Student Loan Interest Rates – What Rates Are Currently At

November 25, 2011

Student Loan Interest Rates

student loan interest rates

Student loan interest rates can vary, but the general rule of thumb when it comes to the subject is that federal student loan interest rates are most always lower than private student loan interest rates. To give you an idea for what your interst rate might look like for federal student loans, below are the top 3 most used federal loan programs as well as their interest rates, which are based of of numbers in late 2011:

  • Federal Stafford Loans – Interest rates start as low as 3.4 % and are available for both undergraduate and graduate students.
  • Federal Perkins Loans – 5 % Fixed Interest Rate. These loans are based off the financial need of the applicant and have a 9 month grace period.
  • Federal PLUS Loans – Interest rates are fixed at 7.9 %. These loans are applied for by parents who are taking out loans for dependent children.

As far as private student loan interest rates go, rates are constantly fluctuating, and can be any number at any time, but to give you an idea for what interest loans may look like when applying for private student loans, here are a few lenders and their student loan interest rates:

  • Sallie Mae – Interest rates are capped at 9.875 LIBOR (London International Bank Offer Rate), which is basically the interest rate that is charged between a different bank or lender for student loans.
  • Citibank – Interest rates tend to range anywhere from 3.125 to 9.375 percent.

The other benefit that comes with federal student loans interest rates are that they are fixed on both Perkins Loans as well as PLUS Loans, which means they are not variable, or do not change throughout the life of your repayment term. Applying for federal student loans means that you fill out a Free Application for Federal Student Aid (FAFSA), which you will also find out if you qualify for federal loan programs which can help with your tuition as well. As with private loans, there rates are always variable meaning they can change anytime. Federal loans also have more lenient repayment terms, allowing one up to 25 years to pay off their loan debt, whereas private lenders usually give one up to 12 years.

Private student loans should be used to cover the cost of your entire tution minus whatever else you are receiving in the form of both federal loans and any other financial aid. Private loans can come with lower student loan interest rates in the event that one either has excellent credit or finds a co-signer that does, which private loan lenders low applicants that have credit scores higher than 750. It is also suggested that you apply with great credit as low credit applicants can find themselves with interest rates that are up to 6 % higher than great credit applicants.

 

Can One Lower Their Student Loan Interest Rates?

Being that when you go to apply for a student loan, you will need to sign a promissory note which is a statement one signs which they are promising that they will repay their debt as well as the interest under the terms that were agreed upon. Due to this fact, student loan interest rates can’t necessarily be decreased through the lender, but the possiblity for dropping your student loan interest rate can be done through consolidation, which can be an great option to consider when you have multiple student loans. The process of student loan consolidation can drop interest rates because the loan repayment term will be extended resulting in one having to pay more in interest, but if you can find a consolidation company that doesn’t have any repayment fees, meaning they don’t charge a fee to pay off your debt early, you can enjoy lower interest rates and pay your debt off faster when you have the funds to do so.

 

Category: Student Loan Database

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