Low Interest Student Loans
Why is it important to find a low interest student loan?
As you pursue higher education, you will find that you need to use several financial sources to cover your educational expenses. Most parents cannot financially handle the total cost of college out-of-pocket, as costs to continue to increase, so students feel that their family's financial limitations will not allow them to continue their education. However, with the help of various available low interest student loans, your educational goals can still be reached. These types of loans are available from the federal government and private financial institutions. Two well-known federal low interest student loans are the Stafford and Perkins student loans.
What is a Stafford student loan?
Stafford loans are a type of low interest student loans available for students to help pay for higher education. Stafford loans can be either subsidized or unsubsidized; for a subsidized Stafford loan, the federal government pays interest on the loan while the student is still in school, while the student is responsible for the interest accruing while the student is in school for an unsubsidized loan. For the 2010-11 academic years, the interest rate for a subsidized Stafford loan is 4.5% and the interested rate for an unsubsidized Stafford loan is 6.8%. Subsidized Stafford loans are given to students who demonstrate financial need, whereas unsubsidized loans are available to any student. Students must file the FAFSA in order to be considered for these loans.
What is a Perkins student loan?
The Perkins student loan is another type of low interest student loan. The student needs to show exceptional financial need to be able to qualify for this loan. For the 2010-11 academic years, the interest rate for Perkins loans is 5%. Perkins loans are similar to subsidized Stafford loans in that the interest accrued while the student is in school is paid for by the federal government. As with all forms of federal aid, a student must file the FAFSA to be considered for this loan.
What are the benefits of low interest student loans?
The most obvious benefit is that you will repay less money due to the lower interest rate. You may also find that your monthly payments are less and you might be able to pay off the loan(s) in a shorter amount of time. This will allow you to save more money once you begin working.
Frequently Asked Questions
Q:Are there any private, low rate student loans available?
A:Generally speaking, private student loans have higher interest rates, and federal loans are the low rate student loans of choice. However, if you have to borrow a private loan and are looking for low rate student loans, you need to make sure you have a cosigner with a very strong credit history. Having such a cosigner can help you obtain a lowered interest rate on the private student loan you applied for. However, you may not be able to lower the interest rate dramatically, and do remember that every private lenders has different terms and conditions and hence their specifications cannot be generalized.
Q:Where can I find Low Interest Rate Student Loans?
A:Low Interest Rate Student Loans are easily accessible: federal student loans offer the lowest interest rates on any student loan being offered. In order to qualify for the loan, you have to submit the Free Application for Federal Student Aid, known as the FAFSA, to demonstrate your financial need and eligibility for these federal low interest rate student loans. If you have exhausted your federal options and have turned to private loans, make sure you have a cosigner with a very strong credit history who can help you bring down the interest rate.