Student loan debt is a big problem for many of today’s students. And unfortunately, it can become even worse if you don’t get started on paying that debt down as soon as possible.
While your interest rates will be variable (and possibly high), there are ways to lower them. They won’t come without some effort on your part, but they’re worth considering if you want to save money over the long term and keep yourself out of financial trouble later on in life.
Lowering Student Loan Interest Rate
Start with a good credit score.
- Get a copy of your credit report from the three major credit bureaus (Equifax, Experian and Transunion). This will show you what’s on your credit history and how it affects your score.
- Check that there are no errors in any of the three reports; if so, fix them immediately or else they could lower your score by up to 100 points or more! For example, if one of your accounts has been closed for too long and doesn’t show up on any of the reports anymore but you still owe money on it (and don’t have another account that can replace its role), this could affect your score negatively since it looks like you’re behind on payments even though actually nothing is owed at all anymore because there is no record of that account being open anymore nor having ever been paid off due to miscommunication with creditors who don’t know how often they send out statements compared with how often customers actually check their mailboxes/email inboxes before going away again until next time when they finally come back home after being away from home longer than normal periods while also enjoying holidays with family members over Christmas/New Year’s Eve which lasted longer than expected because everyone wanted time together after spending time apart during Thanksgiving break earlier this past Fall season which took place just before Winter break began so now everybody feels ready for Summer vacation coming next month when school lets out early because most classes start later than usual due to spring break being late this year due to Easter falling earlier than usual so now everybody wants summer vacation earlier than usual
Consider consolidation.
Consider consolidation if you have multiple student loans. Consolidating your federal student loans can be a way to lower your interest rate, even if the new loan carries the same rate as some of your other loans. The trade-off is that you’ll have one monthly payment instead of several, which may make budgeting and tracking easier.
Consolidation is not the same as refinancing; when you consolidate, your servicer combines all of your federal education loans into one loan with one payment due date, but it doesn’t change the terms or interest rate on any of them (you’ll still pay off each loan separately). Meanwhile, refinancing allows borrowers to get a new private loan with better terms: lower interest rate and/or longer repayment period for example.
Increase your income.
Increase your income. If you’re not earning enough money to pay off student loans, it’s time to look for a second job or increase your hours at work. This can be difficult if you already work full-time—but luckily there are ways to up the ante without adding additional shifts:
- Take on more responsibilities at work. You may reap more rewards by taking on projects that take extra time or effort and offering them as extra services for clients or customers. It also helps if these tasks are part of something larger but still within your area of expertise so that people see how valuable they are from being involved with them from beginning to end (and thus pay more).
- Ask for a raise or promotion at work. If all else fails, don’t be afraid to ask for more money! This can seem like an intimidating prospect, especially when times are rough financially across the board and jobs aren’t easy come by these days; however, sometimes it really does pay off in the long run because employers love seeing employees who are motivated enough about their career path that they’re willing put themselves out there despite any fears they might have about seeming overconfident/etcetera…
Pay on time.
Paying on time is important for many reasons. If you don’t pay your loans, you could end up with a bad credit score. This can affect things such as getting a job or renting an apartment in the future. You will also get charged late fees if you don’t pay on time, which could make your loan more expensive overall. Furthermore, if you default on your student loan payments (miss three or more), there may be legal consequences that negatively affect other parts of your life like getting a professional license or a mortgage loan in the future.
Refinance your student loans.
- Refinancing your student loans can be a good option
- Refinancing your student loans can be a bad option
- Refinancing your student loans can be a risky option
- Refinancing your student loans can be a tricky option
There are options to help lower your student loan interest rate, but they will require research, some effort and diligence on your part.
Since the federal student loan interest rate is fixed at 6.8% for subsidized and unsubsidized loans, there are a few options to consider when looking to lower your loan interest rate. One of the most common ways to lower your student loan interest rate is through consolidation. Consolidation simply means combining multiple federal student loans into one new consolidated loan with a single monthly payment and a single servicer. There are many reasons why consolidating may be beneficial for you, including:
- Lowering your monthly payments by making them more manageable with a longer repayment period
- Reducing the total number of payments you have to make over time
- Changing your repayment plan (in some cases) if it will help you pay off debt faster
Closing
We hope this article has provided you with some helpful information on how to lower your student loan interest rate. If you’re interested in refinancing your loan, we recommend checking out our friends at SoFi.