Student Loan Rates
Student loans come in all shapes and sizes, and when you’re looking for a loan to cover college costs, it’s important to compare your options and evaluate a variety of different factors. One of the most important figures you should examine when considering a loan is its interest rate, or APR (Annual Percentage Rate). This number more or less dictates how much you’ll have to repay when you are out of school and your loan comes due.
Types of Student Loans with Low Interest Rates
Just as there are different student loans, there are a variety of student loan rates available to borrowers. Generally speaking, federal student loans have the most favorable interest rates for borrowers: subsidized Stafford Loans currently have a fixed interest rate of 4.66% for undergraduates, and unsubsidized Stafford loans have an interest of 4.66% as well for undergrads, with 6.21% for graduate students. These federal loans have total borrowing limits, though, and sometimes students use all the federal funds that are available to them and still need additional funding. That’s the time to turn to private loans.
When it comes to private loans, the issue of student loan rates gets a bit trickier. Some private loans have fixed interest rates, but some have variable rates, which fluctuate based on current market conditions and lending patterns. These variable rate loans can wind up costing borrowers thousands of dollars if interest rates are suddenly impacted by a major shift in the economy, and so they’re a somewhat risky source of funding. It’s best to look for a competitive private loan with a fixed interest rate.
Benefits of Student Loans with Low Interest Rates
The obvious benefit of a student loan with a low interest rate is that the total cost of the loan will be relatively lower, though in some cases you may also find that your payment amounts and length are that much shorter that it will help you financially after college.
Finding the Best Student Loan Rates
In order to obtain student loans with the best rates, you must thoroughly research your options, which is where SimpleTuition can help. You should compare various loans; check out their rates, repayment terms, and other details before making a decision – and you can do all of this on our site. Doing the proper research will help you find the loan best for you. Federal student loans, such as Stafford loans, should be explored first, as they have a fixed rate of interest, and various private student loans with low interest rates are available as well.
Why should I compare student loan interest rates on private loans?
Interest rate is the price paid to borrow a sum of money. Private student loans usually have high interest rates as compared to federal loans. Interest rates determine your repayments for each month, so the higher the interest rate, the higher the payment. Before you take out a loan, make sure you find an affordable interest rate.
What should I consider when I compare student loans interest rates?
Student loans interest rates are the amount paid to borrow money from a lending institution, as the rate of interest determines the repayment amount. The higher the interest rate, the higher the repayments. Usually, you will find federal loans with low interest rates. Popular federal student loans include the Perkins, the Stafford, and Parent PLUS loans.
I am seriously considering taking out a private student loan, could you tell me more about private student loan rates?
In general, private student loans are more expensive to pay off as compared to federal loans. But now, a lot of private lenders are offering cheaper options, the catch being that fees dramatically increase the cost of the loan. The loan will have a relatively low interest rate but high fees will take its cost sky-high, so you should look for a loan with a somewhat higher interest rate and no fees. A simple way of balancing this equation is to remember that 3% to 4% in fees is about the same as a 1% higher interest rate.
- Student loan interest rates can vary widely from lender to lender, and can also be impacted by an applicant’s credit score. It’s important to know the range of rates for a loan before applying for it.
- Loan rates can also be variable, meaning they may change during the life of the loan.
- It can be challenging to understand all the different potential rates and scenarios for a loan, but our loan comparison tool can help you understand the fine-print of the loan options available to you.
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