Lower Interest Rate For Student Loans
Getting a lower interest rate on your student loans can save you thousands of dollars over the life of the loan. However, there are several things you should do before applying for a new loan or refinancing your current one. Here are some tips to help you get a lower interest rate on your student loans:
Refinance Your Student Loans
- Consolidation is not the same as refinancing.
- Refinancing can be a good option if you have multiple loans with different interest rates, because it allows you to lower your monthly payments by consolidating all of your existing debts into one loan with a lower interest rate.
- Refinancing is also an option if you have a variable rate loan and can get a fixed-rate loan at a lower cost than what you are paying now.
Consolidate Your Student Loans
Consolidating your student loans is a great way to simplify your repayment process. If you have multiple student loans, it can be confusing and stressful to keep track of them all. Consolidation allows you to consolidate all of your federal or private student loans into one loan with one payment due date and interest rate.
Consolidation is not a loan forgiveness program and does not apply to any other types of debt, such as credit cards. In fact, consolidation just reduces the number of monthly payments that you make by combining them into one larger monthly payment while also reducing their total amount with an interest rate reduction (the amount will vary depending on the type of consolidation).
Additionally, it’s important to know that consolidating does not mean consolidating multiple loans together—it means combining all current federal loans into one new federal loan. For example: if you currently have $5K in federal loans from undergrad school (two Stafford Loans at 6%) and another $5K in federal loans from grad school (Stafford at 7%), after consolidating those two debts would become one single debt: say about $4K for both undergrads and grad school combined at 6%.
Student Loan Forgiveness
If you’ve been paying your student loans for a while and feel like it may take you years to pay them off, don’t give up hope just yet. There are several options available that could reduce the amount of time it takes to pay off your debt. One such option is Student Loan Forgiveness:
- What is Student Loan Forgiveness?
Student loan forgiveness is when the government cancels some or all of your remaining balance on your student loan, but there are many different types of student loans and each type has different rules about what qualifies for forgiveness and how much you can get forgiven.
- How do I apply for student loan forgiveness?
First, make sure that any private loans have been consolidated into one federal Direct Consolidation Loan (CDC). Then fill out an application request form at www.studentloans.gov/publicservice . If approved, payments will stop being deducted from your paycheck and instead be sent directly towards reducing your federal student loan balance until it reaches zero! You may also qualify for interest rate reduction or interest-free status depending on which repayment plan you choose during enrollment (see below).
Income-driven repayment plans are great for people who have low incomes and/or high student loan balances. These plans allow you to pay a specified percentage of your monthly discretionary income toward your federal student loans. The remainder goes toward other expenses like housing, transportation, food, and childcare.
If you qualify for an income-driven repayment plan, the U.S. Department of Education will apply an interest rate that caps at 10% on the outstanding balance (or 15% depending on when you first borrowed). You can choose between two different types of income-driven repayment: standard or graduated (also known as extended). If the standard option is chosen in this situation, then payments will be calculated based on 15% of “discretionary income” which means it accounts for other types of debt such as credit cards or car payments; whereas if graduated was selected instead then only 10% would be considered with any remaining balance going towards those expenses listed above mentioned instead (and yes this includes rent!). That being said both options require monthly minimums at least equal whatever amount was originally owed upon graduation from college — which could mean quite literally nothing depending on how much money was borrowed during undergrad years…
Paying Off Student Loans Early
Paying off your student loans early is a great way to save money, get rid of debt and avoid paying unnecessary interest. Here are some reasons you should consider paying off your student loans early:
- Save Money on Interest. The faster you pay down your student loans, the less interest you’ll pay over time. If your loan has an interest rate of 6%, for example, then if it were paid in full within two years (instead of 20), it would save roughly $11,000 on interest charges alone!
- Get Rid Of The Debt Faster. Paying off debt as quickly as possible can be hugely beneficial psychologically — especially when it comes to credit card debt or other types of unsecured lending that carry high-interest rates. It also reduces the burden on other financial priorities like retirement savings or housing expenses down the road since those bills are paid first by default instead of being spread out over decades with compound interest working its magic against us every year we’re in school while simultaneously increasing our total principal balance.”
These tips will help you get a lower interest rate for your student loans.
- Refinance your student loans.
- Consolidate your student loans.
- Get student loan forgiveness.
- Pay off student loans early, if you can afford to do so and have other sources of income (i.e., a job).
We hope you’re able to use these tips to get a lower interest rate on your student loans. While the process is different for each type of loan, we have covered all the basic steps in this article. If you have any questions or need additional help, please contact us and we will be happy to assist!