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Home Student Loans Private Student Loans Low Interest Student Loans
  • Contents
  • How to Find Low Interest Student Loans
  • Different Loan Repayment Options
  • Qualifying for the Lowest Interest Rate
  • Private vs. Federal Student Loans

Low Interest Student Loans

Penny Redlin
By Penny Redlin
Updated on September 23, 2022
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College is the key to a future with higher earnings, better jobs, and an improved quality of life. It’s a major accomplishment to get accepted to college and enroll, but most students are unable to afford their education paying with their own money. This problem is exacerbated by the fact the college tuition continues to rise year over year.

Student loans offer the opportunity to attend college.  However, borrowing the money for tuition can be daunting as the weight of student loan debt can be a dark cloud over what should be an exciting time in a student’s life.

It is possible to find lenders that offer lower interest rates than others which will translate into lots of money saved, making it worthwhile for students to shop around and find the best loan offer before committing to borrowing. Read on to learn how to find private student loans  with the lowest interest rates.

Compare Featured Lenders

College Ave Student Loans

Recommendation
Best for Private Loans
Repayment Terms

5, 8, 10 or 15 years2

Interest Rates

Variable rates as low as: 5.29% APR1

Fixed rates as low as: 4.41% APR1

Apply Now More Info
College Ave Student Loans
  • Competitive fixed and variable APRs starting at 4.41%1
  • Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
  • Flexible payment terms ranging from 5, 8, 10, and 15 years2
  • Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
  • No origination, application and processing fees, no fees for early repayment
  • Apply online in 3 minutes and get an instant credit decision
  • Applying with a cosigner can increase your chances of getting approved and could result in a lower interest rate

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.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.

2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

3As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 09/13/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

Cosigner Recommended

Sallie Mae Private Student Loans

Recommendation
Best for Private Loans
Repayment Terms

10-15 Years6

(undergraduate)

Interest Rates

Variable Rates: 6.37% APR - 16.70% APR1

Fixed Rates: 4.50% APR - 15.49% APR1

Apply Now More Info
Sallie Mae Private Student Loans
  • Variable Rates: 6.37% APR - 16.70% APR. Fixed Rates: 4.50% APR - 15.49% APR. Lowest rates shown include 0.25% interest rate discount with auto debit payments.1
  • Apply online in minutes and receive an instant credit result2
  • Multiple repayment options from in-school payments to deferred.1 No origination fee or prepayment penalty3
  • Last year, students were 3x more likely to be approved with a cosigner4 and it may help you get a better rate.
  • Borrow up to 100% of school-certified expenses, whether you're online or on campus5

Borrow Responsibly

We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.

Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.

1Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent.  Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.

2In 2022, instant credit decisions were provided to 97.8% of applicants.  Other applications typically received credit decisions in 3 to 5 business days.

3Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.

4Based on the percentage of borrowers who were approved for an undergraduate loan with a cosigner compared to the percentage of borrowers who were approved for an undergraduate loan without a cosigner from October 1, 2021 through September 30, 2022. 

5 For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school.  Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount.  Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. 

6 Examples of typical costs for a $10,000 Smart Option Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44.  For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment may receive a loan term that is less than 10 years. 

Information advertised valid as of 08/25/2023.

SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.

Smart Option Student Loans® are made by Sallie Mae Bank. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.

Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.

© 2023 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.

Ascent offers loans that power bright futures

Recommendation
Best for Private Loans
Repayment Terms

5, 7, 10, 12 and 15 years

Interest Rates

Variable rates as low as: 6.15% APR1

Fixed rates as low as: 4.48% APR1

Apply Now More Info
Ascent offers loans that power bright futures
  • AFFORDABLE variable rates starting at 6.15% APR with Automatic Debit Discount*
  • 1% CASH BACK Graduation Reward*
  • NON-COSIGNED option may be available for undergraduate juniors and seniors.
  • PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
  • FORGET FEES – No application, origination or disbursement fees. No prepayment penalty if you choose to pay your loan off early.
  • COVER UP TO 100% of your tuition and eligible living expenses.

* Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs

Rates are effective as of 10/01/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: www.AscentFunding.com/Rates

1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner.  Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.  

The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.

Earnest Private Student Loan

Recommendation
Best for Private Loans
Repayment Terms

5, 7, 10,15 or 20 years

Interest Rates

Graduate Rates

Fixed: 4.42% - 12.62% APR1

Variable: 5.66% - 13.52% APR1 

Undergraduate Rates

Fixed: 4.42% - 15.90% APR1

Variable: 5.39% - 16.20% APR1 

Apply Now More Info
Earnest Private Student Loan
  • Check your eligibility in just 2 minutes
  • Flexible repayment options you can choose from
  • No fees for origination, disbursement, prepayment, or late payment3
  • Skip a payment once per year (once repayment period restarted)4
  • Will cover up to 100% of the school's certified cost of attendance
  • 9-month grace period (3 months more than most lenders)2
  • Apply over the phone with the Client Happiness Team
    • Call 866-492-1222, Monday through Friday, 5 A.M. - 5 P.M. PST
    • Mention us when you call in to start your application

This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

 

1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.

4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

The information provided on this page is updated as of 07/20/2023. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.

Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information.

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

 

 

Sallie Mae Private Student Loans

Recommendation
Best for Private Loans
Repayment Terms

Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget

Interest Rates

Variable rates as low as: 5.99% APR (with autopay)*

Fixed rates as low as: 4.44% APR (with autopay)*

Apply Now More Info
Sallie Mae Private Student Loans
  • Variable Rates: Starting variable rates range from 5.99% APR to 14.03% APR (with autopay)*, and will never exceed 13.95% (sometimes lower in certain states as required by law)
  • Fixed Rates: Fixed rates range from 4.44% APR to 14.83% APR (with autopay)*
  • Easy online application!
  • No origination fees, late fees, and no insufficient fund fees. Period
  • Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
  • 0.25% discount when you set up autopay*

*UNDERGRADUATE LOANS: Fixed rates from 4.44% to 14.70% annual percentage rate ("APR") (with autopay), variable rates from 5.49% to 13.97% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.99% to 14.48% APR (with autopay), variable rates from 5.99% to 13.97% APR (with autopay). PARENT LOANS: Fixed rates from 6.50% to 14.83% APR (with autopay), variable rates from 6.32% to 14.03% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 08/31/2023.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

Income Share Agreement

Stride

Recommendation
Best for Private Funding
Repayment Terms

Payments based on a fixed percentage of future income for up to 60 months after graduation

Only pay when earning more than the $30,000 minimum income threshold.

Payments stop early if you ever hit the payment cap (2.0x your initial funding amount)

Interest Rates

Payments based on a fixed percentage of future income.

 

Lower (or no) payments when you're unemployed or underemployed.

Apply Now More Info
Stride
  • No cosigner required.
  • Income based repayment, once you're graduated and employed.
  • No payments when you're unemployed or earning below $30,000/year.
  • Shorter repayment. Only 5 years of payments.*
  • Get a quote in less than a minute. Quick and easy application process. Transparent calculator and comparison tool.
  • Must be BA, MA, or PhD student WITHIN 2 YEARS OF GRADUATION, enrolled in a program that meets our outcome-driven eligibility criteria.

* Your Maximum Payment Period is inclusive of any months where Monthly Payments are made as well as any months that are Deferred Months; this will only be extended if you receive Forbearance, which will extend your Maximum Payment Period on a one-for-one basis.

To be eligible for a Stride Income Share Agreement, students must fall into the following criteria:

  • Attending a four-year Title IV college or university.
  • Within two years of graduation.
  • Enrolled in a Bachelor's, Master's, or Doctorate program.
  • Enrolled in an academic program that meets our outcome-driven eligibility criteria. 
  • Reside or attend school in a state we serve:  Currently, we provide Income Share Agreements for all states in the U.S., except Alabama, Colorado, Iowa, South Carolina, and Washington. 
  • U.S. Citizen or permanent resident attending school in the U.S.
  • Current G.P.A. is greater than 2.9.

If you have any questions please feel free to contact us at [email protected] or call (214)775-9960.

 

Sallie Mae Private Student Loans

Recommendation
Best for Private Loans
Repayment Terms

5 , 7 , 10 and 15 years

Interest Rates

Variable: 4.98% APR - 12.79%APR1

Fixed: 4.48% APR – 12.29% APR1

Apply Now More Info
Sallie Mae Private Student Loans
  • Prequalification: Prequalify to estimate your rate without affecting your credit score
  • Online Application Process: Submit online application in minutes
  • Flexible Repayment Options: ELFI offers immediate, interest only, partial payment, and fully deferred repayment options
  • No Fees: No application fees, origination fees, or prepayment penalties
  • Low Rates: Fixed rates from 4.48% to 12.29% and variable rates from 4.98% - 12.79% 
  • Award winning Customer Service: Individually paired Student Loan Advisor to guide you through the application process

*Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 04-01-2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

 

But How Much?

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Understanding Student Loan Interest

Before you start researching lenders, you should first understand exactly how interest works on a student loan balance. Unlike traditional loans, student loans often offer a grace period for six months following your enrollment to allow you time to prepare for upcoming payments after graduation. All student loans will being accruing interest from the date of disbursement.

Unless you have a federal subsidized loan (federal subsidized loans, like the Direct Subsidized Loan, the government will be your interest while you’re enrolled at least half-time, during your grace period, and any time you are in an authorized deferment), you will be responsible to repay this on top of the amount you borrowed. Even during your grace period, and through repayment, your loan will accumulate interest based on the rate indicated in your promissory note.

But how exactly does this interest work? Like any other loan, you will borrow a principal amount — for example, the sum of your school’s tuition and fees— and then repay that principal plus the interest rate you have agreed to. For a $30,000 loan that carries the average student loan interest rate of 5.8%, then, you would pay $9,600 in interest over the course of ten years.

More>>>Calculate the amount of interest on your loan

Unlike other types of loans, some student loans often offer the opportunity to enter into a period of forbearance or deferment. In both cases, payments may not be required for an extended time. Many borrowers mistakenly believe that interest does not accrue during such periods, but in most cases, it will. The interest of your student loans will continue to be added to its principal, even when payments are not required.

How to Find Low Interest Student Loans

Before you decide on a student loan, it’s advantageous to consider all options and find the lender who offers the lowest interest rate. Different lenders will offer different loan terms, so it’s worth your time to do some research and find the lender who offers the most beneficial conditions. How do you find the lowest rates and best repayment terms? There are a few ways to find lenders who are likely to offer optimal rates.

You can start with an internet search for “low interest student loans” and see what results are available. You’ll likely find that there are many private lenders who offer low interest student loans that you can easily apply for. Look at the rates advertised by different lenders as well as the repayment terms and choose a few top contenders to submit applications to.

As you do your research, it’s important to understand that there are two types of interest rates that will be offered by the banks, fixed and variable interest.  Fixed interest is exactly how it sounds, the rate is fixed (i.e. it doesn’t change) over the length of the repayment term.  Variable rates will fluctuate with market conditions and can move up or down during the repayment period, causing monthly payments to change as rates change.

Variable rates are generally lower than fixed rates, so when comparing rates, naturally they will look more attractive.  However, you will need to consider your financial needs and determine which is better for you in the long run – a fixed or a variable rate.

Some people prefer the stability of the fixed rate, while others are willing to contend with the risk of the rate moving up to get the lower rate in the beginning.  If you are considering a variable rate loan, make sure you can afford the payments at the lower and higher interest rate.

Remember that interest rate isn’t the only factor you should pay attention to when you are shopping for a student loan lender. You should also pay attention to factors such as available repayment options — this will affect your monthly payment in addition to the interest rate.

Longer loan terms can offer lower payments but actually be more expensive in the end with the total amount paid higher than if you would have chosen a shorter term. It is possible though to find loans with a shorter repayment plan will come with a low interest rate, too. This is why it’s important to shop around.

Different Loan Repayment Options

What kind of repayment options are available on student loans? The answer to this question depends on the lender you select, but generally speaking, there are a few key differences between options that every borrower should be aware of — the first being the repayment term. Some loans will offer repayment terms of up to as much as 30 years, while others offer much shorter terms of ten years. This makes a major difference in how much you pay monthly, so it’s important to pay attention to.

You should also pay attention to whether the loans you are considering offer variable rates or fixed interest rates. As mentioned above, the variable rate is unique because it fluctuates based on the ups and downs of market interest rates — this means that your interest rate may be lower, but it also could be higher.

A fixed interest rate, on the other hand, offers a set interest rate that will not change throughout the duration of the loan. This may be preferable to people who would rather have a stable repayment plan instead of one that may fluctuate.

Qualifying for the Lowest Interest Rate

A big part of scoring the lowest interest rate on a private student loan is having a good credit score. Your credit score will determine the loan amounts you are offered, as well as the interest rate that a lender approves. The higher your credit score is, the lower your interest rate will be. Your score is based on multiple factors in your credit history such as:

  • Percentage of payments made on time
  • Amount of debt in borrower’s name
  • Credit utilization ratio
  • Accounts that may be in collections

of these elements can affect the interest rate that a lender offers you. If your credit history is less than perfect, you might be forced to accept a loan with a higher interest rate if you apply for the student loan on your own.  It’s not uncommon for students to have cosigners to help them not only qualify for a loan but to also secure the lowest possible interest rate taking advantage of the cosigner’s strong credit score and credit history.

If you use a cosigner, it’s important to mention that the cosigner is just as responsible for the loan as you are.  It is possible to release the cosigner (if the lender allows for this) with a minimum number of on-time, in-full, consecutive monthly payments, and meeting other criteria in your loan’s terms.  This is generally for students with at least 24 on-time payments, but terms will vary by lender and can be more or less, as stated in the terms and conditions of the loan.

Private vs. Federal Student Loans

When discussing differences in interest rates and repayment plans, it’s important to note that many of options noted above are based on private student loans.   Federal student loans have interest rates that are determined by the federal government and non-negotiable.

That said, most students will opt for federal student loans because of subsidized loan options (meaning the government will cover the cost of your interest while you are enrolled in school at least half-time, during your grace period, and during authorized periods of deferment), but this isn’t necessarily the best option for every student.

Federal loans are granted after a student completes the FAFSA® (Free Application for Federal Student Aid). A student’s credit history or income are not taken into account, meaning that it is much easier to get approved for federal funds than private funds.

In fact, students are typically only denied if they have been convicted of a specific felony or if they have maxed out their loan availability. Federal loans are also eligible for loan forgiveness in some cases, and may be further subsidized by additional financial aid if the borrower qualifies.

Private student loans can help pay expenses that are not covered by federal student loans but are needed to  finance the remainder of your school’s cost of attendance, and they can offer competitive and sometimes interest rates depending on your credit.

 

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