How We Assess Student Loans

Insider’s experts choose the best products and services to help you make informed 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 have exhausted other financial aid offers and still need more money to cover the cost of your education, you may consider taking out a student loan. We review available lenders and their loan offers in reviews and guides that help you make the best borrowing decision possible.

To ensure we rate them all equally, we use a rating system that considers a range of factors from interest rates and fees to customer support and ethics. We look at the pros and cons of each company and product, comparing them with others available so you can decide which student loan is right for 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 Note

4.5/5
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APR

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

Editor’s Note

3.25/5
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APR

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

Editor’s Note

3.5/5
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What we look for when scoring student loans

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

  • Interest rate (20% of note)
  • Fees (20% of the bill)
  • Term of office (15% of mark)
  • Repayment options during studies (15% of grade)
  • Borrower accessibility (15% of score)
  • Customer support (7.5% of score)
  • Ethics (7.5% of grade)

The weighting of each category is determined based on its importance to your borrowing experience. Rates and fees have the biggest impact on the total cost of your loan, which is why we weigh them the most. Customer support and ethics are still crucial parts of the borrowing experience, but are not directly tied to the terms of a student loan, so they have less impact on the overall score.

Interest rate (20%)

We look at the minimum and maximum rating a lender offers on their student loans to determine their rating. A low minimum rate is ideal for borrowers with excellent credit, while a low maximum rate caps the cost for borrowers with poorer credit. We look at whether a lender offers both fixed and variable rates. With variable rates, we consider how often the rate changes and the parameters used to determine the adjustments.

Examples

  • A lender will receive 5 out of 5 if its minimum variable and fixed APRs are among the lowest on the market (approximately 2.99% for the variable and 3.25% for the fixed) and the maximum rates are low (12% for the variable and 13% for the fixed ) and that it keeps its rates relatively stable .
  • If a lender has a higher minimum APR but still has low rates (around 3.5% for variable and fixed) and a higher maximum APR (around 13.5% for variable and fixed) and changes its rate 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 can charge you a variety of fees, ranging from origination fees to late payment penalties. We give high marks to lenders who charge minimal or no fees.

Examples

  • If a lender does not charge any fees, they will get a 5 out of 5.
  • Lenders with minimal origination fees and reasonable late fees will receive 2.5 out of 5.
  • Lenders will receive a 1 out of 5 if they charge high origination fees that take a significant chunk of your total loan amount and late fees that add up if you are late on payments.

Term of office (15% of mark)

We determine whether the company has a variety of repayment terms, providing options for borrowers who want to repay their loans quickly and save on interest, as well as those who want to spread their costs over several years. Longer terms usually come with a higher interest rate that you will have to pay for longer.

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

Examples

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

Repayment options during studies (15%)

The best lenders offer several in-study repayment options, including deferred, fixed, interest-only, and full payment. The best repayment plan depends on your situation.

Examples

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

Borrower accessibility (15%)

Lenders can only meet the needs of borrowers in certain states, or with certain credit scores and income levels. We look at how accessible the lender is to borrowers from diverse backgrounds. Some lenders also don’t require credit scores, making them even more accessible to students.

Examples

  • Lenders who are available in all states and have minimal or no credit requirements will get 5 out of 5.
  • A business that is available in nearly every state or has slightly stricter eligibility criteria will receive a 3 out of 5.
  • Lenders will receive a 1 out of 5 if they are not available in most states or if they have high barriers to entry for most borrowers.

Customer support (7.5% of score)

We take stock of the different ways you can contact customer support. For example, we look at whether you can contact someone by phone, live chat, email, or regular mail. We also look at customer service hours and give high marks to companies that offer 24-hour service.

Examples

  • A lender will receive 5 out of 5 if it offers multiple ways to contact it and is open seven days a week for a significant part of the day.
  • A lender with customer support available six days a week and many ways to contact them will win 3 out of 5.
  • Lenders will receive 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 grade)

We review the company to see if there have been any scandals over the past three years. We investigate whether the business is known to be racist or sexist towards 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 whether it has been scandal-free in the past three years and whether it has an A+ rating from the Better Business Bureau.
  • If a company has no scandals and a BBB rating of around B, it will get a 3 out of 5.
  • Lenders will receive a 1 out of 5 whether they have been part of a major scandal in the past three years or have a BBB rating of D or lower.

Our ratings can help you determine which lender is best for you. Student lenders who achieve high scores in each category will be our lenders with the highest overall scores. Still, you can think of options with lower overall ratings if they suit your individual situation better or if you prioritize a certain feature.

About Judith J. George

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