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How do I get the Best Student Loan Rate?

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  • Written By: wiseGEEK Writer
  • Edited By: O. Wallace
  • Last Modified Date: 24 February 2020
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Finding the best student loan rate depends upon the type of loan a student is obtaining. There are different rules for rates offered by agencies like the government, and rates that are available privately. With government-sponsored loans, there may not be that much choice in rates, though they’re typically lower than private loans. For private loans, some governments have sought to cap the rates at a certain amount, but there may still be variation in the specific interest rate. Another consideration occurs when students have finished obtaining loans and choose to consolidate them.

As stated, students can generally expect that most government-issued loans will offer the lowest student loan rate. This isn’t always fully the case and a few private lenders could have a competitive rate or one that represents a lower interest charge. In most instances, the advantages of borrowing directly from the government, through plans in the US like the Stafford or Perkins, outweigh getting a private loan with less interest, which are hard to find in any case. The protections built into these loan programs make them the best first choices for students, and the loans are not based on creditworthiness, rendering it unnecessary to obtain a cosigner. Governments set the actual interest rate and this could vary depending on present law.

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When it comes to obtaining private loans, which many students may need to do if their educational program costs more than is available through federal loans, the soundest way to look for the best student loan rate is by doing some comparison shopping. It’s also advised that students speak at length with advisors at the financial aid department at their school. Financial aid counseling of this type is free, and qualified counselors can steer students toward loans that have the best rate.

Another way to obtain information on the best student loan rate is to do some Internet searching for loan companies. Any potential borrower should do more than consider the interest rate, though. It is also very important to look at any fees a lender assesses, to evaluate details like terms of loan deferment, and to determine whether a loan means paying while in school or getting to compound interest which will then be paid when the program is finished.

When a student has finished school, he or she may have loans from several sources, and one recommendation often made is to consolidate all loans into one payment. Loan consolidation is a good choice, especially if students pick the best student loan rate. Many companies or federal agencies that issue loans may offer to compound them, and again students should evaluate the interest rate offered. Over time, interest amount can make a big difference in how long it takes to repay loans. Student borrowers also need to remember the other factors that can make paying loans difficult or easy, and they should be fully aware of rules about deferment and any additional fees levied by individual lenders.

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