Lowest Interest Rates On Student Loans

Best Online Colleges

With online colleges, you don’t have to worry about missing class time due to transportation issues. Most online universities offer flexible schedules that allow students to take their classes at a pace they’re comfortable with. You’ll still get the same quality education from these schools as you would from any brick-and-mortar university. Your only cost is internet access and a computer. You can even apply to several schools at once using online application sites.

Credit Card Offers

There are various credit card offers out there that you should consider if you’re looking for low interest rates on student loans. One example is the Discover It Student Cash Back Rewards Card. By earning cash back on purchases, you’ll earn 1% cash back on everything. Plus, 0% APR on balance transfers for 15 months! There’s no annual fee either. So, what are you waiting for? Earn rewards now!

No Money Down Refinance Loan

If you already have a loan, then look into refinancing your current mortgage. No matter how small the initial down payment may be, you could use the extra money to pay off your student loans. In fact, you might make some extra money with the lower rate. If you’re not sure where to start, here are some tips to help you find the best deal:

Find a reputable lender who specializes in mortgages for people with bad credit.

Look for a competitive rate.

Try different lenders until you find one who’s willing to work with you.

Take out a home equity line of credit (HELOC) instead of an unsecured personal loan.

Federal Direct Subsidized Stafford Loans

The federal government provides two types of student financial aid. One type is subsidized Stafford Loans, while the other is unsubsidized Stafford Loans. Both are designed to provide financial assistance to students who meet certain qualifying requirements. While both types of loans carry similar terms, the difference lies in the interest rates.

Private Student Loans

Private student loans are often taken out by parents for children who want higher education. These private loans tend to have higher interest rates than federal student loans. However, parents often choose them over federal loans for several reasons. First, private loans do not come with income restrictions, unlike federal loans. Parents may be able to qualify for a larger amount when borrowing privately. Also, private loans are not subject to bankruptcy laws. Finally, private loans do not need to be paid back to the United States government, which means parents are not taxed on the interest payments.

Lowest Interest Rates On Student Loans

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Lowest Interest Rates On Student Loans

Students who borrow money to pay for college have two options for repayment: subsidized student loans or unsubsidized private student loans.

Students who borrow money to pay their tuition costs are granted certain loan benefits if they choose to go this route. These benefits range from lower interest rates on these loans to more lenient terms. Here’s what you need to know about both.

Subsidized student loans

For those who qualify for the federal government’s financial aid program, subsidized student loans are offered at 3.86 percent interest rate until December 2019 (after which they’ll go back to 6.31 percent). These loans are offered to students enrolled full-time at eligible colleges and universities. Unsubsidized private student loans offer higher interest rates than subsidized loans; however, they’re not subject to income limitations or restrictions on how long the loans can be paid off.

Private student loans

Unsubsidized private student loan borrowers are charged variable interest rates; currently, they start at 9.55 percent and are capped at 20.5 percent. Borrowers may receive forgiveness after making payments for 10 years, although only half of borrowers do so. Private student loans aren’t eligible for any loan benefits offered by the federal government.

The Bottom Line

Both types of loans provide flexibility for borrowers. Subsidized loans allow students to take advantage of federal grants and tax credits while paying less in interest. Unsubsidized loans may cost more upfront, but the borrower doesn’t have to worry about income limits or payment length restrictions. Both types of loans are best suited for different situations.

Lowest Interest Rates On Student Loans

Why should I pay student loan interest?

The current federal government policy is to not allow any private lender to charge students higher rates than the U.S. Treasury does. In addition, the federal government guarantees repayment of loans at low fixed interest rate (currently around 2%) regardless of future market conditions. If there were no guarantee, borrowers might have difficulty obtaining financing.

How do I find out how much my student loan interest is costing me?

A good way to figure out how much money you’re paying each month towards student debt is to look up the total amount borrowed, divide that number by 12, and multiply by 0.0176; this is known as the monthly payment amount. You can then compare that calculation to the “best” APR offered by each of the lenders. Look for lenders offering both variable-rate and fixed-rate plans. Fixed-rate plans may be less attractive if they cost more for longer time periods, while variable-rate plans may be cheaper for shorter terms. Be wary of the hidden fees associated with some plans. These include charges for late payments and penalties for early withdrawals. Also be sure to shop around for the lowest possible payment amount.

What are the best ways to lower my loan payments?

There are three main routes to lowering your payment amounts: negotiate a lower loan balance, consolidate your loans, or refinance your existing loans. Negotiating a lower loan balance means agreeing to repay a smaller portion of the original loan amount. Consolidate your loans—or merge them with those of friends or family members—to save on interest costs. Refinancing your student loans is the same as refinancing any mortgage, except you won’t need to provide a down payment. Your best bet is to talk directly with your lender about these options.

Which schools offer the best financial aid packages?

The school you choose will largely depend on whether you think you’ll attend full-time or part-time. Part-time programs tend to have lower tuition costs, but they don’t always offer as many academic awards (such as merit scholarships). Full-time programs typically have higher costs, but they give you eligibility for more financial assistance, including grants and work study positions.

If you plan to go back to school after earning your bachelor’s degree, check to see what kind of financial aid is available for graduate degrees. Many institutions don’t require students to reapply once they receive their undergraduate degrees, so if you decide to pursue a master’s degree after graduation, you likely won’t have to worry about applying for funds. However, the application procedure may be slightly different, depending on which program you’re applying to.

For information on financial aid programs, contact your school’s Financial Aid office.

Lowest Interest Rates On Student Loans

Direct Subsidized Loans

These loans require no payment while you’re attending school. You only have to make payments after your school career ends. You may get a subsidized loan if you meet certain criteria. Your interest rate changes as your credit score rises. You might qualify for a higher amount than $0. You must sign a promissory note promising to pay back the money borrowed plus interest.

Federal Family Education Loan (FFEL)

This type of loan is meant specifically for students who want to go to college. You borrow less than direct subsidized loans, but you still need good grades to avoid paying high interest rates. An FFEL only requires monthly payments until after graduation. These loans are offered for undergraduate programs at four-year schools, community colleges, vocational institutions and public institutions. Private lenders don’t participate in federal student loans. Your interest rate changes depending on how much you borrow, your expected family contribution, and your credit history.

Federal Perkins Loans

Similar to direct subsidized loans, these loans do not have a fixed interest rate. However, they do have a lower maximum borrowing limit. There are two types of Perkins loans. A standard loan has a 10 percent fixed interest rate. A PLUS loan has a 5 percent fixed interest rate and a 6 percent variable interest rate.

Parental PLUS Loans

If you would otherwise qualify for a Perkins loan, but the program limits exceed your parent’s income, then a parental PLUS loan might be a good option. If you can’t find a private lender offering a competitive rate, federal funds could be available under the Parent Plus Loan Program. This program offers fixed interest rates between 8 and 9 percent. Parents must co-sign their children’s loans unless the student has a scholarship or fellowship.

Consolidation Loans

Instead of making monthly payments, consolidating your loans reduces the total amount owed over time. You’ll still owe the same amount you did before consolidation. In addition, your interest rate goes down as your debt lowers. Most people choose to consolidate because it helps them repay their loans faster and save on interest. However, some borrowers say that the extra paperwork isn’t worth it.

Federal Stafford Loans

The government gives out Stafford loans for undergraduate and graduate studies at eligible educational institutions. Unlike federal Perkins loans, Stafford loans have a fixed interest rate based on your eligibility. You can apply for a Stafford loan even if you don’t plan to attend college right away. Borrowers must use the loan to finance education lasting less than six years. You can take out a fixed-rate or adjustable-rate Stafford loan. Students who borrow a fixed-rate Stafford loan aren’t penalized if interest rates rise. However, those who borrow an adjustable-rate Stafford loan may face higher interest costs.

Federal GradPlus Loans

GradPlus loans are meant for graduate students enrolled in accredited masters and doctoral degree programs in science, technology, engineering or mathematics. You can borrow up to $20,500 per year for tuition and related expenses. To receive this loan, you must complete a FAFSA. The maximum term of the loan is five years.

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