Best Student Loans in Texas of 2024

Updated: November 1, 2024

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The cost of higher education in Texas is soaring, leaving many students and their families grappling with how to foot the bill. Fortunately, finding the best student loans in Texas can be a game-changer, offering you a lifeline to achieve your academic dreams.

MoneyGeek found that Risla provides the best overall student loans in the Lone Star State. College Ave is excellent for those who want the lowest interest rates, whereas Funding U is ideal for students with bad credit. Discover is preferable for international students, while PNC offers the best deal for students who need a co-signer. However, keep in mind that the best lender for you may differ depending on your particular needs and situation.

Understanding Student Loans

Student loans are financial instruments designed to help individuals pay for higher education. They serve as a bridge, filling the gap between what you can afford to pay out of pocket and the actual cost of tuition, books and living expenses. In essence, student loans make it possible for you to pursue your academic goals.

When you take out a student loan, you're essentially borrowing money that you'll need to pay back over time, usually with interest. The loan will accrue interest from the moment you receive the funds, and you'll be expected to start making repayments after a certain period — often following your graduation.

There are two types of student loans:

  • Federal student loans: Federal student loans are funded by the federal government and often come with lower interest rates and more flexible repayment options. Eligibility is often based on financial need.

  • Private student loans: Private student loans are offered by private lenders like banks or credit unions. They usually have higher interest rates and less flexible repayment terms. Creditworthiness is a significant factor in determining eligibility.

Understanding the differences between federal and private student loans is crucial because each type comes with its own set of rules, benefits and drawbacks. For example, federal loans often offer income-driven repayment plans, while private loans do not. Knowing these differences can help you make an informed decision that aligns with your financial situation and long-term goals.

Best Private Student Loans in Texas

Private student loans are financial products offered by private lenders like banks, credit unions and other financial institutions. These loans can fill the gap if you've exhausted all federal aid options and still need more funds. They can also be useful for covering costs that federal loans don't, such as study abroad programs or specialized equipment for your courses.

However, private student loans come with their own set of pros and cons. On the positive side, they can offer larger loan amounts and may disburse funds more quickly. On the downside, they often have higher interest rates and less flexible repayment options. It's crucial to read and understand the terms of the loan to prevent financial difficulties down the line.


    Best Overall

  • Risla
    • 2.99%–4.74%Fixed APR Range
    • Not availableVariable APR Range
    • $1,500–$150,000Loan Amount Range
    • Not required if borrower meets qualificationsCo-signer

    Risla is a nonprofit agency that provides affordable college financing options, including fixed-rate student loans and student loan refinancing.

    Pros

    • Offers fixed-rate loans.
    • Income-based repayment option available.
    • Provides loan forgiveness program for nurses.

    Cons

    • Not available in all states.
    • Loans are subject to credit approval.
    • Does not offer loan prequalification.
    Risla

    Best With Lowest Interest Rates

  • College Ave
    • 3.89% - 17.99%Fixed APR Range
    • 5.59% - 17.99%Variable APR Range
    • $1,000 minimum, no maximumLoan Amount Range
    • Not requiredCo-signer

    College Ave is a private student loan company that offers loans for undergraduates, graduates and parents of college students. They provide flexibility in repayment terms and loan options.

    Pros

    • Variety of loan products, including undergraduate, graduate and parent loans.
    • Multiple repayment options, including interest-only payments while in school.
    • No origination fees or prepayment penalties.

    Cons

    • Requires a credit check, potentially making it harder for students with no or low credit history to obtain a loan.
    • Doesn't offer loan prequalification, so you won't know your rate until you apply.
    • Co-signer release only after half the loan term has passed.
    College Ave

    Best for Those With Bad Credit

  • Funding U
    • 6.99% – 12.49%Fixed APR Range
    • 7.49% – 12.99%Variable APR Range
    • $3,001 up to $20,000Loan Amount Range
    • Not requiredCo-signer

    Funding U is a private student loan company that offers no co-signer student loans. They make lending decisions based on academic records, future earning potential and other school-related factors.

    Pros

    • No co-signer required.
    • Loans are not based on credit score but on academic success and career potential.
    • Provides fixed-rate loans.

    Cons

    • Limited loan amounts.
    • Available in a limited number of states.
    • Does not offer loan prequalification.
    Funding U

    Best for Parents

  • Education Loan Finance (ELFI)
    • From 3.20%Fixed APR Range
    • From 1.20%Variable APR Range
    • Minimum of $1,000Loan Amount Range
    • U.S. citizen or permanent residentCo-signer

    ELFI is an online lender that provides student loan refinancing products. They are known for their competitive rates and various term options.

    Pros

    • Competitive interest rates.
    • No application fees, origination fees or prepayment penalties.
    • Offers personalized customer service.

    Cons

    • Requires a credit check, which could be a hurdle for some borrowers.
    • Does not offer in-school student loan options, only refinancing.
    • Minimum loan amount for refinancing is higher compared to other lenders.
    Education Loan Finance (ELFI)

    Best for International Students

  • Discover
    • 3.99%–11.59%Fixed APR Range
    • 1.79%–11.09%Variable APR Range
    • $1,000 up to 100% of college expensesLoan Amount Range
    • Optional Co-signer

    Discover is a well-known financial institution that offers private student loans for undergraduate and graduate students, as well as student loan refinancing.

    Pros

    • Offers a one-time cash reward on each new student loan for good grades.
    • Multiple repayment options available.
    • No origination fees, late fees or prepayment penalties.

    Cons

    • Requires a credit check, which could be a hurdle for some borrowers.
    • Doesn't offer prequalification, so you won't know your rate until you apply.
    • No co-signer release option.
    Discover

    Best for Those Who Need a Co-Signer

  • PNC
    • 2.99%–9.89%Fixed APR Range
    • 1.09%–8.19%Variable APR Range
    • $1,000–$50,000Loan Amount Range
    • AllowedCo-signer

    PNC is a traditional bank that offers private student loans to undergraduate and graduate students, in addition to student loan refinancing.

    Pros

    • Offers a variety of loan products, including loans for undergraduate, graduate and health and medical professions.
    • Provides options for interest rate discounts.
    • Co-signer release available after certain conditions are met.

    Cons

    • Requires a credit check, which could be a hurdle for some borrowers.
    • Loans are subject to approval.
    • Doesn't offer prequalification, so you won't know your rate until you apply.
    PNC

Federal Student Loans in Texas

Federal student loans are financial aid options funded by the U.S. government to help students pay for higher education. They are often based on financial need and come with terms that are generally more favorable than those of private loans. These loans are a popular choice for students due to their various benefits, such as:

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    Lower interest rates

    Federal student loans usually offer lower interest rates compared to private loans. This means you'll end up paying back less money over the life of the loan.

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    Flexible repayment plans

    These loans often come with multiple repayment options, including income-driven plans. This flexibility can make it easier to manage your debt post-graduation.

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    Loan forgiveness programs

    Some federal loans are eligible for loan forgiveness programs, such as Public Service Loan Forgiveness. This can result in a portion of your loan being forgiven if you meet certain criteria.

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    No credit check required

    For most federal student loans, a credit check isn't necessary. This makes it easier for students with little or no credit history to secure funding.

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    Grace periods

    Federal loans usually offer a grace period after graduation before repayments begin. This gives you time to find employment and get financially settled.

How to Apply for Federal Student Loans in Texas

Applying for federal student loans is a critical step for many students in financing their higher education. The process involves several stages, from gathering the required documents to finalizing the loan agreement. Below, we break down how to apply for federal student loans.

  1. 1

    Gather necessary documents

    Before you start the application process, gather all the necessary documents, such as your Social Security number, tax records and information about your income and assets. These documents will be used to determine your eligibility and the amount you can borrow. Having them ready in advance will make the application process smoother.

  2. 2

    Complete the Free Application for Federal Student Aid

    The first official step in applying for federal student loans is completing the Free Application for Federal Student Aid (FAFSA). This form is available online and is used to assess your financial need. Make sure to fill it out accurately and completely to avoid any delays or issues.

  3. 3

    Review your Student Aid Report

    After submitting the FAFSA, you'll receive a Student Aid Report that summarizes the information you provided. Review this carefully to ensure all the details are correct. If there are any errors, you'll have the opportunity to make corrections.

  4. 4

    Examine your financial aid offer

    Once your FAFSA is processed, you'll receive financial aid offers from the schools you've been accepted to. These offers will detail the types and amounts of federal student loans you're eligible for. Take the time to review these offers and understand their terms before making a decision.

  5. 5

    Accept the loan

    After reviewing your financial aid offers, you'll need to formally accept the federal student loan you want. This usually involves signing a Master Promissory Note (MPN), which is a legally binding document outlining the terms of the loan. Make sure to read this carefully before signing.

  6. 6

    Complete entrance counseling

    Before receiving federal student loan funds, you'll be required to complete entrance counseling. This is an informational session that explains your rights and responsibilities as a borrower. It's crucial to pay attention during this session to understand the terms and conditions of your loan.

The Types of Federal Student Loans Available in Texas

When it comes to financing your education, federal student loans offer a variety of options. Each type of federal loan comes with its own set of terms, eligibility criteria and benefits. Here's a breakdown of the four main types of federal student loans to help you make an informed decision.

  • Direct Subsidized Loans: These loans are designed for undergraduate students who demonstrate financial need. The government covers the interest while you're in school and during deferment periods, making this a cost-effective option. However, there are limits on how much you can borrow, which are determined by your school and your year in the program.
  • Direct Unsubsidized Loans: Unlike subsidized loans, these are available to both undergraduate and graduate students regardless of financial need. Interest starts accruing as soon as the loan is disbursed, and you're responsible for paying it. The borrowing limits are generally higher than for subsidized loans but still depend on your level of education and dependency status.
  • Direct PLUS Loans: These loans are intended for graduate students and parents of dependent undergraduate students. They require a credit check and offer higher borrowing limits but also come with higher interest rates. It's important to note that you're responsible for all the interest that accrues, even while you're in school.
  • Direct Consolidation Loans: If you have multiple federal student loans, you can consolidate them into a single loan with a fixed interest rate. This can simplify your payments and offer more flexible repayment options, but it may extend your repayment period. It might also cause you to lose certain benefits, like interest rate discounts.

Student Loan Forgiveness in Texas

Student loan forgiveness is a financial relief program that allows borrowers to have some or all of their federal student loans forgiven, meaning they are no longer required to make payments on the forgiven amount. These programs are often designed to encourage individuals to work in specific professions or sectors that are considered to be of public interest or in high demand. In Texas, there are specific programs that offer loan forgiveness for certain fields, such as health care.

  1. 1

    Loan Repayment Program for Mental Health Professionals

    The Loan Repayment Program for Mental Health Professionals in Texas is a significant initiative aimed at addressing the shortage of mental health professionals in underserved or rural areas. Depending on the practice specialty, qualified professionals can receive up to $160,000 over a five-year period for providing service in a Mental Health Professional Shortage Area (MHPSA)

    To qualify, you must be a fully licensed mental health professional in Texas. Eligible roles include psychologists, licensed professional counselors, licensed clinical social workers and licensed marriage and family therapists. You must also be willing to work in a designated MHPSA in the state for five consecutive years to receive this benefit. Those interested must submit an application form to the Texas Higher Education Coordinating Board.

  2. 2

    Texas Physician Education Loan Repayment Program

    The Texas Physician Education Loan Repayment Program is a significant initiative aimed at encouraging qualified physicians to practice in medically underserved areas of the state. Qualified participants can receive up to $180,000 in loan repayment over a four-year period.

    To be eligible, you must be a licensed physician in the state of Texas practicing in primary care fields such as family medicine, pediatrics and geriatrics. You must also commit to practicing in a Health Professional Shortage Area (HPSA) or a Medically Underserved Area (MUA) within the state. The application process involves submitting a completed application form to the Texas Higher Education Coordinating Board.

Tips for Managing Student Loans

Navigating student loans can feel overwhelming, but effective loan management is crucial for long-term financial health. Knowing how to manage your student loans can save you from unnecessary stress and financial strain down the line. Here are some actionable tips to help you manage your student loans wisely.

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    Borrow only what you need

    Borrowing more than you need can lead to a debt spiral that's hard to escape. Remember, every dollar you borrow will cost you more due to accumulating interest. Be frugal and only take out loans for essential educational expenses.

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    Understand the grace period

    After you graduate, there's usually a grace period — often six months — before you need to start making loan payments. This time can be a financial breather, but it's also a ticking clock. Use this period to secure employment and budget for upcoming loan payments.

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    Consider early payments

    Making payments on your loan while you're still in school or during the grace period isn't required, but it can be helpful. These payments can significantly reduce the amount of interest that accrues, lowering the overall cost of your loan. Even small, consistent payments can make a big difference.

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    Keep track of loan documents and due dates

    Keeping your loan documents organized is essential for staying on top of your financial obligations. Use digital tools or a dedicated folder to keep track of your loan agreements, payment schedules and correspondence with lenders. This organization will serve you well when it's time to calculate payments or if you encounter any issues with your loan.

Scholarships and Grants as Alternatives to Loans

Scholarships and grants are financial awards designed to help students cover the cost of their education. Unlike loans, which are borrowed sums that accrue interest and must be repaid, scholarships and grants provide what is essentially “free money” that doesn't require repayment.

The benefits of scholarships and grants extend far beyond the immediate relief of not having to worry about tuition fees. They offer a sense of financial liberation that allows you to focus more intently on your studies, extracurricular activities or even part-time work experiences that can enrich your resume. For students in Texas looking to fund their higher education, consider taking the following steps to secure scholarships and grants:

  1. 1

    Start with the Texas Higher Education Coordinating Board

    The Texas Higher Education Coordinating Board (THECB) is a treasure trove of information on state-funded scholarships and grants. Visit their website to explore various financial aid programs like the TEXAS Grant and the Tuition Equalization Grant. This should be your first stop to understand what state resources are available to you.

  2. 2

    Consult your school’s financial aid office

    Your educational institution is a vital resource for localized financial aid opportunities. Schedule a meeting with a financial aid advisor to discuss scholarships and grants specific to your school or program. They can provide insider tips on awards that have less competition or are tailored to your field of study.

  3. 3

    Prepare a stellar application

    Once you've identified potential scholarships and grants, focus on crafting an exceptional application. Tailor each application to highlight how you meet the specific criteria of the award. Use compelling narratives, strong references and any required documentation to make your application stand out.

  4. 4

    Meet all deadlines

    Texas scholarships and grants have strict application deadlines, often differing from one award to another. Use a calendar or organizational app to track these dates. Missing a deadline can mean missing out on a valuable financial aid opportunity, so be vigilant about submitting all required materials on time.

  5. 5

    Follow up

    After you've submitted your applications, it's advisable to follow up with the awarding organizations. A simple email or phone call can ensure that your application is under consideration and can provide an opportunity for you to reiterate your enthusiasm for the award. This proactive approach can make you more memorable to the selection committee.

The Impact of Student Loans on Credit

When you take out a student loan, it becomes part of your credit history, and how you manage it plays a crucial role in shaping your credit profile. Your payment behavior, including the punctuality of your loan repayments, is reported to credit bureaus and influences your credit score.

Making your student loan payments on time is not just a financial obligation; it's an investment in your financial future. Timely payments positively affect your credit score, making it easier for you to qualify for other types of credit, like car loans, mortgages or even future educational loans. On the flip side, late payments can have a detrimental effect, lowering your credit score and making future borrowing more expensive or even unattainable.

Defaulting on your student loan has severe repercussions that extend beyond just a low credit score. A loan default can lead to wage garnishment, where a portion of your salary is withheld to pay back the loan. Additionally, defaulting can make you ineligible for future federal financial aid and can even lead to legal action. A default can remain on your credit report for up to seven years.

Frequently Asked Questions (FAQs)

MoneyGeek compiled a list of frequently asked questions to help you navigate the landscape of student loans in Texas.

What are the eligibility criteria for student loans in Texas?

How do I apply for a student loan in Texas?

What is the difference between subsidized and unsubsidized federal loans?

How does interest work on student loans?

What are the repayment options for student loans?

What happens if I can’t repay my student loan?

What is student loan forgiveness, and how can I qualify?

About Christopher Boston

Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

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