Paying for college is already challenging enough, but then you have to think about finding the best student loan rates, and it can just be daunting. How do you find a lender? What should you think about? How do you know you’re getting a good deal? It can all be overwhelming.
When I was in college, there weren’t a lot of options. If you got Federal loans, you filled out your FAFSA and waited for your email from the financial aid office. If you were looking for private loans, you went to a major bank.
That’s all changed today. There are lots of options, and comparing them all could be a challenge.
Let’s take a look at how to find the best student loan rates and what you should consider before borrowing.
Federal vs. Private Student Loans
The first thing to understand is that you don’t get a choice in your student loan rates with Federal loans. Federal student loan rates are set by the government and change periodically.
However, for most people borrowing Federal student loans, that doesn’t matter because they are trying to take advantage of the special student loan repayment programs or loan forgiveness plans that come with Federal student loans.
Federal student loan interest rates vary, from as low as 3.4% to as high as 8%. Check out this chart to see where you student loan interest rate may fall (these are for loans taken after July 1, 2017):
Loan Type | Borrower Type | Interest Rate |
|---|---|---|
Direct Subsidized Loan | Undergraduate | 4.45% |
Direct Unsubsidized Loan | Undergraduate | 4.45% |
Direct Unsubsidized Loan | Graduate or Professional | 6% |
Direct PLUS Loan | Parents, Graduates, and Professional | 7% |
Perkins Loan | Undergraduate | 5% |
Finding Private Student Loan Lenders
If you go the private student loan route, there are a lot of lenders with different programs and it’s important to compare.
We’ve reviewed most of the major student loan lenders and have a comparison tool here: Comparing Private Student Loan Lenders.
We also recommend really researching the different loan programs out there. There are a lot of lenders that offer different programs and incentives that can be helpful depending on the type of degree and what you believe your employment will look like after graduation.
If you already have student loans and are looking to refinance, it’s also essential to compare.
Comparing The Best Student Loan Rates
We recommend using a service like Credible to compare the best student loan rates. With Credible, you can compare multiple lenders in about 2 minutes. It’s quick and easy, and will give you a snapshot of what you might see for student loan rates.
Check it out here and see for yourself: Credible Private Student Loan Comparison.
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