Student loans can really put a damper on your financial situation. After all, most people don’t realize when they are taking out student loans on top of student loans that they will have to pay it all back one day, with interest added to it - just look at the statistics. If you are one of those financially smart borrowers with a full grasp of this, then consider yourself ahead of the game.
The good news is that no matter where you are in your student loan repayment, there are ways you can lower your interest rates to help you pay less over the life of your loans. Let’s look into a few ways you can lower your student loan interest rates, therefore saving you money and getting you ahead financially.
Start by Looking for Lower Rate Loans
The first thing you can do is look into lower student loan rates. To begin, check federal student loan rates which are typically lower than private student loan rates. These rates fluctuate based on the market rate from year to year. If federal rates are low, then it may be a good option to go with federal loans since you can lock in the rate (all federal loans are fixed rate loans).
If federal rates are not at their lowest, then it may be a good idea to look into your private lender options. This gives you the ability to shop around for lower student loan rates. While federal rates do not suffer any wide disparity, private lenders have a more wiggle room when defining their rates, and some lenders may offer better rates than others.
It’s a good idea to look into some of the well-known private student loan lenders and compare their rates. In most cases, you have the choice between a variable rate and fixed rate when shopping for a private student loan. This gives you the opportunity to secure a low variable rate loan, but be cautioned, that rate may rise over time.
How to Lower Your Current Interest Rate
If you already have student loans and just want to find a way to lower your student loan interest rates, then you may want to look into private student loan refinancing through a private lender. If you have a decent credit history, then your chance of securing a lower interest rate are better than you would if you had sub-par credit. Shop around with some of the private lenders and see what refinancing rates they offer. Just remember, your rate is going to depend greatly on your creditworthiness. That doesn’t mean you shouldn’t consider their offers if you don’t have the best credit. It is always worth a shot to try to lower your student loan interest rates this way, especially if you got your loans when interest rates were particularly high.
How to Obtain an Interest Rate Reduction
If you already have your loans through a private lender, there are some special ways you can obtain an interest rate reduction on your loans – even if you have already locked in your rate! Start by talking to your private lender about any incentive options they have. For example, some lenders will give you a break in your interest rate if you sign up for automatic payments on your loans. This is a win-win situation. Timely payments are important regardless, but autopay takes out the effort of remembering to make a payment. Throw in the interest rate discount, and the deal gets better. You may also get a break if you sign up for paperless billing or other convenient tools.
As you can see, there are quite a few ways to lower student loan rates. If you are worried about how much interest you will be paying over the life of your loan, then you are not alone! Some student debtors are buried so deep in student loan debt that they can’t even see the light at the end of the tunnel. Dig yourself out little by little, and start by trying to cut your interest rates.