3 out of 5.
  • Lenders will get a 1 out of 5 if they have limited ways for you to contact them and are only available during certain hours of the traditional work week.

Ethics (7.5% of rating)

We look into the company to see if there have been any scandals in the past three years. We research if the company is known for being racist, or sexist toward its customers or staff or has predatory lending practices. We also consider the company’s Better Business Bureau rating.

Examples

  • A lender will receive 5 out of 5 if it has had no scandals in the last three years and has an A+ rating with the Better Business Bureau.
  • If a company has no scandals and a BBB grade of about B, it will get a 3 out of 5.
  • Lenders will get a 1 out of 5 if they have been a part of a significant scandal within the past three years or if they have a BBB grade of D or lower.

Our ratings can help you determine which lender is best for you. Student loan loan lenders that earn high marks in each category will be our lenders with the highest overall ratings. Still, you may think about options with lower overall ratings if they are a better fit for your individual situation or if you prioritize a certain feature.

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