Are you paying too much for your student loans?
Here are 5 ways to lower your student loan interest rate.
1. Refinance student loans
Student loan refinancing is the most effective way to lower your student loan interest rate. When you refinance student loans, you combine your existing federal student loans, private student loans or both into a new student loan with a lower interest rate. That lower interest rate means you could save substantially each month on your student loans. That’s real money back in your pocket.
This student loan refinancing calculator shows you how much money you can save when you refinance student loans.
2. Have strong credit
If you want to know how to get a lower interest rate, having good credit can help. If you have good credit, you are viewed as a responsible borrower and more likely to repay your student loans. Therefore, lenders view you as less of a credit risk. To increase your credit score, start with developing a strong payment history. That means paying on time and not skipping any payments.
To refinance student loans, you will need a credit score of at least 650. The higher your credit score, the lower the rate.
3. Choose a variable rate loan
While federal student loans only offer a fixed interest rate, you can refinance student loans and receive a variable interest rate too. A variable interest rate student loan typically has a lower rate than a fixed interest rate student loan.
A fixed interest rate means that the interest rate will never change during student loan repayment. A variable interest rate means that your student loan interest rate may change during repayment. In a rising interest rate environment, a variable rate student loan can become more expensive. However, in a decreasing rate environment, a variable rate student loan can becomes less expensive.
4. Choose the shortest repayment term
Want a lower interest rate? Choose a shorter repayment period.
You can receive a lower interest rate if you choose to pay back student loans faster. Why? The sooner you repay your student loans, the sooner the lender gets paid back. For example, you will usually get a lower interest rate on a 5-year loan term than a 20-year loan term. While the monthly payment may be higher, the overall cost will be substantially less because you will save on interest costs.
5. Apply with a co-signer
If you have bad credit or don’t meet the qualifications to refinance student loans, you can apply with a qualified co-signer.
A qualified co-signer can be a family member such as a parent or spouse with a strong credit score and income who assumes financial responsibility for your student loan, including for student loan refinancing. Your strong credit and income profile can help you get approved to refinance student loans and get a lower interest rate.
Some lenders offer a “co-signer release,” which means you can release your co-signer from financial responsibility for your student loan once you meet certain requirements.
For the original article click here: https://www.forbes.com/sites/zackfriedman/2019/10/07/5-ways-to-lower-your-student-loan-interest-rate/#67b66ec74c47