Sparrow partners with financial institutions to provide students and their families with a streamlined search and comparison process that helps borrowers find the best private student loan offers in minutes.
We believe transparency is key to earning and maintaining borrowers’ trust. That’s why we take who we partner with seriously.
The lenders that borrowers choose are very important. The right lender could save borrowers money, time and stress. The wrong lender can be predatory, usury, and misleading. We pride ourselves on working with a diverse set of fantastic lenders to ensure that our borrowers receive the most competitive offers for their unique financial situation.
How We Select Lenders to Partner With
Our lenders are evaluated against a rigorous set of criteria to ensure that they truly are the “best companies” for private student loans and student loan refinancing. In order to be eligible for onboarding onto our marketplace, a lender must pass all 15 criteria explained below. After onboarding, each lender’s eligibility is re-evaluated on a quarterly basis.
- Offers private student loans and/or student loan refinancing to schools eligible for federal funding under Title IX
- Complies with relevant state and federal law: TILA, ECOA, FRCA, GLBA, UDAAP, FCT Act, and CAN-SPAM Act
- Services loan payments internally or through reputable third-party servicers including: FedLoan Servicing, Nelnet, Navient, MOHELA, Edfinancial Services, OSLA, Great Lakes, and GSMR among others
- Loan origination receives school or self-certification pursuant to Section 155 of the Higher Education Act of 1965
- Does not have outstanding or unresolved litigation with the Consumer Finance Protection Bureau (CFPB)
- Maintains a strong customer satisfaction rating on either Better Business Bureau and/or Trustpilot
- Qualifies borrowers with limited (less than 2 years of active credit) or no credit history
- Qualifies borrowers with limited or no annual income
- Maintains necessary lenders licenses for states where loan products are provided
- Provides at least one repayment option: Immediate, Fixed, Interest Only, or Fully Deferred
- Offers cosigned and/or non-cosigned loans
- Offers e-signature option for digital loan origination
- Does not include prepayment penalties
- Offers robust financial literacy programs and resources
- Offers death and disability discharge
How We Score Potential Lenders
Our checklist serves as a baseline. We go well beyond it to identify lenders with whom we’d like to partner. The following below is a breakdown of the methodology we apply to identify compelling partnerships.
Affordability (35%)
- Interest rate (30%)
- Fees (5%)
Customer service (30%)
- Borrower origination experience (15%)
- Borrower repayment experience (15%)
Eligibility (20%)
- Loan term (5%)
- Minimum and maximum loan amounts (5%)
- Minimum FICO score (10%)
Miscellaneous (15%)
- Product availability (10%)
- Regulations and compliance (5%)
Affordability (35%)
Affordability primarily considers the interest rates and loan fees that affect borrowers’ monthly loan payments. For many borrowers, the best loan is the one that costs the least over time. The following factors determine affordability.
Interest rate (30%)
We look at how competitive a lender’s interest rates are versus other lenders’ for various types of borrowers (i.e. borrowers with different FICO scores).
Why interest rate competitiveness matters for borrowers: Choosing a loan with a competitive interest rate can result in significant interest savings over the lifetime of a loan.
Fees (5%)
Fees can tack on costs to a borrower’s loan. None of the lenders on the Sparrow marketplace have prepayment penalties.
Why fees matter for borrowers: Borrowers should shop around to find the lowest-cost lender, accounting for interest rate and any associated fees.
Customer Service (30%)
Customer service considers how borrower-friendly a lender is in the origination and repayment processes. Customer service is a heuristic for the trustworthiness and credibility of a lender.
Borrower origination and repayment experience (15%)
Borrower origination and repayment experience addresses the ease at which lenders qualify, disburse and service loans. Borrowers ought to be able to expect friendly, non-predatory servicing as they work with their lenders to repay their loans.
Why borrower origination and repayment experience matters for borrowers: Because private student loans are a credit of last resort, borrowers have to be able to rely on lenders to originate and service a loan on-time. Having the wrong origination or servicing experience can weigh on borrowers for years to come.
Customer service rating (15%)
Customer service ratings show the quality of experience a borrower can expect from a lender. Sparrow studies Better Business Bureau and Trustpilot customer service ratings for student loan companies.
Why customer service matters: Borrowers should be able to trust their lenders and expect good customer service from them.
Eligibility (20%)
Eligibility considers a lender’s flexibility to meet the various needs of different borrowers.
Loan term (5%)
We evaluate the term options that lenders provide borrowers to repay their loans.
Why loan term matters: A broad range of loan terms offers flexibility for every borrower’s unique financial situation.
Minimum and maximum loan amounts (5%)
We assess the minimum and maximum loan amounts offered by lenders.
Why maximum and minimum loan amounts matter: A lender’s loan amount should be large enough to meet borrowers’ needs and small enough so that borrowers do not take on unnecessary debt.
Minimum FICO score (10%)
We look for lenders with low or no credit score minimums.
Why minimum FICO score matters: If borrowers’ credit score falls below the threshold, they will have trouble qualifying for a loan.
Other Factors (15%)
Sparrow looks at a range of other factors to determine a lender’s overall rating.
Product availability (10%)
Product availability describes the coverage lenders provide to students studying for different degrees (i.e. undergraduate, graduate, pre-professional, etc.) or coming from different circumstances (access to a cosigner).
Why product availability matters: Borrowers may benefit from borrowing loan products tailored specifically to their degree (i.e. JD, MD, BA, MS, etc.) or economic background (cosigned vs. non-cosigned loans).
Compliance and regulations (5%)
We ensure that all lenders on the student loan marketplace are legally compliant with federal and state law. We work with each of our lending partners in order to comply with requirements related to loan disclosures and terms, credit discrimination, credit reporting, and unfair or deceptive business practices.
Why regulations and compliance matter: Borrowers should have the confidence that Sparrow and its partnered lenders are compliant with federal and state law and will not be subject to usury or deceptive lending practices.
Lenders We Partner With
In-School Student Loan Lenders
Arkansas Student Loan Authority
Student Loan Refinance Lenders
Arkansas Student Loan Authority
Sparrow’s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.