Where can I find a student loan with low interest rates?

Question

I am entering my Sophomore year at a private, four year institution this year and still need to pay $7,649 before the beginning of the school year. This amount was determined after subtracting the total awards that the school awarded me from the total tuition for the school year.

Today I applied for a $3,500 Federal Stafford Loan through Nellie Mae.

Every road I take is a dead end in terms of finding a company with low interest rates. I am the first member of my family to attend a post-secondary institution, let alone full-time, and really have no idea what I'm doing.

Last year, my parents applied for a Federal Direct Loan for $6,000 and we're currently paying on that amount.

I'm really worried that my total loan amount is going to be enormous when I graduate and that I will have no way of paying it off without living at home. Any suggestions about a good company or other financial advice is greatly appreciated, so much that I will reward someone with ten points.

Thanks.

I was told that we're paying on the loan right now because it is in my parent's name.

Thanks for your input, Joe.

Answer 1

i have waaaaaaaaay more in outstanding student loans than that. you're right on track for going for the federal loans - they will give you below-market interest rates. the only problem is that it's impossible to find anything lower until the fed stops jacking up the prime rate.

you should be able to take out federal loans for up to the entire expected student budget at your institution. talk to someone in your school's financial aid office if you need help figuring out how to apply.

you're right, it will suck to graduate with a large student loan overhead. but going to a good school will help you get a better job (or, get you into a better graduate program so you can rack up some more loans, but get a much better salary to pay them off with) and hopefully you should find it worthwhile in the end!

n.b. if you're a full time student, neither you nor your family should be paying _anything_ on loans right now. they should all be set for "in school" status which means that you pay nothing until after you graduate. if you get a direct subsidized loan, it won't even accrue interest during your 4 years. if you get a direct unsubsidized loan, then you're looking at the interest compounding, which is not that great, but you still don't pay anything until you graduate. if your loans are not set for in school status, you really need to talk with someone either at your school or at your lender.

Answer 2

It sounds like your parents borrowed a Federal Direct PLUS Loan last year. If so, then, yes, they would have begun repayment on the loan. There *may* be an option for them to get their payments temporarily deferred on this loan -- but they need to ask for it. If you have exhausted all *your* federal loan options, quite frankly, the PLUS loan is the next best thing. See if your parents don't mind borrowing another PLUS for your Sophomore year. You could make a deal with them that, if they make the payments while you are in school, you will take over when you graduate. As far as interest rates go, this very well may be your cheapest option.

Your lowest rate (non-parent) loan options are always going to be Federal Loans, which are typically administered by your school's Financial Aid Office. You apply for loans like Stafford and Perkins simply by filing the FAFSA; your school will then determine your eligibility when they receive your application results. It sounds like, at this point, you've only been offered a Stafford Loan.... Although it's possible that you don't meet your school's eligiblity criteria for Perkins (which is reserved for students with low EFCs), it's always worth asking to make sure that you're not missing out on anything.

One piece of good news is that, next year, your Stafford Loan limit will increase to $5,500, so you will have to rely less on private loan funding.

On to private loans...

The lowest rate private loans are offered to students with good credit and/or with co-signers who have good credit. Even if your credit is decent, it might behoove you to apply with a cosigner, since some companies (like Sallie Mae) will offer you a lower rate just for using a creditworthy cosigner.

If you and your co-borrower have excellent credit, you should be able to snag a rate close to "Prime" or even "Prime minus .5%." Obviously, the Prime rate is variable, but it's currently hovering around 8% which isn't horrible. Keep in mind that most lenders can't tell you what your rate is going to be until *after* you apply with them (how else will they know how good your credit is?). So, you might have to bite the bullet and send in an application before you can get a sense of the "cost" of the loan. Once you know what kinds of rates your being offered, use FinAid's repayment calculator to determine what your estimated monthly payment will be: http://www.finaid.org/calculators/loanpayments.phtml

Some good lenders to look at:

Sallie Mae (the industry leader, by far)
Citibank (#2 behind Sallie Mae)
Citizens Bank
Bank of America
College Board (offering great PLUS Loan benefits this year!)

Answer 3

See in case you may open a mastercard and pay it off. Chase grants a 4.ninety 9 F APR for the existence of the non-public loan on transfers, or perhaps like 0% for the first twelve months, then you really can pass it from one card to a special taking purely low charges, i artwork at Chase. so i imagine that would want to help. I did myself in my view with my student loans... properly my mom did it for me , reason i could not get approved for a 25,000 credit line. ha ha

Answer 4

As far as I know the only way to find a low interest loan is by filling out the FAFSA... but I know you know that.