Want a lower private student loan rate? Here’s what experts say to do

With the 2023-2024 academic school year set to begin soon, many students are arranging their finances this summer and securing student loans for the fall. There are two types of student loans for borrowers: federal and private. Although federal student loans offer flexible repayment options and possible forgiveness programs, Private student loans An excellent source of financing for any bridge Remaining funding gap.

As with any loan, it’s a good idea to do your research Student loans that offer low interest rates and other favorable terms. Securing the lowest possible rate now can save you substantially over the entire loan term and result in smaller monthly payments. Fortunately, even in today’s high rate environment, there are steps you can take to qualify for a great student loan interest rate.

Don’t wait until the last minute to secure your loan — learn about private student loan rates you may qualify for now.

How to get a low student loan rate

Here are some tips from the experts that can help you secure a lower private student loan rate:

Improve your credit score

As a general rule, higher credit scores lead to lower interest rates on most credit products, including private student loans. Establishing credit as a student Can be challenging — but it’s not impossible.

“Building your credit is critical and necessary, and the sooner you start, the better,” said Joe Cambarato, CEO of National Business Capital. “Even when you’re in high school, you can start by becoming an authorized user on your parent’s or a family member’s credit card. That serves as a kind of foundation. Once you turn 18, you can apply for your own credit card and even a car. Debt.” To maintain good credit in the future, just make sure you also practice good credit habits, such as not spending more than you can afford.

Get a qualified cosigner

While having good credit certainly helps, many borrowers may require a cosigner with good credit to qualify for a private student loan.

“It’s still important to remember that traditional students typically won’t have enough credit history or current income to qualify for a private student loan on their own, so they’ll need a cosigner who can meet those requirements to get approved,” says Angela Colatriano, Chief Marketing Officer of College Ave Student Loans.

As with most loan decisions, it comes with risks. The less risk you face as a borrower, the more likely you are to get your loan approved Low interest rates. “Credit scores show how you manage your debt, but income is what pays off the loan. Get a co-signer with a low debt-to-income ratio. Secure a low rate,” notes Jack Wang, a financial aid adviser at Innovative Advisory Group.

Consider a shorter loan term

Another effective way to reduce risk is to choose a shorter loan tenure. Generally, shorter loan terms come with lower rates since the lender pays their money back sooner.

“Borrowers can get lower rates by choosing terms that lower the lender’s risk, such as the shortest repayment period — typically five years — and making full principal and interest payments while in school,” Wang said. “However, those loan terms may not be the best for student borrowers and co-signers.”

Eric Daugherty, business development manager at Monterey Financial, agrees: “Longer loan terms typically come with higher interest rates and larger repayment amounts, because the lender is taking on more risk. However, they typically come with lower monthly payments. It’s the timing that matters. Also balance your monthly payment ability with the total cost of the loan.”

Shop and compare lenders

Most lenders allow you to preview and preview your interest rates online without damaging your credit score. It only takes a few minutes to fill out an application and get an estimate of what the lender will charge you.

Colatriano advises, “Lenders that offer competitive interest rates and flexible repayment options that meet your unique budget and financial goals. You’ll want to look for a reputable student loan lender with strong customer service. Be sure to read reviews and check service offerings. Features such as a mobile app and various contact methods are available if you need to contact customer service for assistance.”

Start comparing private student loan rates you may qualify for today.

Bottom line

If you’re thinking about taking out student loans for the upcoming school year, a smart first step is to look into them Federal aid options, which includes grants, scholarships, and federal student loans. These loans come with key benefits, including income-driven repayment programs that adjust your payments based on your income.

Once you have exhausted your federal options, Consider private student loans To pay any remaining education expenses, including accommodation and meals.

Due to the Federal Reserve’s campaign to raise interest rates starting in March 2022, the student loan landscape is different than in years past. “Now is a tough time for education loans because the Fed funds rate has been higher since 2006,” said Shavon Jones, an education attorney who represents post-secondary institutions with RegulatorGuards. “As a result, some private education loans currently have lower interest rates than government-backed education loans.”

Private Student Loan Interest Rates It varies from lender to lender, so compare several offers before making a decision. Additionally, list additional criteria you want to compare, such as flexible payment options, availability of a cosigner release option, and excellent customer service.

Get started today and learn more about what student loan options are available to you here.