July 24, 2015
With the costs for tuition and other expenses at colleges and universities continuing to rise, it’s more important than ever to make sure you find the best interest rates for your student loans. While many accept student debt as an inevitable part of a professional degree, it’s a good idea to learn more about the student loan landscape so you don’t owe more money than you have to.
1. Variable Rates Can Help You Save
Interest rates for Federal student loans are fixed to be around 4.5 to 7 percent for the 2015-2016 school year. In contrast, many private lenders offer variable rates that can be significantly lower. A variable interest rate means that it can fluctuate based on the current offerings on the market and a fixed interest rate means it will not change during your loan’s lifespan. The benefit to a variable interest rate from a private student loan is that if you’re willing to take a risk, you could be saving significantly on total interest paid.
2. Better Credit Means Better Interest Rates
Since federal student loan interest rates are fixed by the government, there is no flexibility in getting a better rate. Private lenders on the other hand will take several factors into consideration, one of the most important ones being the credit histories of you and your cosigner. If either you or your cosigner have excellent credit, you are more likely to a get a lower interest rate since lenders will view you as a lower risk borrower.
3. Private Student Loans Cover More Expenses
If you’re a high school graduate in 2015, you can expect Federal loans to cover roughly $18,000 for each year you’re in school. However, the average tuition for out-of-state public schools is over $20,000 per year, and more than $30,000 per year for private schools. When you add in room, board and other expenses, that’s an additional $5,000 to $15,000 per year, making a huge shortfall in what the Federal loans will pay for. Taking out a private loan will cover more of the expenses during the course of your academic career so you can focus on completing your degree.
4. Best Rates May Be Found at Community Banks and Credit Unions
In many cases, a community bank or credit union can be a great choice for a private student loan. Credit unions are able to lend money for less because they are not-for-profit institutions and aim to provide value to its members. Interest rates from community banks and credit unions can range from 3 to 7 percent in some cases, making them highly competitive with Federal interest rates.
We offer private student loans with low interest rates from community banks and credit unions.
Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.
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