Undergraduate Student Loans
Compare multiple undergraduate student loans without negative impact on your credit score.
Best Loans for Undergraduate Education
Compare Undergraduate Student Loans
In today’s world, it’s almost required to have a college degree to get a well-paying job. While it isn’t true in every case, even entry-level jobs nowadays are beginning to require a minimum of a two-year degree.
As degree requirements become more and more common - the cost of obtaining a degree continues to increase. Continue reading to learn more...
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The United States currently ranks second in the world in the average tuition cost for a public university. With costs continually rising, the need for financial assistance has never been higher. Students all across the country have been turning to undergraduate student loans to help pay their way through school.
What is an undergraduate student loan?
An undergraduate student loan is a type of loan that is intended to help students pay for their undergraduate education. The loans can help students pay for the cost of their tuition, books, housing, food, and other various educational expenses.
Compared to other types of loans, student loans are designed to have lower interest rates that make it easier for students to pay them back.
They will also often have the initial payments deferred until the student graduates from school. This allows students to find a job before beginning payments.
In the United States, there are private student loans and federal student loans. Federal student loans make up the majority of loans in the United States and tend to be cheaper than their private counterparts.
Compare undergraduate student loan rates
Below are the current rates offered by various lenders for undergraduate student programs.
Ascent
✔ Fixed APR: 3.21%-13.02%
✔ Degrees: Undergraduate and graduate student loans
✔ Loan Term: 5, 7, 10, 12, 15, and up to 20 years
✔ Fees: No application or origination fees
✔ Cosigner release: Yes.
Citizens
✔ Fixed APR: 3.23%-11.70%
✔ Degrees: Undergraduate and graduate student loans
✔ Loan Term: 5, 10, 16 years
✔ Fees: No application, origination, or prepayment penalty fees
✔ Cosigner release: Yes.
College Ave
✔ Fixed APR: 2.94%-12.99%
✔ Degrees: Undergraduate and graduate student loans
✔ Loan Term: 5, 8, 10, 15 years
✔ Fees: No application, origination, or prepayment penalty fees
✔ Cosigner release: Yes.
EDvestinU
✔ Fixed APR: 3.02%-8.22%
✔ Degrees: Undergraduate and graduate student loans
✔ Loan Term: 7, 10, 15 years
✔ Fees: No application, origination, or prepayment penalty fees
✔ Cosigner release: Yes.
INvestEd
✔ Fixed APR: 3.33%-7.69%
✔ Degrees: Undergraduate and graduate student loans
✔ Loan Term: 5, 10, 15 years
✔ Fees: No application, origination, or prepayment penalty fees
✔ Cosigner release: Yes.
Sallie Mae
✔ Fixed APR: 3.50%-12.60%
✔ Degrees: Undergraduate student loans
✔ Loan Term: 10, 15 years
✔ Fees: No application, origination, or prepayment penalty fees
✔ Cosigner release: Yes.
How do undergraduate student loans work?
Like any other loan in the US, the process begins with a loan application. Depending on what type of loan you decide to take out, the application process can vary greatly.
For federal student loans, the process begins with the student filling out the Free Application for Federal Student Aid or FAFSA. The FAFSA is required for most financial aid whether federal, state, or private.
The FAFSA will take into account the income and financial situation of your parents or household. Depending on the results of the FAFSA, the potential scholarships, student loans, and other financial aid offers will come directly from the university that you’re attending.
For private student loans, filling out a FAFSA is not required. Unlike federal loans, private student loans require a credit check to ensure that you qualify. If you don’t have a high credit score or have no credit history at all, you will likely require a cosigner for your private loan. In fact, over 90% of private student loans in the US today have a cosigner.
The money from the student loans, regardless of whether you have private or federal loans, will be sent directly to your school. From here, the school will use the money for tuition, room and board, and other fees. If there is any other money left over, it will be sent directly to you for spending on other academic expenses.
When it comes to repaying the loans, most federal loans have a grace period attached to them. This means that you won’t need to begin paying the loans back until six months after you graduate. While private loan terms vary, many lenders today are also offering a grace period on their loans.
Once repayment begins, the loan works just like any other loan, accumulating interest and requiring payments every month.
What are the benefits of an undergraduate student loan?
When it comes to taking out a student loan, there are a lot of benefits to the borrower.
Attending school
Of course, the most obvious benefit is that a student loan will allow someone to attend college when they otherwise wouldn’t be able to.
Payment flexibility
Unlike most other loans, the borrower won't have to make any payments for sometimes years. This is a great benefit to the borrower and allows time to get a job to afford your payments.
Building a credit history
At 18, many people are yet to have any credit score or history. Taking out a student loan will often be the first credit product a student has and begins the building of their credit history.
Low loan interest rates
The interest rates of student loans, especially federal ones, tend to be lower than other loans like mortgages or vehicle loans.
Types of undergraduate student loans
Federal student loans
The majority of student loans in the United States are Federal. These are loans that are issued and operated by the US federal government.
Today, all federal student loans are operated by the US Department of Education. The Department of Education offers several different loan types to students across the country.
- Direct Subsidized Loans - Made to undergraduate students that demonstrate financial need to pay for various university costs
- Direct Unsubsidized Loans - made to undergraduate students regardless of financial need
- Direct PLUS Loan - Loans made to graduate students, professional students, or the parents of undergraduate students. Financial need is not required, but unlike other loans, a credit check is required
- Direct Consolidation Loan - allows the borrowers to combine all of their various student loans into a single loan through a single provider
Private student loans
Private student loans are not made by the federal government, but rather by private companies. These include various banks and financial companies throughout the country.
Private loans tend to be used only once a student has exhausted all other scholarship and financial aid options. This is because most private loans have higher interest rates, less favorable terms, and more penalties than their federal counterparts.
Before the 2008 financial crash, there was a program that allowed private companies to provide federally guaranteed loans. This stopped in 2010, and now all federally guaranteed loans can only be issued by the US government.
What types of undergraduate student loans can I qualify for?
The great thing about federal student loans is that every undergraduate student qualifies for them. Of course, which type of federal loan you qualify for depends on your financial picture.
If you have great financial need, you are likely able to qualify for a federally subsidized loan. These loans keep interest from accumulating until the student has graduated and for six months afterward.
If you cannot demonstrate financial need, you still qualify for federal loans. The only difference is that you will receive an unsubsidized loan. These loans will accumulate interest while the student is in school, and the interest will be added to the principal.
As far as private loans, qualification will depend on your financial picture. A credit check will be performed, and most borrowers will need a cosigner.
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Will I need a cosigner for an undergraduate student loan?
Most borrowers that are using a private loan will need a cosigner. This is because the majority of private lenders require a credit check and at least some credit history before extending the loan.
There are certain situations where a borrower can receive a private loan without a cosigner. Some lenders today are allowing alternate methods of approval that do not take into account (or at least not as much) the credit score of the borrower.
Choosing a co-signer is important for both you and them. The cosigner shares responsibility for the loan, so if you are not able to pay for the loan, the responsibility will fall onto the cosigner.
How much can I borrow with an undergraduate student loan?
Federal Student loans do have a maximum amount that you can borrow, but it depends entirely on your need, dependency status, and where you go to school.
For the most recent year, the range that an undergraduate student can borrow per year ranges from $5,500 and $12,500. This number is higher for graduate students, reaching $20,000.
While there is no hard rule for the maximum amount of private loans allowable, many lenders will extend a max of cost of attendance minus any other loans and financial aid. The maximum total amount given to students varies among lenders but tends to range from $75,000 to $120,000.
What is the cost of an undergraduate student loan?
The average cost of an undergraduate student loan varies greatly. It depends entirely on how much money you are loaned as well as the interest rate for the loan.
Today, the average amount borrowed for undergraduate student loans is $29,000. While the interest rate of student loans varies greatly, the average rate currently being paid is 4.53%.
If the borrower decides to enroll in the standard 10-year repayment plan offered by the government, using the terms above the borrower would be paying $305 per month. The overall cost of the loan, including interest, is just over $36,000.
Fixed-rate vs. Variable rate loans
Choosing between a fixed-rate loan and a variable rate loan is a highly personalized decision and there is no set in stone answer for which is best.
When a student chooses a fixed-rate loan, the interest rate will remain the same throughout the entire period of the loan.
A variable rate loan means that as market conditions change, so does the interest rate. This means that your monthly payments can vary, sometimes significantly.
How to choose:
A common belief is that lower-income borrowers should select fixed-rate loans. This is because low-income borrowers will only have a set amount of money each month to pay with, and if the interest rate increases they can quickly find themselves in a dire situation.
If you can withstand slight fluctuations in payments, a variable rate loan may be a good choice. Variable loans tend to start with a lower rate, and there is always the chance that markets such as the 2020 market will allow interest rates to lower, thereby decreasing how much you need to pay on your loan.
What is the interest rate of an undergraduate student loan?
The interest rates for student loans vary widely.
As of November 29, 2021, the below rates apply to Federal loans.
| Loan Type | Interest Rate |
| Subsidized Loan | 3.73% |
| Unsubsidized Loan | 5.28% |
| PLUS Loans | 6.28% |
Private loan interest rates will depend on which lender you choose, as well as the financial situation of the student and cosigners.
The average private loan rate currently ranges between 6% and 7%.
What type of payment options are available for undergraduate student loans?
Federal Student Loans
- Standard Repayment Plan: Fixed payments that ensure your loan will be paid off within 10 years
- Graduated Repayment Plan: Payments begin lower, then increase every few years, ensuring your loan will be paid off within 10 years
- Extended Repayment Plan: Payments can either be fixed or graduated and will ensure your loan is paid off within 25 years
Federal loans also have other various payment plans that will change your payment and loan length depending on your income, family size, and other factors.
Private Student Loans
- Immediate: this payment plan involves you making full monthly payments even while you are attending school
- Interest Only: you will make payments while in school, but only on the interest
- Partial Interest: you will make a fixed monthly payment while in school, but only on a portion of the interest
- Full Deferment: you will pay nothing while in school, but the balance of your loan will grow due to interest
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