What Is A Good Interest Rate On Student Loans?

What Is A Good Interest Rate On Student Loans?

7 min read


8% – 10%: An interest rate of 8%-10% per year (this includes private student loans) would give borrowers a monthly payment between $50-$100. If your loan amount is greater than $35,000 your payments would be less.

11% – 14%: An interest rate of 11%-14% per year would give borrowers a monthly repayment around $150-$200. Again, if you have a higher loan amount, your monthly repayments may decrease.

15% – 20%: An interest rate of 15%-20% per year would require borrowers to make monthly payments between $250-$350. If you have a larger loan amount, your monthly payment could increase.

21% – 25%: An interest rate of 21%-25% per year requires borrowers to pay between $400-600/month. Your monthly payment would depend upon the size of your loan.

26%+%: An interest rate above 26% per year would require even higher monthly payments, usually starting at $1000+.

What Is A Good Interest Rate On Student Loans?

For those who have been out of school for a while, student loans are something they just don’t talk about anymore. And, if you’re still paying off a loan, chances are you’ve forgotten what it’s like to be debt-free. But, did you know that the interest rate on your student loans could make a difference on how much money you earn over time? And, in some cases, it may even save you thousands!

If you’re currently taking out federal student loans — whether it be Direct Subsidized, Direct Unsubsidized, PLUS, or Perkins loans — here are some tips to help you figure out the best interest rates for your situation.

Start with the basics

The first thing you need to do is calculate how much you’ll pay back each month. If you’re wondering how you can find the exact amount, check out our guide on How To Calculate Your Monthly Payment. Once you know your monthly payments, you can then compare them to the different types of student loans available based on their terms.

Direct subsidized loans

Subsidized loans offer you the lowest possible interest rates, since you only have to pay what you would normally owe (plus any fees) upfront. However, when you take out these loans, you won’t receive any extra money from the government, so you’ll end up paying more than if you had taken out an unsubsidized loan.

Direct Unsubsidized loans

Unsubsidized loans give you the highest interest rates, but they don’t require you to pay anything down. You pay interest at the same rate regardless of how much you borrow, meaning that you’ll end up paying much more than you would with subsidized loans.

Plus loans

These loans offer lower interest rates than either subsidized or unsubsidized loans, but they’re still higher than what you’d pay with credit cards. Plus loans have a fixed interest rate, meaning that it doesn’t change no matter what your balance is. So, it pays to be careful not to go over your limit.

Perkins loans

This type of loan offers a variable interest rate, which means that it changes depending on how much money you’ve borrowed and how far ahead you’ve paid. So, if you haven’t paid back much yet, you’ll likely pay less per year. But, once you start making larger payments, you’ll accrue more points, which will increase your interest rate.

Bottom line

When it comes to choosing your student loan interest rate, keep in mind the following factors:

What Is A Good Interest Rate On Student Loans?

There’s no doubt about it, student loan debt is at record-breaking levels. And while many people try to pay off their loans as soon as possible, others struggle to make ends meet even after they’ve paid them off.

To help shed some light on how much interest students actually pay, we’ve put together this list of the top four student loan interest rates currently being offered. Are any of these still good deals? Let us know what you think in the comments section below!

While everyone should strive to get out of debt, paying back student loans shouldn’t have to be a hardship. Fortunately, lenders offer borrowers a wide array of options. If you’re ready, here are the current interest rate offers on loans you may qualify for.

Best Current Offers:

Princeton PLUS Loan: 4.31% APR fixed for six years; then 5.39% APR fixed for nine years.

Federal Stafford Loan: 2.51% – 3.86% APR fixed for 15 years (depending on creditworthiness).

Direct Subsidized Federal Consolidation Loan: 1.66% – 3.84% APR fixed for 10 years.

Direct Unsubsidized Federal Consolidation Loans: 3.44% – 5.15% APR fixed for 10 to 20 years.

Best New Offerings:

Chase Total Access Visa Credit Card: 0% introductory APR on the first $10,000 spent + 3% cash back on everything else (after $450/month fee); balance transfer fees waived for 12 months; and 0% intro APR on purchases for 18 months. After that, variable APR 16.24%-25.74%. That’s a great deal if you’re looking to make big purchases right away. You’ll earn 3% cash back on every purchase, plus unlimited 1% Cash Back on ATM transactions (a total of 6% bonus cash back) — and all the points just add up faster than ever before. Plus, earn a $150 Bonus after your cardmember anniversary, and receive a $50 statement credit after making your first purchase with your new card.

Citi ThankYou Rewards: Earn 5% Cash back on every purchase you make using your Citi ThankYou Rewards card (no annual fee). Get 50 Bonus Points after spending $500 in the first three months. Then, earn 2% cash back on gas you spend and 1% cash back everywhere else. Every time you use your Citi ThankYou rewards card, you’ll earn a point — and those points can turn into cash!

Best Newest Offers:

Capital One VentureOne Rewards Credit Card: 0% Intro APR until March 31st on purchases & balance transfers, then Variable APR 13.99% – 24.99%, based on creditworthiness. No Annual Fee.

Discover More Way™: 0% Intro APR on Purchases for 15 Months and Balance Transfers for 9 Months; 4% Intro APR on All Other Purchases and Balance Transfers. There’s No Penalty APR and No Annual Fee.

What Is A Good Interest Rate On Student Loans?

1% – 2% is good interest rate

5-6% is good interest rate

8% is good interest rate (best)

What Is A Good Interest Rate On Student Loans?

What Is A Good Interest Rate?

Interest rates are what they sound like – interest paid on some type of debt. In our case, we’re talking about student loans, and the rate at which we get paid back. Let’s say you have $10,000 in federal student loan debt with an interest rate of 5%. If you pay 10% per year on that loan, then after 20 years, you’ll owe $11,964.56. Let’s say you want to borrow $20,000 instead. You’re going to end up paying over $19,000 in interest on that loan. So depending on how much money you need, you may want to choose a lower interest rate than 5% if you don’t think that rate is enough to cover your costs.

How Do I Find Out My Interest Rate?

You can check your government-issued student loan documents to find out your current interest rate. Your Department of Education (DOE) website will give you information about your loan balance, payments, and due dates. Go to www.studentaid.ed.gov, click on the tab labeled “My Student Aid Account,” and enter your social security number to access your account. This information should be located on page two of your private student loan document.

What Are The Types Of Loan Programs Available To Me?

Most students go to college expecting to graduate with heavy debts, but many don’t realize that there are several alternative repayment programs available to them. Many schools offer some kind of loan forgiveness program, and you can choose whether to pursue those options or stick with traditional payment plans. Here are four different types of student loan programs you could use:

Income Based Repayment (IBR): Under this plan, your monthly payment will depend on your income and family size. The amount you pay each month will decrease once your earnings reach 25%, 30% or 50% of their original level. Students who do not make any payments during the first five years of their loans will receive 15 years of no payments under this plan.

Pay As You Earn (PAYE): Under this plan, you make fixed monthly payments based on the length of time you’ve been making these payments. You won’t earn any financial assistance until you have completed your education and started working. Once you begin earning, your monthly payment will be determined by your annual salary. Payments continue while you work, even if you take breaks to study or raise children. You will repay 100 percent of your loans before you can qualify for any of the income-based repayment plans.

Graduated Payment Plan (GPP): Like PAYE, GPP requires your payments to increase as you earn more money. However, unlike PAYE, you start making payments immediately upon graduation. These payments will remain steady regardless of how much you earn. After ten years of repaying your loans, the remaining balance will be forgiven. This option is popular among older borrowers looking for relief from high interest rates.

Total Debt Consolidation (TDC): TDC is designed to help consumers refinance their existing student loans into one combined loan with a single set of terms and conditions. While this does put all of your loan obligations into one place, it also makes it difficult to track individual loans. And since the consolidation involves the amortization of your loan, there may be a slight increase in the total amount you will have to repay.

How Long Will It Take To Begin Repaying My Student Loans?

The length of the repayment period varies depending on the type of loan plan you select. For example, the average borrower with federal Stafford loans (now called subsidized loans) was able to reduce their monthly payments by 55% after six months and by 40% after nine months. That means it would take the average borrower around seven years to pay off her entire loan. Other repayment options typically last between seven and thirty years.

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