Student Loan Rates

woman considering loan ratesStudent 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. 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 Direct Loans currently have a fixed interest rate of 4.53% for undergraduates, and unsubsidized Direct loans have an interest of 4.53% as well for undergraduates, with 6.08% 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.

Refinance your student loan

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 Direct 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.

Frequently Asked Questions
How do I find a student loan with the best interest rate?

Many students rely on financial assistance and are on the lookout for student loans with the lowest interest rates, which mean they’ll ultimately cost lest come repayment. Federal loans are the first choice for many students because they have low, fixed rates and may be subsidized, making them even cheaper. However, if these are not enough, then private loans can be explored. With private loans the best rates are determined by the credit history of a student or the co-signer.

When comparing student loan rates from private lenders, what factors should I consider?

To compare student loan rates from private sources, the first consideration is the interest rate. But other important factors include the terms and conditions that come with each loan. You are legally bound by those terms and conditions, so it pays to know what they are. Compare the choice of repayment options, know your borrower benefits, and check if the interest rate is fixed or variable.

Why should I compare student loan rates?

It is important to compare student loan rates because this helps you get the best and cheapest interest rate on your student loans. Remember that repaying your student loans is an expensive and lengthy process, so finding one with a lower rate will save you a lot of money in the long run.

Is it true that the best student loan rates are offered by federal loans?

Federal loans are geared towards making education affordable. Low interest rates are one of the key features of these loans. The federal government even offers some subsidized loans where interest is subsidized while the student is in college to help make loans repayments more affordable. The rate on these loans is fixed at 4.53% for undergraduate students.

What are the current rates for Direct loans?

Direct loans are student loans funded by the federal government. The current interest rate for unsubsidized and subsidized Direct loans is 4.53% for undergraduate students.

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 Direct 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 could 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.