Navigating Student Loan Alternatives: A Comprehensive Guide
While Bank of America no longer participates in the student loan market, options remain for students seeking financial aid. This article explores alternatives to Bank of America student loans, guiding you through the landscape of federal and private student loan options.
The Changing Landscape of Student Loans
The student loan industry has evolved, with many traditional banks stepping back from offering direct student loans. Most traditional banks no longer offer student loans. A handful still have private loan programs, but student loans are more common with online lenders. For instance, Bank of America ended its private student loan program in 2008. Later, in 2017, BofA abandoned this strategy as well. It sold off over $3.9 billion in student loans, made up mostly of FFEL loans. Currently, Bank of America has no affiliation of any kind with student loans. Banks such as Citibank and Wells Fargo also don’t offer private student loans.
This shift has led to the rise of online lenders and a few remaining traditional banks that still offer private student loans, such as PNC and Citizens.
Understanding Federal Student Loans
Before exploring private options, it's crucial to exhaust all federal student aid options. Federal loans offer fixed interest rates, and most don’t require a credit check, which could be beneficial for borrowers with limited credit who don’t have a co-signer. You can qualify for federal student aid by completing the Free Application for Federal Student Aid, or FAFSA.
Federal loans typically have lower interest rates. Students should not use private student loans until their federal loan options have been exhausted.
Read also: Banking Options at Penn State
Private Student Loan Options
When federal aid falls short, private student loans can help cover the remaining costs. There are many lenders to consider with varying rates, terms, and eligibility requirements. So it’s important to take time and compare them all to find the one that suits your needs. Here are some lenders that offer private student loans:
Sallie Mae
Sallie Mae offers undergraduate student loans to pay for undergraduate, career training or trade school costs-bigger ones like tuition and housing, and smaller ones like books and a laptop. Borrowers can apply once to get money for the whole year and choose from multiple repayment options, including no payments while in school. Sallie Mae allows borrowers to borrow up to 100% of your school-certified expenses, whether you’re studying online or on-campus. Adding a cosigner may increase approval odds and potentially lead to a better rate.
Sallie Mae’s LoanSmart Option Student Loan® is designed for undergraduate and career training students. It offers in-school repayment options, including monthly interest-only payments or fixed $25 payments, or deferment until after graduation. Borrowers can borrow up to 100% of school-certified expenses (minimum $1,000).
Rates and Terms:
- Variable Rates: 30-day SOFR + 4.80% (4.37% APR) to 30-day SOFR + 15.75% (16.99% APR)
- Fixed Rates: 3.74% (2.89% APR) to 16.53% (17.49% APR)
- A 0.25 percentage point interest rate reduction is available for enrolling and making monthly payments by auto debit.
- Loan terms range from 10-15 years, based on cumulative Sallie Mae loan balance, repayment option, and year in school.
- No prepayment penalty or origination fees.
Credible
Credible is a student loan marketplace that allows you to compare various instant prequalified rates. Search undergraduate and graduate loans to find the best personalized prequalified rates. A major perk is that you only have to apply once, not separately, for multiple lenders. Credible offers borrowers a “kayak-style” experience while shopping for personalized prequalified rates. Users complete a single, brief form and receive personalized prequalified rates from multiple lenders. Checking rates on Credible is free and does not impact a user’s credit score to compare offers.
Credible’s marketplace includes lenders such as Abe, Ascent, Citizens, College Ave, Custom Choice, ELFI, InvestEd, MEFA, Nelnet Bank, and Sallie Mae - UGSofi.
Read also: Is Citizens Bank Right for You?
Loan Features:
- Personalized prequalified rates.
- Deferred and interest-only repayment options.
- Graduate and undergraduate loans for almost every degree type.
- Repayment options range from immediate full repayment, interest only, full deferral while in school, flat payment while in-school, and graduated repayment.
- Borrow up to $170,000 through Credible’s marketplace.
- Annual max (100% of school certified costs minus other financial aid received).
- Lifetime aggregate loan amount 200K.
Rates and Terms:
- 2.85% Fixed APR (with autopay)
- 4.13% Variable APR (with autopay)
- No fees.
- 5, 7, 8, 10, 12, 15 and 20 year terms available.
Ascent
Ascent offers benefits that put students first, including a fast & easy application, flexible repayment options, 1% cash back graduation reward, monthly no-essay scholarships, and a 0.50% - 1.00% autopay discount. Ascent provides non-cosigned and cosigned loan options. Students get exclusive access to financial resources, graduation rewards, and college and career prep tools.
Ascent Funding, LLC products are made available through Bank of Lake Mills or DR Bank, each Member FDIC.
Loan Features:
- Cover up to 100% of college tuition and other school-related expenses.
- Minimum loan amount of $2,001 (except for Massachusetts, where it's $6,001).
- Loan terms from 5, 7, 10, 12, 15, or 20 years for graduate students.
- Wait up to 9 months after graduation to start making payments.
- No application, origination, or disbursement fees, and no penalty for early payoff.
Rates:
- Undergraduate Rates:
- Variable: 4.38% - 14.79%
- Fixed: 2.89% - 14.26%
- Graduate Rates:
- Variable APR with ACH: 5.08% - 15.04%
- Fixed APR with ACH: 3.69% - 14.61%
College Ave Student Loans
College Ave Student Loans offers loan options for undergrads, grad students and parents. Our loans are designed to give you great rates plus the most repayment options so you can create a loan that fits your monthly budget while paying as little interest as possible. Our simple application process takes just 3 minutes to complete and get an instant credit decision.
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.
Loan Features:
- Graduate Student Loan
- Cover the costs of school for students pursuing a masters, doctoral or professional degree.
- You can also choose from 4 different repayment options
- Dental Loan
- Medical Loan
- Law School Loan
- MBA Loan
- Graduate Health Professional Loan
- Parent Loan
- Help pay for your child’s education with a customized loan.
- Choose how quickly to pay back the loan:
- Full Principal and interest payments
- Interest plus payment
- Interest only payments
Rates and Terms:
- Variable Rates: 4.24% - 14.49% APR (with auto-pay discount)
- Fixed Rates: 2.89% - 14.49% APR (with auto-pay discount)
- No application or origination fees and no penalties for paying early.
- Choose between 5, 8, 10 or 15 year options.
Citizens Bank
Citizens Bank offers private student loans with a loyalty discount for existing customers and multiyear loan approval. A six-month grace period extension is available. However, you must be pursuing a bachelor’s degree or higher to qualify.
Read also: Your Guide to PSAT Question Banks
Key Facts:
- Best for existing Citizens Bank customers.
- Six-month grace period extension is available.
- Loyalty discount for existing Citizens Bank customers.
- Multiyear loan approval is available.
- You must be pursuing a bachelor’s degree or higher.
Qualifications:
- Loan amounts: $1,000 to $100,000.
- Available Term Lengths: 5, 10 or 15 years
PNC Private Student Loan
PNC offers private student loans, but doesn’t offer an additional interest rate discount if you already have an account with the bank.
Key Facts:
- PNC doesn’t offer an additional interest rate discount if you already have an account with the bank.
- Interest rate discount for autopay is larger than most lenders offer.
- You can’t see if you’ll qualify and what rate you’ll get without a hard credit check.
Qualifications:
- Loan amounts: $1,000 to $50,000.
- Available Term Lengths: 5, 10 or 15 years.
Nelnet Bank Private Student Loan
Nelnet Bank offers private student loans with flexibility in repayment. Provides rate offer with soft credit check.
Key Facts:
- Best for borrowers who value flexibility in repayment.
- Provides rate offer with soft credit check.
- Does not disclose full underwriting requirements.
- Does not allow bi-weekly payments via autopay.
Qualifications:
- Loan amounts: $1,000 with an aggregate loan limit of $125,000 (Undergrad).
Rates:
- Fixed interest rates range from 3.47% APR (with auto debit discount) to 9.86% APR (without auto debit discount).
- Variable interest rates range from 5.81% APR (with auto debit discount) to 9.86% APR (without auto debit discount).
SoFi
SoFi stands out for offering student loans with no fees, including no origination fees or late fees. SoFi provides a rate discount for using autopay, which is typical of many private student loan lenders.
Key Facts:
- Best for flexible repayment options and no fees options.
- You can see if you’ll qualify and what rate you’ll get without a hard credit check.
- Multiple in-school repayment options available, including interest-only and flat-fee, and deferred for undergrad and grad students.
- Does not offer bi-weekly payments via autopay.
Qualifications:
- Loan amounts: $1,000 minimum.
- Available Term Lengths 5, 7, 10 or 15 years
Rates:
- Fixed rates range from 3.43% APR to 15.99% APR with 0.25% autopay discount.
- Variable rates range from 4.64% APR to 15.99% APR with a 0.25% autopay discount.
Student Loan Refinancing
If you have existing student loans, refinancing can potentially save you money. Our top picks on this page - SoFi, Citizens, PNC and Nelnet - all offer student loan refinancing. You may be eligible for a discount or lower rate by refinancing with your bank if you already have an account, but compare offers to ensure you're getting the lowest rate possible, even if that means straying from your current bank.
However, most national brick-and-mortar banks, such as Bank of America and JP Morgan Chase, don’t refinance student loans.
If you have existing student loans with a bank that no longer offers refinancing, you can get those loans refinanced through a different bank, credit union or online lender.
Considerations Before Refinancing Federal Loans
When you refinance federal loans formerly managed by BofA, your federal loans will become private loans. You will lose access to federal protections such as income-driven repayment plans, loan forgiveness, and forbearance. Make sure you won’t need access to any of these programs before committing to private loan refinancing.
How to Choose the Right Student Loan
The best student loan is generally the one that costs you the least. That may come from a bank, especially if it offers a loyalty discount that lowers your interest rate. If your bank doesn’t have a student loan program, consider an online lender, which can offer quick preapproval and match other features you might value in a bank.
Steps to Get a Student Loan from a Bank
If you’ve found a bank that offers student loans, follow these steps before you borrow:
- Exhaust federal student loans: Banks only offer private student loans. Before borrowing those, max out unsubsidized and subsidized federal student loans because of their low fixed rates and consumer protections.
- Compare offers: If federal loans won’t cover all your costs, compare private student loans to get the best rate possible.
- Check your qualifications: Private lenders typically want you to have a credit score above 670 and enough income to afford all your debts and expenses. Banks may have additional requirements.
- Apply with the bank: Banks that refinance student loans. In many cases, student loan applications can be done on the bank’s student loan page, but you might also be able to apply in person.
- Verify school attendance: At least half-time school enrollment.
Factors Banks Consider
- Strong credit (or a creditworthy co-signer).
- Stable income.
- Manageable debt balances. Lenders typically review your or co-signer’s monthly income compared to your monthly debt payments to measure ability to manage additional debt.
Additional Resources
- Grants:
- Work study programs: Work study programs offer a job on-campus or off-campus as a way to pay for education costs and living expenses.
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