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Low Interest Student Loans – Both Federal & Private

March 9, 2012

Low Interest Student Loans

Low Interest Student Loans

Low interest student loans can be obtained, both federal as well as private, which we shall delve into the topic of how to get low interest federal loans first. The most sure fired way of getting low interest student loans for government lending is filling out a Free Application for Federal Student Aid (FAFSA), which by doing so you will be apply for a host of different student loan programs at the same time, two of which include:

  • The Perkins Loan which offers a fixed interest rate of 5%.
  • As well as the Stafford Loan which offers one a chance to get an interest rate as low as 3.4 % and also comes in the form of a fixed rate.

Now filling out a FAFSA will benefit you in more ways than just getting low interest student loans, which the first one is that your credit score doesn’t dictate your eligibility for both the Stafford and Perkins Loans, what determines it is your financial need, as these are needs based loans, which the more you need money the more you will be lended. The other main benefit that comes with filling out a FAFSA is the fact that you will also be applying for federal grant programs, like the Pell Grant among others, which can offer eligible applicants the opportunity to get free money to use towards their tuition and never have to pay it back.

These drawback of these loans programs is that they come with lending limits, which differ for dependant and independent students, which the minimum can range anywhere from $5,500 for undergraduate students to around $20,000 a year for graduate students. Which this may seem like a lot, but remember lending is based off of your financial need, which the amount you altimately qualify for can be a lot lower.

As far as filling out a FAFSA goes, you can start applying for these low interest rate student loans as soon as Janurary 1st of the year that you are looking to get financial aid for. You also need to keep in mind that the FAFSA needs to be filled out every year that you are in school and are looking to get federal financial aid. Even if you feel that you won’t be eligible for federal loans because you think you can prove great financial need, do so anyways as it is shown the a large percentage of those who didn’t fill out the FAFSA because they thought they wouldn’t get any money, would have been eligible if they have submitted a FAFSA.

Not only will federal lending provide you with private student loans, but they come with a lot more flexible repayment terms, compared to the likes of private loans. They have introduced the repayment program called Income Based Repayment (IBR) which offers an option for those stuggling with money to be able to pay around 15% of what they are making as a loan payment, which the payment can be as low as $5. The last great benefit of obtaining federal student loans is that the interest is fixed on the Perkins and Stafford, meaning the interest rate will never change once you obtain the loan, unlike private loans where they APR rates always fluctuate.

Private Low Interest Student Loans

Now the words low interest and private student loans are rarely used together, but this should deter your from considering the option of using private lending when your federal lending has not provided enough to cover your tution and other related expenses. Which before we go into how to get low interest student loans, we want to advise you to only apply for private student loans as a last resort, meaning always utilize federal financial aid first and other sources, as private student loans are known to come with substantially higher interest rates as well as shorter repayment terms. Now how can you get low ineterest student loans from private lenders? Well the most sure fired way of doing so is to borrow from:

  • Credit Unions – Credit unions are known to offer student loans with comparable interest rates and repayment terms of the likes of federal student loans. They are also more lenient in providing better chances of eligibility to those who have bad credit scores as well.

To start applying for low interest student loans through credit unions, you need to visit your local credit union and become a member.

As far as other private student loans go, those which can be attained through large and small banks and other private lending companies, the positive aspect of borrowing this way is that these corporations will be able to provide you with a much larger sum than what federal loans can offer. The amount that is offered by private lenders will be the amount you need to cover your tution minus whatever federal student aid and other financial aid sources have provided you.

Low Interest Student Loans Through Charities

There are a host of different charities out there that offer either low interest student loans, or absolutely no interest student loans, which these programs are non-profit and offer those a chance to attain education and not be burdened by high interest rates when the payoff period begins.