How To Find Student Loans With Low Interest Rates

School is a challenging expense for a lot of students. Personally, I had no help from my parents. They weren’t wealthy and believed that we all should provide for ourselves. Of course that wasn’t the easiest thing for me!

I was lucky enough to attend a great school with a reasonable tuition. Each semester’s tuition was about $1500, a great deal considering many people pay ten times this. It’s hard for me to imagine trying to pay for such an expensive school.

Even with my school’s relatively inexpensive tuition, I had difficulty paying. Though I did work throughout college, without loans I NEVER would have been able to afford it. Lucky me, there are many opportunities for help. Because I am familiar with the process of acquiring school loans, I’d like to share a few tips to help students and prospective students.

Choose a Student Loan with a Low Interest Rate!

Many loans are available to you but each is different. Doing your research and selecting the loans with the lowest interest rates will greatly decrease your payments.

In my research, I realized that private student loans have the worst rates. The reason for this is that private loans aren’t backed by the government. This means that these companies take more risk when lending money. Because of this, private loans should only be a last resort.

In general, federally backed loans offer much more competitive interest rates. This list should be of use to you. I’ve listed them in the order I found most helpful. Loans with the lowest interest rates are listed first.

1. Subsidized Stafford. The federal government backs and guarantees these loans. Because of this, there’s little risk for a bank in giving you the loan and interest rates can be low. The government will repay this loan if you default. Clearly you don’t want it to come to this but government backing does help keep the interest significantly lower than private loans. And remember, while you’re in school you won’t need to repay these loans. 2. Unsubsidized Stafford. The government also backs these loans but they are different because you are responsible for payments while in school. 3. Private. These loans should only be used as a last resort. The interest rate is going to be higher and you will likely need a cosigner. These loans require a credit check and if you’re like most young students, you don’t have the necessary credit to secure this kind of loan.

Visiting your school’s financial aid office is the best way to go about getting a Stafford loan. They will give you a FAFSA (federal application for financial student aid). This form will need to be completed and returned in order for you to apply for loans. If you don’t have any previous student loans in default, then this process is simple and you’ll usually be approved.

Pell Grants are another source to check out. You won’t have to pay these back! Getting a student loan with a low interest rate is cool but money that you don’t have to give back is much better.

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