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The American Federation of Teachers and the U.S. Department of Education have temporarily resolved key disputes in a major federal lawsuit challenging the handling of income-driven repayment and forgiveness programs.

In a joint status report filed Friday (PDF File) in the U.S. District Court for the District of Columbia, both sides asked Judge Reggie B. Walton to deny, for now, the union’s motions for a preliminary injunction and class certification. Those motions sought immediate relief for borrowers who said they were wrongly denied or delayed in receiving debt cancellation.

The agreement allows the Education Department to continue processing student loan forgiveness under the Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) programs while the lawsuit remains pending.

The AFT had filed suit earlier this year, alleging that the Department was failing to provide legally required repayment plans and loan forgiveness. The lawsuit has a potential impact on millions of borrowers navigating overlapping repayment rules and deadlines.

Key Terms Of The Agreement

The new joint filing outlines a detailed temporary framework meant to protect borrowers as litigation continues:

• No More Denials for “Partial Financial Hardship.” The Department agreed not to reject any borrower applying for the IBR plan solely because they lack a “partial financial hardship,” a standard rooted in a decades-old definition from the Higher Education Act. Borrowers denied on this basis since July 4, 2025, will be invited to reapply once the Department’s systems are updated.
• Continued Loan Discharges. Borrowers already eligible for cancellation under IBR, ICR, or PAYE will continue to see their loans discharged, and the Department confirmed that those whose payments exceed their final qualifying amount will receive reimbursements.
• Clarified Tax Treatment. The Education Department affirmed that it will not issue IRS Form 1099-C for borrowers whose loans are discharged in 2025, provided conditions in IRS Notice 2022-1 apply. However, the agency noted that final tax determinations remain under the authority of the IRS and the Treasury Department.
• Public Transparency. Over the next several months, the Department must file six public status reports detailing application volumes, pending cases, decisions, and discharges across the income-driven repayment and Public Service Loan Forgiveness (PSLF) Buyback program. The first report will be due within 30 days after the current government shutdown ends.

The first report must also explain how the Department identifies borrowers eligible for discharge and disclose how many IBR applications were denied after July 4 on financial-hardship grounds.

What This Means For Student Loan Borrowers

For millions of Americans still repaying student loans, the agreement signals both relief and continued uncertainty. By halting hardship-based denials, the Education Department effectively ensures that borrowers leaving the Saving on a Valuable Education (SAVE) plan or other repayment programs won’t lose eligibility due to outdated definitions.

Borrowers who became eligible for cancellation in 2025 under income-driven plans will be treated as having their loans discharged as of their eligibility date, not the later date when paperwork is processed. This clarification could prevent tax complications.

The inclusion of PSLF “Buyback” data also reflects ongoing efforts to monitor the program, which allows borrowers to receive credit for earlier periods of qualifying payments, but is experiencing significant delays.

What Comes Next

The court must still approve the agreement. If accepted, the case will remain open but paused while the Department issues its reports and implements system updates.

For now, the most immediate benefit will be clarity for borrowers who applied for IBR after July 4, 2025, but were rejected on financial-hardship grounds. Those individuals will have an opportunity to reapply once processing systems are fixed - expected in Winter 2025.

Borrowers, meanwhile, will at least get more transparency in what's happening with the student loan system amidst the changes.

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Editor: Colin Graves

Certificates of deposit (CDs) remain one of the most reliable short-term savings tools, especially for those seeking guaranteed returns as rates begin to level off. As of October 22, 2025, the best 12-month CD rates reach up to 4.20% APY (annual percentage yield), with many banks and credit unions still offering yields far above the national average of 1.68%, according to the FDIC.

CDs lock in your rate for a fixed period, offering peace of mind even as the Federal Reserve prepares further rate adjustments. If you’re looking to earn a predictable return over the next year, these are the best CD rates available today.

💰 Today's Best 12-Month CD Rates At a Glance

Here are the best bank and credit union savings accounts rates today:

1. Credit One Bank - Credit One Bank is offering a jumbo CD at 4.20% APY, but it does require a $100,000 minimum deposit to open.

2. Alliant Credit Union - Alliant Credit Union offers short term and long term CDs with competitive APYs. Right now you can get 4.10% APY on a 12-month CD option! Read our full Alliant Credit Union Review.

3. Community Savings - This bank based in Ohio is currently offering 4.00% APY on a 12-month CD with just a $1,000 minimum.

4. Seattle Bank - Seattle Bank is currently offering a 12-month CD at 4.00% APY with just a $1,000 minimum deposit.

5. Barclays Bank - Barclays Bank offers short term and long term CDs with competitive APYs. Right now you can get 3.80% APY on a 12-month CD option! Read our full Barclays Bank review here.

You can find a full list of the best 12-month CDs here >>

How 12-Month CDs Work

A 12-month certificate of deposit pays a fixed interest rate for one year in exchange for keeping your money on deposit until maturity. If you withdraw early, the bank charges a penalty - typically 90 days of interest.

CDs appeal to savers who prefer guaranteed, short-term returns. While high-yield savings accounts offer flexibility, CDs can secure a higher fixed return for a set period, which can be helpful if rates are expected to decline.

For example, a $25,000 CD at 4.00% APY would earn roughly $1,000 in one year, compared with about $420 based on today's national average 12-month CD rate.

What To Know Before Opening A CD

Certificates of deposit operate differently than savings accounts. Make sure you understand what you're getting:

• Short-Term Goals: Ideal for saving toward tuition, a wedding, or a home down payment within a year.
• Rate Protection: A CD locks your APY, so you’re insulated from rate cuts.
• Ladder Strategy: Pair a 12-month CD with longer terms (24- or 36-month) to capture higher rates while maintaining liquidity.
• Safety: FDIC or NCUA insurance protects up to $250,000 per depositor, per institution.

Before opening an account, make sure you understand all the terms:

• Minimum Deposit: Some banks require $1,000 or more to open.
• Withdrawal Terms: Review penalties before committing funds.
• Renewal Policy: Many CDs automatically renew at maturity unless you opt out.
• Rate Guarantees: Confirm whether your rate is locked at the time of application or funding.
• Online Access: Ensure the bank allows easy transfers and e-statements.

How We Track And Verify Rates

At The College Investor, our editorial team reviews CD rates daily from more than 30 banks and credit unions nationwide. We confirm every APY directly from official rate disclosures and regulatory filings.

Only FDIC- or NCUA-insured institutions available to U.S. consumers are included.

Our rankings are editorially independent - compensation does not influence placement. While we may earn a referral fee when you open an account through some links, our reviews and recommendations are based solely on yield, accessibility, and overall customer experience.

FAQs

Are 12-month CDs safe?

Yes. CDs are federally insured up to $250,000 per depositor, per institution.

Can I withdraw my money early?

Yes, but you’ll forfeit some interest, typically three months’ worth.

Are CD earnings taxable?

Yes. Interest earned is subject to federal income tax, and in some states, state tax.

What happens when a CD matures?

You’ll usually have a 7- to 10-day grace period to withdraw or renew your funds.

Is now a good time to open a CD?

Rates remain near their cycle highs, so locking in a short-term CD can make sense before potential cuts.

Editor: Colin Graves Reviewed by: Richelle Hawley

Google AI overviews are misleading or inaccurate in 37% of finance-related searches, according to The College Investor's latest analysis. This is an improvement from last year, where 43% of AI Overviews were inaccurate - but a one-third error rate is troubling when it comes to personal finance.

This is causing consumer confusion, and potentially harming Americans' finances. The overviews were especially bad when it comes to tax, insurance, and financial aid related queries.

What's Happening: Over the last several years, Google has been rolling out AI-driven answers in search results. At the top of the search results they show AI Overviews, and they're now expanding the use of AI Mode. The problem is they are plagued with inaccurate answers. And experts say it's a serious issue.

It's important for searchers to realize that Google is simply analyzing the existing web results and trying to provide an answer based on what it knows and what it finds. It links to some of the resources it finds on the right side.

However, at the end of the day this information is not vetted by a professional or anyone with knowledge of personal finance. It may not be accurate. Even Google alludes to it with their disclaimer (which is different than last year's):

Google search screenshot. [Screenshot by The College Investor]

Key Issues With Google AI-Overviews And Personal Finance

We re-tested 101 personal finance-related queries across multiple areas of personal finance, including banking, credit, investing, insurance, student loans, and financial aid. You can jump to every query we tested below. This was a follow-up to the same study we did in 2024.

Out of 100 searches, we found that Google AI Overviews were correct in 63 instances, and provided misleading or inaccurate information in 37 instances. Notably, one of the queries no longer has an AI Overview appear for it - and this query had difficulty providing an accurate result last year.

We labeled the incorrect answers three ways:

• 🔶 Misleading: The AI answer provided could be interpreted in a way that causes financial harm.
• 🔶 Missing Key Information: The AI answer was semi-correct, but also missed key information that could cause financial harm (such a key exceptions or state-based rules).
• ❌ Incorrect: The AI answer was simply incorrect, typically using outdated or incorrect values or information, which could lead to financial harm.

We found the the AI-Overviews were completely incorrect in 11 instances. This was only a marginal improvement over the 12 incorrect instances last year. This included issues such as providing outdated information on products and services (or simply making up product names) and outdated information on student loan repayment plans.

The remaining 26 errors were either misleading results or the results were missing key information.

Compared to The College Investor's 2024 AI Overview Study, it improved it's answers in 18 AI Overviews, but got worse in 14 AI Overviews. This shows that both the search results and related AI Overviews continue to change - but the underlying AI technology can't seem to get it right.

When Google Gets It Right

Generally, the AI Overviews were correct for basic 101-level questions, such as "what is" or "how to". They had the most correct answers when covering basic personal finance topics, including banking and getting out of debt.

Compared to last year, they significantly increased the "robustness" of answers. Many of the improvements we saw were queries that were previously Missing Key Information, and now the AI Overview covers the nuances.

When Google Gets It Wrong

AI Overviews struggled the most with recency and nuance - which is most of personal finance. Most of the incorrect answers involved navigating changes to student loans and financial aid, One Big Beautiful Bill tax topics, investing topics, and insurance.

The biggest area of decline was when it came to actual product or service decisions. Last year it appeared to create its own listicle of answers. This year, it was making up products or service names in two of our queries, and continued to get interest rates wrong. For major financial institutions, this is a big compliance issue.

What Surprised Us The Most

Last year, the results were pretty strong on trending news. This year, we noticed that many answers were "hedging their bets", and while providing a lot of information, they didn't really answer the questions.

It was surprising that there were no improvements (and actually declines) in comparing banking products. Checking interest rates on savings accounts seems like a pretty easy task. We do it everyday. But Google seems to fail at it.

The amount of spam in the AI overviews appeared to have increased from last - from images linking to weird foreign spam domains, or parasite content hosted on .edu domains. 

We also saw a lot of YouTube videos were being pulled in to the results, which was different than last year.

What Google Is Saying

A Google Spokesperson told The College Investor, "The vast majority of AI Overviews are factual and we’ve continued to make improvements to both the helpfulness and quality of responses, including for financial queries where we have an even higher bar for accuracy. We also inform people when it’s important to seek out expert advice or to verify the information presented."

When sharing some of the examples from this study, the spokesperson said "When issues arise - like if our features misinterpret web content or miss some context - we use those examples to improve our systems, and we take action as appropriate under our policies."

Why Does This Matter For You

When you search for financial information online, you're often looking for help with decisions that directly affect your money - how to pay off your student loans, ways to lower insurance costs, or how to choose the right savings account. If those answers are wrong, the consequences can be serious.

An AI-generated answer that misstates tax rules could lead you to file incorrectly and owe extra taxes and penalties. A bad suggestion about refinancing student loans could cost you loan forgiveness. Even something as simple as outdated credit card details could push you toward a product that no longer exists or carries different fees.

Unlike information from a certified financial planner, a government website, or trusted outlets such as The College Investor, Google’s AI answers aren’t reviewed by experts. They’re stitched together from web content that may be outdated, incomplete, misleading, or flat-out wrong. 

That matters because more Americans now rely on their digital devices as their first stop for financial advice. When the search engine that most people use starts presenting unverified information as fact, it doesn’t just waste your time — it can cost you real money.

The government has also been focused misleading and deceptive AI. The FTC announced it was going after a variety of AI scams, California just passed a host of new restrictions on AI, and there has been an increase in UDAAP enforcement in deceptive banking and finance advertising.

When it comes to your money, real human expertise still matters — because getting it wrong can cost you more than just a click.

Expert Opinions

We asked the following questions to a panel of experts to get their perspectives on the issues raised in the study and AI in general. You can read their bios and responses below. Just click “Read More” under the expert’s name.

1. Do you think Google AI Overviews are problematic? Why or why not?
2. Do you think that Your Money or Your Life (YMYL) queries should be held to a higher standard?
3. What do you think Google needs to do to improve?
4. Do you think the average Google user knows that these answers may be incorrect?

Methodology

These AI overviews were collected on October 12 and 13, 2025 using a Chrome browser in incognito mode with a California IP address. We focused on major questions in each personal finance topic area, along with trends of questions we've seen being asked on social media.

Editor: Colin Graves

Once student-loan payments begin, many borrowers find their living expenses eat up more of their income than expected. Rent, groceries, insurance, transportation, and utilities can quickly compete with your monthly loan bill.

Ignoring these costs (or underestimating them) can push you toward missed payments or expensive credit-card debt. Building a budget that accounts for both your loan obligations and daily expenses helps you stay financially stable while working toward payoff.

Think of your budget as a balancing act:

• Too aggressive, and you may struggle to cover essentials.
• Too flexible, and you’ll delay your progress toward being debt-free.

Incorporating Student Loan Repayment Into Your Budget

The first thing that you will want to do as you start to repay your student loans is incorporate them into your monthly budget. If you don't have a budget yet, make it a goal to create a budget and stick to it. While the word budget often has a negative connotation with many people, a budget is actually only a tool to help you save money on things that aren't important to you so that you still have money left for the things that are important.

There are many different ways to create a budget, but the simplest budget is just a tally of your income and your expenses (usually on a monthly basis). Make sure that your student loan repayment amount is included in your budget, and adjust as needed. It's important to note that besides crunching your spreadsheet, you need to also figure out the reason WHY you want a budget. Without your emotional buy-in, it will be very hard if not impossible to stick to your budget over time.

Lower Your Loan Payment

If you have a higher student loan balance than your annual salary, there are still a few options that you might be able to take advantage of. There are legal ways to lower your student loan payment amount, and many of them are available to many borrowers.

Federal student loan borrowers have income-based repayment strategies like extended repayment, graduated repayment and income-based plans. Plus, if you're going for student loan forgiveness, you need to be on an income-driven repayment plan.

Borrowers with private student loans don't have as many options, but refinancing your student loans may help lower your monthly payments.

Find Ways To Save On Major Expenses

If you've been working with your budget for a few months and you're finding it a bit tighter than you want, it may be time to take a more detailed look. You may find that there are a few things that you considered "must haves" when you first made a budget that you might be able to cut now.

Creating a budget is not meant to be a one-time "set it and forget it" — instead, it's something that should change as you go through life.

Besides just cutting things out of your budget, we have a list of 15 ways that you can save more money each month. This includes things like eliminating bank fees, using credit card rewards judiciously, getting organized and other tricks that you might be able to use to help stay within your budget.

Make sure you check out that list to see if there's anything there that might be able to help.

Increase Your Income

Besides cutting your expenses, you can also focus on increasing your income.

Of course one of the best ways to increase your total income is to maximize your earnings from your full-time job, but that's not the only way to increase your income.

You might consider investing in yourself by becoming an entrepreneur. You can also take advantage of a variety of side hustles to bring in additional income. The great thing that comes with increasing your income when you already have a budget is that you know exactly where that extra income can be best used.

What NOT To Do During Student Loan Repayment

Following the advice above can give you a leg up on handling your regular living expenses while also making your student loan payments. The one thing that you'll want to make sure to NOT do is ignore your student loan payments or the impact that they might have on your monthly budget. Sticking your head in the sand is likely to lead to an undesirable financial situation.

Many graduates get their college degree and find themselves in a position where the student loan debt they owe feels overwhelming. If that describes your situation, don't despair and don't ignore the problem.

Instead, talk to your friends, family and trusted advisors and make a plan. This could include looking for ways to increase your income, cut your expenses, modify or refinance your existing debt or all of the above.

Why This Matters

Adding a student loan repayment to your monthly budget may make things a little tight, especially if your monthly budget was already tight. But the same budgeting concepts that set you up for financial success still apply.

Chart and track your income and expenses, and remember that a budget is a marathon, not a sprint. Involve your friends and family in your journey to pay off debt, and you'll find yourself there in no time.

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Editor: Clint Proctor Reviewed by: Chris Muller

Private student loans can be a valuable tool when it comes to paying for college. They typically offer low interest rates for qualified borrowers, have flexible repayment terms, and some even offer extra features like career coaching and more. But it can be hard to find the best private loans, and should you even take them out?

We've compared 10 nationwide private student loan lenders to help you find the best option based on your credit, income, and goals. Beyond the rate, we also compared the fees, repayment terms, application process, income requirements, cosigner requirements, and borrower perks like discounts.

Promo: If you want to get a quote at a top lender right now, check out College Ave. They typically have some of the lowest student loan rates available. You can get a quote in minutes. Check out College Ave here >>

Check out our list of the best private student loan lenders below:

Best Private Student Loans Of 2025

Student Loan Rates: The student loan rates below are updated daily Monday through Friday. The lowest rates are usually for shorter loan-terms, variable rates, those with high credit scores, and low debt-to-income ratios. 

Full Breakdown: Best Student Loan Lenders

Here are all the details you need to know about the best student loan lenders.

Abe Student Loans

Abe Student Loans offers private student loans to a undergraduate, graduate, and post-bachelor graduate certificate students, with flexible repayment options and no origination, late payment, or forbearance fees. Students can use the funds from an Abe student loan to cover the cost of expenses such as tuition, room and board, books and supplies, transportation, and other personal expenses during their time at school.

You can use Abe loans to help fund the cost of a Bachelor of Arts or Science degree at an approved school. This includes private and public colleges. You can check the approved school list at the time of your application. 

Read our full Abe Student Loans review here.

Get a quote at Abe Student Loans here >>

Ascent

Ascent Student Loans is a solid choice as a private lender - as they offer both cosigner and non-cosigner loans for undergraduate and graduate students. They also offer a solid loan amount range from $2,001 - $400,000*, competitive rates, and easy repayment terms.

What we love about Ascent is how clear they make their requirements to get the non-cosigned loan for juniors and seniors that considers more than just a credit score, which is rare in the private student loan industry. The qualify, students must:

• Be a college junior or senior enrolled full-time (or with an expected graduation date within 9-months of the date the loan application is submitted) in a degree program at an eligible institution.
• Be a U.S. citizen or have a U.S. permanent resident or Deferred Action for Childhood Arrival (DACA) status.
• Have satisfactory academic performance of 3.0 GPA or greater.

They offer loans starting at just $2,001* minimum, and they offer loan deferment while in school up to 9 months after graduation.

Read our full Ascent Student Loans review here.

Get a quote at Ascent here >>

Citizens Bank

Citizens Bank offers one of the most robust private student loan programs on this list. They let you borrow as little a $1,000, and all the way up to $350,000 depending on your degree. I personally love that they base the amount you can borrow on your degree program because it does help you focus on your ROI (return on investment). 

Citizens Bank offers both student and parent student loans, which can be a potential alternative to Parent PLUS Loans. Given that we recommend most borrowers refinance Parent PLUS Loans, you can potentially take advantage of lower interest rates and fees up front.

You may qualify for multi-year approval when you apply with Citizens Bank. And you'll also have the option to defer payments until after you graduate or make interest-only payments while you're in school. Parent borrowers must make at least interest-only payments while the student is in school. 

Finally, Citizens Bank also doesn't charge any origination fees, application fees, and has no prepayment penalties. 

Check out our full Citizens Bank review here.

Get a quote from Citizens Bank here >>

College Ave

College Ave offers some of the lowest rates on student loans on the market today. They are one of the largest private student loan lenders, and have highly competitive rates on their loans.

College Ave offers a variety of repayment terms, which are more flexible than other private student loan lenders. You can get loans for 5, 10, 15, or 20 years. You must borrow at least $1,000, but you can borrow up to the cost of attendance.

College Ave also offers the ability for student to defer payments until after graduation or make interest-only payments while you're in school. 

Read our full College Ave review here.

Get a quote from College Ave here >>

Earnest

Earnest has traditionally been known for student loan refinancing, but they now offer fairly flexible private student loans as well.

They offer top notch rates and terms, and one of the most generous grace periods after graduation - at 9 months. They also don't charge fees for origination, disbursement, prepayment, or late payment.

The flexible terms continue with the option to skip a payment once every 12 months. And you can even put your loans in forbearance during an unpaid parental leave.

Check our out full Earnest student loans review here.

Get a quote at Earnest here >>

ELFI

ELFI is one of the largest student loan originators, and as a result, they typically offer some of the lowest student loan rates available.

They offer extremely competitive rates, with standard loan terms and conditions. You can borrow from 5 to 15 years, and they can lend across the entire United States, including Puerto Rico.

The only major drawback is you must be enrolled in a bachelor's degree or more advanced education program.

Check our out full ELFI student loans review here.

Get a quote at ELFI here >>

Funding U

Funding U is a new lender that makes the list because they focus on offering no cosigner private student loans. This is very rare - and so we wanted to include it.

To make it happen, they use alternative criteria to make loans possible. 

However, they also have lower loan amounts and higher interest rates than other lenders. But if you're really looking for a non-cosigned student loan, this may be a good option.

Check our out full Funding U student loans review here.

Get a quote at Funding U here >>

LendKey

LendKey is another great lender that makes this list because they have great rates on their student loans and have a unique business model that allows them to do it. LendKey's loans are funded by credit unions and community banks - so you're getting a great loan, but it's handled by LendKey's online service. You never even realize that you have a private loan from a small bank.

LendKey doesn't have quite as much flexibility for borrowers during school. You can make interest-only payments or fixes $25 per month payments while in school (which is still pretty low but not quite as painless as full deferment). LendKey also doesn't offer loans to parents directly.

LendKey has no origination fees, application fees, and doesn't charge a prepayment penalty if you pay the loan off early.

Read our full LendKey review here.

Get a quote at LendKey here >>

Sallie Mae

Sallie Mae is probably one of the most well-known lenders on this list. They are the nation's largest private student loan lender by loan volume. As a result, they also offer some of the most competitive private student loans and parent loans out there.

You can take out Sallie Mae student loans starting at just $1,000 (which is one of the lowest) and can borrow up to the total cost of education². Sallie Mae has over 8 different student loan options to choose from and a variety of repayment plans too. 

Read our full Sallie Mae review here.

Get a quote for Sallie Mae here >>

SoFi

SoFi is not one of our recommended lenders, but we can't ignore that they have compelling rates and terms. We won't gatekeep if they are the best choice for your family and situation.

SoFi allows you to borrow up to the full cost of attendance, with just a $1,000 minimum. They offer four different repayment plans, including deferred, partial, interest-only, and immediate repayment. They are even offering a bonus for good grades!

Read our full SoFi review here.

Get a quote from SoFi here >>

Student Choice Student Loans

Student Choice Student Loans is a service that works with a huge network of credit unions nationwide to match you with low cost student loans offered by credit unions. These credit unions can typically offer great rates since many are small and independent, and are simply looking for a few student loans each year. But as a network, the scale can serve everyone!

Since we've been following Student Choice, they consistently offer some of the lowest rates in the country. Right now, they offer the lowest starting variable rate student loans.

Since the loan is offered by each credit union independently, the minimum and maximum loan rates will vary, along with the loan terms. You'll see what you match and qualify for when you get your offer.

Read our full Student Choice Student Loans review here.

Get a quote from Student Choice Student Loans here >>

How To Compare The Best Private Student Loans

It can be hard to know when it makes sense to borrow a private student loan, and what features you should look for. All of the lenders on the list above are great, but each person has a different financial need, so it can be hard to know which is right.

When it comes to comparing private student loans, we recommend borrowers look at the following:

• Interest Rate: Getting the lowest interest rate possible is the key to paying the least amount of interest on your loan. Remember, the higher the rate, the more you pay over the life of the loan.
• Term: This is how long you'll repay the loan for. Always keep the shortest term possible. The longer the term, the more interest you'll pay.
• Origination Fees: Look for loans that have low or no origination fees. However, if you can get a lower interest rate by paying a small origination fee, you should consider it. The origination fee is one-time, but the interest rate is ongoing.
• Application Fees: You should look for private loans with no application fees.
• Prepayment Penalties: You should look for loans that don't make you pay a penalty for paying the loan off early.
• Cosigner Release: 90% of private student loans require a cosigner. You should find a student loan that allows you to release the cosigner in the least amount of time possible. The best we usually see is 24 months of on-time payments.
• Flexible Repayment Terms: You should look for lenders that allow you flexible repayment options - such as deferment during school, and variable lengths after graduation. This will help you should you need it after graduation.

Fixed Rate vs. Variable Rate

There are two main types of interest rates on student loans - fixed rates and variable rates. Variable rates are usually "sexy" in that they are lower than fixed rates...today. However, variable rates can rise in the future if interest rates go up (they can also go down, but that's very rare). Fixed rate loans charge the same interest rate over the life of the loan. 

So, should you get a fixed rate or variable rate student loan? For most private loans, you should go for a fixed rate loan. The reason is, we are in a rising interest rate environment. Rates will only rise in the future since we're at historic lows today. You can see the best student loan rates here.

Given that you're still in school, you'll have several years before you make payments - during which time your rates could rise with a variable rate loan. So, while variable rates are attractive today, you might be regretting that decision in the future.

Now, if you're refinancing an existing student loan and know the timeline of your debt repayment, getting a variable rate loan is less risky. You can see the best places to refinance a student loan here.

Understanding Cosigner Release

It is near impossible to get a private student loan without a cosigner. In fact, 90% of all private student loans have a cosigner. 

The reason? Because private student loans act much more like car loans or mortgages - you need to have income, a high credit score, and more to qualify. 

For most college students, they simply don't have credit (yet), a high income (because they're students), or an employment history (once again, because they're students). That's why most banks require a cosigner. 

However, banks and lenders have realized that cosigners don't like to be cosigners, and they want to get off the loans as soon as possible - that's where cosigner release comes into play. 

Cosigner release is a program offered by lenders where, after a specific number of on-time payments, the cosigner can be removed from the loan. Many banks offer cosigner release after 24-36 on-time payments. This basically proves that the borrower is able to handle the student loan themselves, and they no longer need the protection of having a cosigner. 

When getting a private student loan, look for loans that have short cosigner release programs. This will allow your cosigner to be removed faster, which is always an added benefit. 

Important Considerations For Borrowers

Given that most private student loans require a cosigner, it's important that cosigners and borrowers know and understand what they are getting into. If the borrower can't pay the loan, the cosigner is fully responsible for the debt - and failure to pay could negatively harm both the borrower's and cosigner's credit.

Also, if something were to happen to the borrower (such as death or disability), the cosigner is typically 100% responsible for the loan.

That's why recommend that borrowers get term life insurance for the duration of the student loan - payable to the cosigner. The value of the policy should be the loan value plus interest. That way, if anything were to happen to the borrower, the cosigner is protected.

Check out Everyday Life to get a quick quote online in about 5 minutes. You'll see that life insurance for college students is typically very cheap - and this can be a great way to protect your family should something happen. You don't want to be responsible for your cosigners loans.

Private Loans vs. Income-Sharing Agreements

Income-sharing agreements are becoming popular alternatives to student loans as a way to pay for college. Income-sharing agreements are tools where you can get money for college in exchange for repaying a portion of your income after graduation.

There are limits to income-sharing - you typically have a minimum salary you need to achieve before you start repayment. Then, you only pay a certain percentage of your income, up to a certain amount. The goal is your repayment is based on how successful you are due to your education. You can find the Best ISAs here.

Learn more about income-sharing agreements here.

Frequently Asked Questions About Student Loans

Here are some common questions people ask when thinking about private student loans:

What's the difference between private and federal loans?

Private loans are offered by independent banks and lenders, whereas federal loans are offered by the Department of Education. Private loans are subject to traditional credit and income criteria, where federal loans are offered to all students regardless of income or credit.

Do private loans offer better interest rates?

Potentially. Your interest rate is determined by a number of factors, including credit history, income, cosigner, school, loan term, and more.

Do private loans offer loan forgiveness?

No, private loans do not offer loan forgiveness.

Do private loans offer deferment and forbearance?

Some private loans offer deferment and forbearance. It's important to shop around and compare lenders to see if they offer options such as deferment if you think you'll need to use it.

What repayment plan options are available for private loans?

Each private loan lender sets its own repayment options. Most only offer fixed repayment plans, but some lenders offer graduated or extended plans.

What can private student loans be used for?

Private student loans can be used for all qualified educational expenses, up to the cost of attendance. This include tuition, fees, room and board, books, supplies, and more.

Who is eligible for a private student loan?

Private student loan eligibility requires a good credit history and debt to income ratio. For undergraduate students, it may also require a cosigner who has a good credit history and meets the minimum credit score requirements.

Will I need a cosigner for a private student loan?

90% of private loans require a cosigner, since private loans rely on credit history. Undergraduate borrowers typically don't have income and credit to qualify, so a cosigner is needed.

How are private student loan funds disbursed?

Private students loans are disbursed to your school's financial aid office. It will be used to cover all school costs first. Any amount remaining will be refunded to you so that you can pay for other expenses, such as rent, books, and supplies.

Do private student loans affect financial aid?

No, private student loans do not affect financial aid money, such as scholarships.

Can you use private student loans to help with living expenses?

Yes, private student loan money can be used for any expenses up to the cost of attendance, including living expenses like room and board.

Final Thoughts

Getting a private student loan can be confusing. That's why we've listed the top online lenders to get a private student loan so that you can compare your options quickly and easily.

It can take upwards of a month or more to get the paperwork done and your loan funded. Make sure that you're giving yourself enough time to apply and get approved so that you don't miss any deadlines at your school.

Methodology

The College Investor is dedicated to helping you make informed decisions around complex financial topics like finding the best private student loans. We do this by providing unbiased reviews of the top banks and lenders for our readers, and then we aggregate those choices into this list.

We have picked student loan lenders based on our opinions of how easy they are to use, their interest rates, any bonuses provided, and a variety of other factors. We believe that our list accurately reflects the best private student loan options in the marketplace for consumers.

Editor: Clint Proctor Reviewed by: Richelle Hawley