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We base our star ratings on 10 metrics to help determine the most objective score for every lender. But while our star ratings provide a good starting point, our reviews go into detail to help you decide if a lender is the right fit for your education.
Our ratings
We rate business loan providers using a scale of 1 to 5 stars:
Because university costs vary widely between schools, lenders that offer the most flexible loan amounts earn high scores. Lenders earn 5 stars by offering loans of less than $5,000 for borrowers who may only need a small amount. Lenders that offer loans between $5,000 to $7,500 are slightly less flexible, so they earn 4 stars. Lenders that require borrowers to take out more than $7,500 earn 1 star — but few have such a high minimum requirement.
How we rate maximum loan amount
★★★★★ — Cost of attendance (COA)
★★★★★ — $100,000 or more
★★★★★ — $7,500 or more
Typically, lenders will allow students to borrow up to 100% of the cost of attendance — after subtracting other financial aid like federal loans, grants and scholarships. But some lenders will place restrictions on maximum loan amount. Those that allow borrowers to take out $100,000 or more earn 4 stars, while those that have a cap of $100,000 or less earn 3 stars.
How we rate maximum loan term
★★★★★ — More than 20 years
★★★★★ — 15 to 20 years
★★★★★ — 10 to 14 years
★★★★★ — 7 to 10 years
★★★★★ — Less than7 years
Maximum loan term influences how long you have to repay your loans. The longer you’re able to borrow, the more affordable your monthly repayments will be — so lenders earn 5 stars for offering terms of 20 or more years. The less time you have to repay, the lower your score is. Lenders that only offer maximum terms of seven years earn our low 1-star rating.
How we rate minimum APR
★★★★★ — Below 2.99%
★★★★★ — 3% to 6.99%
★★★★★ — 7% to 10%
★★★★★ — More than 10%
The minimum APR is the interest and fees you pay on your loan. For borrowers with excellent credit — or a cosigner with excellent credit — having a lower APR means paying less overall. Lenders that charge 2.99% or less earn 5 stars, while lenders that have a minimum APR of 10% or higher earn 1 star.
How we rate maximum APR
★★★★★ — Below 10%
★★★★★ — 10% to 12%
★★★★★ — 12% to 15%
★★★★★ — 15% to 18%
★★★★★ — More than 18%
The maximum APR you pay is an important metric — especially if you borrow a variable-rate loan. If a lender sets its cap at 10%, you won’t pay more than that — provided you qualify. The majority of the lenders we review have a maximum APR under 15%.
How we rate repayment options
★★★★★ — Has options for deferment and six-month grace period as well as in-school options, including interest-only repayments, small fixed repayments or full repayments
★★★★★ — Offers three of the four repayment options
★★★★★ — Offers two of the four repayment options
★★★★★ — Full repayments required while in school
Repayment is one of the major concerns for student loans. Lenders that give borrowers the most options — including a six-month deferment period after graduation — earn 5 stars. Lenders that have a mixture of payment options earn 4 or 3 stars based on how many options are offered. And lenders that require in-school repayments earn a low 1 star.
How we rate fees
★★★★★ — No fees
★★★★★ — Late and NSF fees
★★★★★ — Origination fees
★★★★★ — Payment fees
The most common fees are late and NSF fees, so lenders that charge them earn 4 stars. 5 stars are reserved for lenders that charge no fees, and lenders that charge origination fees only earn 2 stars.
How we rate customer reviews
★★★★★ — Excellent customer service
★★★★★ — Good customer service
★★★★★ — Average customer service
★★★★★ — Subpar customer service
★★★★★ — Poor customer service
Customer reviews are optional. Our score is based on reviews from Trustpilot or the lender’s Better Business Bureau page. Any lender with more than 100 reviews will receive a score equivalent to what its customers gave it.
How we rate cosigner requirements
★★★★★ — Can apply with or without cosigner
★★★★★ — Cosigner required
★★★★★ — Must apply without a cosigner
Most lenders allow borrowers to apply for a student loan with or without a cosigner, and they earn a 5-star rating. Those that force borrowers to apply with a cosigner receive 4 stars, and those that force borrowers to apply without a cosigner receive 3 stars — largely because it limits young students’ ability to borrow.
How we rate perks
★★★★★ — Offers one of these perks
If a lender has any of these perks, we give it an additional 5 stars.
Deferment options, not including hardship or military deferment
Option to skip a payment or change due date
Entrepreneur programs, career guidance or financial education resources
Cosigner release
Graduated or income-based repayment option
APR discounts for grades
Autopay discount of 0.5% or higher
Works with international students
Loans for trade schools or non-title IV schools
Unemployment protection available
What we don’t consider
While these star ratings can guide you to the right lender, you still need to make sure you qualify for a loan before applying.
State availability. Not every lender operates in all 50 states. Check to make sure the lender you’re interested in works in your state before applying.
Eligibility requirements. Minimum credit score and income requirements will depend on your lender, but because most accept cosigners, a lender’s eligibility requirements don’t factor into our rating.
Kellye Guinan is a freelance editor and writer, specializing in consumer lending. Her writing and analysis has been featured on Bankrate, MSN and MediaFeed. She holds degrees in anthropology and German language and literature from Middle Tennessee State University.
Here’s what to expect when it comes to rates, terms, restrictions and more between these two types of loans. Find out which is better for your situation.
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