Single Mom School Loans

Low Interest Student Loans For College-Find Out Why Federal Student Loans Are Still The Best

Low interest student loans are basically referring to the different federal student loan programs. That is because majority of the federal student loans feature lower interest rates compared to loans given by private lenders. That is one great reason why you should always initially go after federal low interest student loans.

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The interest rates of federal loans are not only minimal, but they’re also locked into a pre-set value. That’s evident with the Perkins Loans, PLUS Loans, subsidized Stafford Loan, and unsubsidized Stafford Loan. Their respective rates are 3.4%-4.5%, 6.8%, 5.0%, and 7.9%. Most private loans have interest rates amounting to more than 10%.



In general, you must meet at least one of the criteria provided by your lender before they can give you loans with competitive interest rates. You (or your cosigner) should possess an excellent credit history, average- above average income, a stable work, a collateral (e.g. car), and/or a down payment money.

Even if you manage to get a low-interest private loan, that would still be short-lived. Why? It’s because the interest rate of private loans tend to fluctuate as their relative index (LIBOR or Prime) changes. As a form of compensation, your loan holder might have to adjust the amount of your payments.

The best time to get a personal education loan is when your federal student aid and free sources of college funds fail to cover all your school-related expenses. Be sure to do a background check of any private lenders (e.g. Sallie Mae and Wells Fargo) before taking out any loan from them. Pay attention to their customer service, borrower benefits, and repayment options.

Repayment options for government and private education loans completely differ. Although you have the option to start paying after you graduate, it is highly encouraged that you start doing this while you’re still in school. This will help you get more savings from reduced total loan amount and lowered interest.

If you still haven’t done it, a loan consolidation is another way to lower your monthly interest. This will make your loans more manageable by putting them all in one account, so you can pay for them all at once. If you only have one loan, or you’re at the last leg of your payments, a loan consolidation is clearly not for you.

If you don’t want to deal with interest rates altogether, then you should apply for scholarships and grants. You have plenty of options out there that fit all kinds of student profiles. You could also apply for federal loan forgiveness in order to cancel or reduce a portion of your loan costs.

Knowing how to effectively manage your debts is more important than finding cheap loans. Before you apply for student loans, take note of your rights and responsibilities as a borrower. Always pay on-time using the agreed amount, so you can build a good credit history. In that way, you can freely access any low interest student loans in the future.