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Student Loans May 2023

Student loans are a type of financial aid that many students rely on to pay for their education. Such a loan can be a long-term commitment, so understanding and choosing the right lender or loan is essential.

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Types of Student Loans

Student loans fall under two main categories and an option to refinance:

1. Federal (public) Student Loans

A Federal student loan is direct financial aid given to college-level students by the United States Department of Education. Eligibility for a federal loan is determined based on a student’s financial need. This type of loan is used for undergraduate, graduate, and professional student studies.

Average federal student loan stats:

APR 3.5-7.54%
Amount Up to $138,000 per year
(depends on school and student’s qualifications)
Term 10 years

 

2. Private Student Loans

Private student loans are offered by non-governmental entities such as commercial banks, credit unions, and other financial institutions. Interest on these loans is determined based on an applicant’s credit score and income level. The loan term on private loans is adjustable and may range anywhere from 5-20 years, depending on the service provider.

Private Student Loans are divided into the following categories

  • Degree Specific Loans
  • Bad Credit Loans
  • International Student Loans
  • Income Share Agreements
  • State Specific Loans

Average private student loan stats:

APR 1.3-15%
Amount Starting at $1,000 and up to full tuition amount
Term Up to 25 years

 

3. Student Loan Refinance

A student loan refinancing is a type of loan that replaces an existing student loan(s) with a new one. Student loans are often refinanced to take advantage of lower interest rates, better repayment terms and to consolidate several different loans into one.

Average student loan refinancing stats:

APR 2-15%
Amount Essentially any amount previously borrowed
Term Up to 25 years

How to Choose the Ideal Student Loan

To figure out which type of loan is the best, an applicant needs to make an honest appraisal of several factors, including loan eligibility, loan terms and conditions, APR rate and the repayment plan.