student loans, which bank or company has the lowest interest rates for payback?

Answer 1

For Federal loans or private loans?

PRIVATE loan rates will vary greatly -- it all depends on your credit rating. If your credit is good enough, most reputable companies will give you a decent rate. When applying for private loans,
(1) Check your credit report to get an idea of what you might qualify for
(2) Do your research on the different companies' rates and terms to see which ones appeal to you
(3) Pick a lender, apply, see if you are approved, and move on if you are not. Every credit application you submit is a "hit" on your credit report, so don't apply indiscriminately.

For FEDERAL student loans, the interest rates are set by the federal government, so they won't vary much by company. Some lenders will offer different "borrower benefits" or "repayment incentives," but these change from year-to-year and sometimes from school-to-school. Some examples:

* Sallie Mae as servicer w/ Citizens Bank as lender: 3.3% cash back after 33 on-time payments and a 1% principal reduction at graduation and .25% interest rate reduction for auto-debit

* Citibank: 1.00% interest rate reduction after making the first 36 consecutive monthly payments on time; another 1.00% interest rate reduction after making the first 48 consecutive monthly payments on time. [Note that these aren't just an 36 payments -- they have to be the first 26]; .25% interest rate reduction for auto-debit

* Bank of America: a total 4% principal reduction over 48 months (1% principal reduction for making the first 12 payments on-time; another 1% for making the next 12 on-time... and so on until 48 months are up); .25% interest rate reduction for auto-debit

* AFC Lending: .25% interest rate reduction upon repayment; 1.75% interest rate reduction for auto-debit [sounds good, yes, but this company is *brand* new and has yet to "proove" itself]

* Key Bank: 3.75% principal reduction after 36 on-time payments; .25% interest rate reduction for auto-debit

* College Board: 3.3% cash back after 33 on-time payments. They also note that there may be other benefits available and that borrowers should contact their Financial Aid Office

Many of the best borrower benefits are negotiated between the school and the lender, so any benefits that you read about on this site might *not* apply to your situation (or your school may have already lined up a good option for you).

Keen in mind that, with most benefit programs, your eligibility for the benefit often hinges on your ability to make ALL your payments on time. If you miss even one, they can deny you the repayment incentive. The most problem here? Most students miss payment #1 and they're doomed from the start.

Finally, there's a lot more to selecting a lender than just their benefits. There are a lot of shifty companies out there that offer decent repayment benefits... but think long and hard about their reputation and customer service before you commit to a 10+ year relationship with them. If the company is small, they may not even be around in a few years and your loan may be sold to another lender... To get some idea of who the larger, longer-lasting lenders are, check out this site: http://www.finaid.org/loans/biglenders.phtml