How to Rate Student Loans

Insider’s experts select the best products and services for you to make smart financial decisions.here’s how). In certain cases, we are paid a commission Our partnersHowever, these opinions are not necessarily those of the company. These offers are subject to terms.

You may be able to take out a loan if you have exhausted all other financial aid options and still need money to pay for your schooling. Student loan. Reviews and guides help you make the right borrowing decision. 

We use a method to make sure that they all get the same evaluation. Rating systemThis includes everything from customer service and ethics to interest rates and fees. So that you can choose the right student loan for you, we compare each company and product. 

What are we looking for when rating student loans

In our reviews and guides, we rate student loan products on a scale of 1-5. The overall rating takes into consideration seven different categories. Some are judged more strongly than others. They are:

• Rate of Interest (20% of Rating)
• Fees (20% of rating).
• Length of term (5% of rating)
• Repayment options during school (15% of rating).
• Borrower accessibility (15% rating)
• Customer service (7.5% of rating).
• Ethics (7.5% of rating).

Each category is weighted according to its importance in relation to your borrowing experience. The most important factors that will impact the total cost of your loan are fees and rates. We therefore weigh these most heavily. Although customer service and ethics are important parts of the borrowing experience they do not directly impact the terms of a student loan.

Interest rate (20%)

To assess a lender’s student loan rating, we examine the minimum and maximum ratings it offers. A low minimum rate will benefit borrowers who have excellent credit while borrowers with lower credit ratings will pay less. We consider whether a lender offers fixed or variable rates. We consider the frequency at which the rate changes as well as the metrics that are used to make adjustments.

Some examples

• A lender will accept 5 out 5If its minimum variable rate and fixed rate are the lowest (about 2.99% and 3.25%, respectively), and maximum rates are low (13% for fixed and 12% for variable), then it maintains its rates fairly steady.
• Lenders with a lower minimum APR, but still low rates (about 3.5% fixed and variable), and a higher maximum rate (about 13.5% fixed and variable) will earn more. 3 out of 5. 
• Lenders who have extremely high rates and fluctuating rates will be disqualified 1 of 5. 

Fees (20%)

Lenders could charge fees ranging from late payment penalties to origination fees. We recommend lenders with high marks who do not charge any fees. 

Some examples

• Lenders that do not charge fees will receive a 5 out 5.
• Lenders that pay a modest origination fee, and a reasonable late payment will be approved for funding. 2.5 out of 5. 
• Lenders will receive a 1 of 5If they charge high origination fees, which can take a substantial portion of your total loan amount, and late fees that can add up if payments are delayed. 

Length of term (5% of rating)

We check if the company offers a range of repayment terms. This allows borrowers to choose between paying off their loans quickly to save interest and spreading their payments over a longer period. Higher interest rates are generally associated with longer terms. 

We also look at whether the company offers repayment terms or if the borrower has the option to choose.

Some examples

• Lenders can earn up to 5 out 5It offers multiple repayment terms and many options. 
• Companies that have fewer repayment terms or options for terms are more likely to be approved. 3 out of 5.
• Lenders will get a 1 of 5You can choose the term length you want from a restricted number of options, or limit their loan amount ranges.

Repayment options for students (15%)

The best lenders offer multiple options for repayment while in school, including deferred, fixed, interest-only, and full payment. Your situation will determine which repayment plan is best. 

Some examples

• Lenders with all four options will be eligible 5 out 5.
• Lenders that have at least three of the four options can earn 3 out of 5.
• Lenders will get a 1 of 5If they have only one choice for the loans that they make. 

Accessibility for Borrowers (15%)

Lenders might only be able to lend to borrowers who live in certain states or have certain income and credit scores. We consider how easy it is for borrowers to access the lender, regardless of their background. Some lenders don’t require credit scores making them easier for students. 

Some examples

• Lenders who are accessible in all states and have low or no credit requirements will be accepted 5 out 5.
• A company that is easily accessible in all 50 states or meets slightly more stringent eligibility requirements will be granted a certificate 3 out of 5. 
• Lenders will receive a 1 of 5If they aren’t available in all states or have high barriers for entry for most borrowers, they may not be available. 

Customer service (7.5% of rating).

We review all possible ways to reach customer support. We look at whether you can reach someone by phone, email, live chat, or regular mail. Companies that provide 24/7 service receive high marks.

Some examples

• A lender will accept 5 out 5 It should provide multiple contact options and be open seven days per week for a substantial part of the day. 
• Lenders that offer customer service six days a week and have many contact options will be able to earn 3 out of 5. 
• Lenders will receive a 1 of 5If they do not have a way to contact you or are unavailable during normal business hours, 

Ethics (7.5% of rating).

We examine the company’s past to find out if any scandals have occurred in the last three year. We investigate whether the company is known to be racist, sexist or abusive towards customers or employees. We also check the Better Business Bureau rating of the company.

Some examples

• A lender will accept 5 out 5 If the company has no scandals within the last three-years and has an A+ rating from the Better Business Bureau, it is eligible. 
• A company with a BBB rating of at least B and no scandals will be granted a certificate. 3 out of 5.
• Lenders will receive a 1 of 5They should be asked if they were involved in a major scandal within the last three-years or if their BBB grade is D or lower. 

The ratings will help you decide which lender is right for you. Our lenders with the highest overall ratings will have high-scoring student loan loan lenders. You may consider other options with lower overall ratings, if they’re a better fit for you or if a specific feature is important to you.