Best Low Interest Student Loans - A Detailed Review

In this topic, we will emphasize on the best low interest student loans which is the trending step when it comes to student loans. You can ease-fully take tips, refer and solve your targets towards interest rates of your loans.

Updated by Nchumbeni F Yan on 25th February 2020

Education grows expensive as you pursue higher levels towards education in any field. In this context, we will assist you to make financial decisions with ease.

Always and firstly borrow federal loans before private loans. Once you have exhausted federal student loans, you have to compare multiple private lenders to find the lowest interest rate.

Private student loans imply a good option only if

  • You have already applied for the Free Application for Federal Student Aid (FAFSA), to verify your eligibility for federal grants, work-study, and federal loans.

  • You have limited the maximum in subsidized and unsubsidized federal student loans.

  • You and your co-signer maintain good credit. Private student loan borrowers have co-signer in the majority.

  • You borrow on the term of your need.

Get ideas more about the personalized rates from these well-established lenders regarding borrowing private student loans in this article.

Table of contents:

What is a Low-Interest Student Loan?

A student loan is a type of financial assistance or help designed for students to cover their expenses on education,or others during their study period. A student with a low interest rate could help you to pay off your loans off early.

Currently, loans are 9% to 12% of the average rates in the industry.

The best low interest student loans 2020

Here are the best lists below:

Lender Best area for
Earnest flexible payments
Ascent cosigned or non-cosigned independent students
Common band private student loan faster pay off for loans.
College Ave private student loans students who make payments while they are still studying
Lendkey origination fees, prepayment fees
SoFi flexible repayment options, defer payments.
Citizens one international students, existing citizens bank customers
Discover student loans students who need room on payments
Sallie Mae private student loans part-time students and for those who want repayment flexibility
Lender Variable rates Fixed rates
Earnest 2.47%-11.4% 4.39%-12.78%
Ascent cosigned or non-cosigned 3.28%-12.59% 4.26%-13.22%
Common band private student loan 3.52%-9.50% 5.45%-9.74%
College Ave private student loans 3.70%-11.98% 4.725-12.94%
Lendkey 3.75%-10.75% 4.86%-11.24%
SoFi 2.41%-11.70% 3.49%-11.99%
Citizens one 2.69%-11.02% 4.40%-12.19%
Discover student loans 2.08%-11.37% 4.74%-12.49%
Sallie Mae private student loans 2.75%-10.65% 4.74%-11.85%

How do I get a Low-Interest Student Loan?

To get a low-interest private student loan is a little complex as compared to getting a federal student loan. There are points to follow if you want to get approved for a low-interest rate, including that you note the below;

  • Complete your FAFSA form, know what to borrow:

File your FAFSA. Compare the options. Know how much you need to borrow before you take out a private student loan. Look for federal grants and scholarships if you are eligible, the amount which isn't covered by federal student aid.

Private student loans should only be utilized to cover the remaining costs after taking federal funding and free money for college into account. The lenders usually let you borrow up to the cost of attendance(COA). Your estimated costs are often inflated by adding a few thousand dollars to the COA. So, use savings or part-time job income to cover those smaller costs.

  • Maintain your Credit Before you apply:

Improving your credit is a key to low-interest student loans, important for students seeking loans without a cosigner. If you don't have credit, try to establish it within six months.

  • Add a cosigner:

Add a co-signer to boost your credit and chances to secure the lowest possible interest rate.

Adding a cosigner means, the person is ready to be legally responsible for the debt. The lender considers their income and credit score as well, during the application phase.

This is helpful when you are poor or have no credit. Your cosigner aids chances that offer co-signer release after a set number of on-time payments.

  • Eligible Credit Score you need to get a low-interest student loan:

You need a good credit score of at least 650 to qualify as a sole borrower under private student loans. 

To qualify for the lowest interest rates, a credit score of 720 or more is a must.

Check your credit score for free three times a year. Agencies such as TradeUnion, Experian, and Equifax are required to give you free reports every 12 months.

If your credit score isn't high, add a cosigner to support. Even if you have a decent credit score, it's best to add a creditworthy cosigner. The higher your credit score, the higher you'll qualify for the lowest advertised rates. Lenders use their own eligibility criteria when evaluating for loan applications.

You can always apply for a rate on a soft inquiry whether you'll qualify for a specific lender.

Difference between private student loans and federal student loans

Federal student loans mean a loan that you are borrowing which is funded by the government. You can apply by submitting a FAFSA.

Whereas, private student loan means a loan that you are borrowing through a bank, credit union or online lender.

Federal student loans offer borrowers security and variable repayment options that private loans may not offer, such as income-based repayment, loan forgiveness programs. It also offers flat interest rates set by Congress. While the interest rate on private student loans depends on your co-signer's credit score. 

At least 690 credit scores are a must, or you have to pay a higher interest rate for private student loans rather than for federal loans.

How to choose a private student loan?

Compare the offers from multiple sources such as banks, credit unions, online lenders to get the lowest interest rate. Negotiate your rate with the lender as possible.

A fixed-rate remains the same throughout the lifespan of the loan, while a variable rate would be promising than a fixed rate but could fluctuate rates overtime on economic conditions.

Go for borrower protections in your private lender offers, such as deferment and forbearance, any repayment options.

Have an option where you choose your loan terms, to pay back the loan faster with less interest or pay lower amounts with more interest over a long period.

How to qualify for private student loans?

Each lender will have its own needs for taking out loans. In most loans, credit score and income are taken into consideration.

However, lenders will usually require students to have established credit or an income to apply with a co-signer. Or some lenders offer loans considering career and income potential if without a cosigner.

Note: Lenders often require you to get enrolled in a Title IV school, which means your school processes federal student aid. In some states, lenders don't offer certain loans. 

How to find private student loans with bad credit?

It is very difficult yet possible. Try for federal student loans.

If you have hit your limit on federal student loans, you may be able to get a private student loan by adding a co-signer who has creditworthiness, usual scores on the high 600s or higher.

Do you need a co-signer for private student loans?

If you are at your worst, no income, no credit, bad credit, getting a co-signer is a life-saving option to get a private student loan. Without evidence of your bills, such as car loan, utility, credit card, you have no evidence to demonstrate that you can pay bills on time. You'll need a co-signer with a solid credit score, in the high 600s at least for signing with them for the loan hook if you are unable to pay.

Some lenders offer loans that don't require credit, whereas some look at the school career potential to determine the amount and rate you can borrow for.

How to apply for private student loans?

Every lender has its own terms and conditions.

A document proving citizenship, identity, income along with cast information, financial aid award letter from the institution, school attendance is a must.

You and your co-signer will have to maintain a credit score in the high 600s or higher. A co-signer debt-to-income ratio is also verified to pay for a student loan bill.

Worried about your student low-interest loans? Find the best student loans suited for you.

Other methods of borrowing if you are unable to get private student loans

Don't give up, for there are diverse options for borrowers who don't qualify for low-interest student loans.Just make some bends or adjustments in your college or part-time job plans.

Apply for federal grants and scholarships:

All the students should apply for these options before borrowing any loans, especially important for students who can't get approved for a private student loan. It would help you pay off your loan. It would be free money for school.

Studying at an affordable school:

Choosing a less expensive school, you may not need any private student loans at all. Choosing a school close to home would eliminate extra charges too.

Work-study in school:

Take up a part-time job to help your loans. Some colleges offer work-study programs on campus or near the campus.

A job offering Tuition Assistance:

Go for tuition assistance programs such as in Chipotle, Starbucks. If you're an employee, your company will likely help you cover some part of your loans.

Master's degree students have more benefitting options. It is cool for a work commitment exchange in agreement to paying your master's degree.

What's the catch?

Students often missed their opportunities when having to pay for a high amount of interest rates. In the guided context above, it deals and mentored a borrower to grab the best options having a low interest on student loans.

Also, it helps you in granting low-interest rates for undergraduate students, graduate students, and even parents or any student with high loan interest.