Depending on your credit, it is possible to get a private loan with a very low interest rate. But for most, a federal student loan is the best bet. The benefits of a low interest student loan are obvious. A low interest rate just means lower payments, a shortened repayment period and more money in your pocket.
An additional benefit of low interest student loans are the subsidized aspect of many federal student loans. If you obtain a Stafford loan or a Perkins loan, you may have your interest paid by the government while you are in school and possibly up to nine months after you graduate.
One form of a low interest student loan is a Stafford student loan. This kind of loan allows students with little to no credit to afford college. Because this is a federal student loan, the requirements are different from a standard lenders loan. Rather than basing your worthiness on a credit score, it is based on whether or not you fall within the eligible income bracket. If you attend school at least half-time and if you have never defaulted on a loan, you should qualify.
A Stafford loan also has a limit as to how high the interest rate can be. Currently it is at 8.2%. Most do receive a lower rate than this though. Another added benefit is that you can get a Stafford loan subsidized, meaning that the government will foot the bill for the interest that accrues while you are in school. This kind of loan is also available unsubsidized, but the low interest rate still applies.
Another kind of low interest student loan is a Federal Perkins Loan. This loan can provide many options for a borrower, but in order to qualify you need to show exceptional need. In fact, most that do qualify also qualify for the Federal Pell Grant (another form of financial aid). If you do qualify for this type of low interest loan, you will be happy to hear it is subsidized as well. A Perkins Loan also has the largest grace period of all the loans, meaning your first payment is not due until nine months after graduation. The interest rate is also the lowest you will find at 5%.
So, do you see a theme to low interest student loans? They are all federal loans. Nothing else can come close to there outstanding rates.
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