How to Lower Your Student Loan Interest Rate

If you’re struggling to make your student loan payments each month, you’re not alone. In fact, according to a recent study, nearly 40% of Americans with student loans are delinquent on their payments.

One of the best ways to lower your monthly payments is to lower your interest rate. And while that may seem like a daunting task, it’s actually surprisingly easy to do.

In this blog post, we’ll show you how to lower your student loan interest rate so

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Introduction

If you have student loans, you’re not alone. In fact, about 45 million Americans have student loan debt. The average graduate has $28,400 in student loans, but some people owe much more than that.

The good news is that there are ways to lower your student loan interest rate. If you can lower your interest rate, you’ll save money over the life of your loan and you’ll be able to pay off your debt more quickly.

Here are some tips on how to lower your student loan interest rate:

1. Shop around for the best rates.
2. Compare rates from multiple lenders.
3. Get a co-signer with good credit.
4. Focus on paying off your highest-interest loans first.
5. Make extra payments whenever possible.

What Determines Your Interest Rate?

A low student loan interest rate can save you thousands of dollars over the life of your loan. So it’s worth taking a few minutes to learn about the factors that determine your interest rate. Your interest rate is primarily determined by your credit score. But other factors, like the type of loan and the lender, can also affect your rate.

Your Loan’s Program

When you first take out a student loan, your interest rate is based on the type of loan you have and the lender that you choose.

However, after you have begun repaying your student loan, there are a few things that can affect your interest rate going forward. These include:
-Your Loan’s Program: The program that your loan is part of will affect what interest rate you pay. For example, if you have a Direct Subsidized Loan, your interest rate will be lower than if you had a Direct Unsubsidized Loan.
-Your Repayment Plan: The repayment plan that you choose can also affect your interest rate. For example, if you choose an income-based repayment plan, your interest rate may be lower than if you chose a standard repayment plan.
-Your Loan Servicer: Your loan servicer is the company that handles the billing and payments for your student loan. If you change loan servicers, your new servicer may offer a lower interest rate.

Your Loan Status

One key factor in determining your student loan interest rate is the status of your loans. Federal student loans come in two types: subsidized and unsubsidized. Subsidized loans are given to students with demonstrated financial need, as determined by the FAFSA form. For these loans, the interest doesn’t accrue while you’re in school at least half time, during your grace period, or during deferment or forbearance periods. Unsubsidized loans aren’t based on need, and interest accrues on them as soon as they’re disbursed.

The type of loan you have also makes a difference. Stafford loans are available to all eligible students, regardless of financial need; PLUS loans are for graduate students and parents of dependent undergraduate students who don’t have an adverse credit history. Consolidation loans allowed borrowers to combine all their federal student loans into a single loan with one monthly payment; however, consolidation isn’t currently an option for new borrowers.

Private student loans also don’t have subsidized options, and all private student loan interest accrues as soon as the funds are disbursed.

How to Lower Your Interest Rate

The first step to lower your interest rate is to contact your servicer and explain your current situation. You can also try to negotiate a lower interest rate with your servicer. If you have a private loan, you can refinance your loan to get a lower interest rate. You can also look into student loan forgiveness programs.

Refinance Your Student Loans

Refinancing your student loans is one way to lower your interest rate. When you refinance, you get a new loan with a lower interest rate and pay off your old loan. This could save you money on interest and help you pay off your loans faster.

If you have good credit, you may be able to qualify for a lower interest rate when you refinance. If you have private loans, you may be able to get a lower interest rate by switching to a federal loan. You should compare rates from different lenders before refinancing.

Pay Off Your Student Loans Early

The best way to lower your interest rate is to pay off your student loans early. If you have the cash on hand, you can make payments directly to your loan servicer to pay down your principal balance. Doing this will reduce the amount of interest you accrue over the life of your loan, and it will also help you pay off your loans faster.

Another option is to refinance your student loans. This means taking out a new loan with a lower interest rate and using it to pay off your existing loans. This can be a good option if you have good credit and you’re able to find a lender who is willing to give you a competitive interest rate.

You can also try to negotiate with your loan servicer for a lower interest rate. If you have been making timely payments on your loans and you have good credit, you may be able to get a lower rate simply by asking. It’s always worth asking, as you could potentially save hundreds or even thousands of dollars over the life of your loan.

Conclusion

If you have private student loans, you may be able to lower your interest rate by refinancing. Student loan refinancing is when you take out a new loan with a lower interest rate to pay off your old student loans. This can save you money on interest and help you pay off your student loans faster.

If you have federal student loans, you may be able to lower your interest rate by consolidating your loans. Student loan consolidation is when you combine multiple federal student loans into one new loan with a lower interest rate. You can also extend the repayment period, which can lower your monthly payments.

You may also be able to get a lower interest rate by signing up for an income-driven repayment plan. With an income-driven repayment plan, your monthly payments are based on a percentage of your income. These plans can help make your monthly payments more affordable, and they also offer the opportunity to have your remaining balance forgiven after 20 or 25 years of repayment.

You can learn more about these options and compare rates from different lenders at Credible.com. Credible is astudent loan marketplace that allows you to compare rates from multiple lenders in minutes. Credible is free to use and there’s no obligation to move forward with any of the lenders they connect you with.