Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 12, 2011

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Perhaps the greatest advantage of student loans over other types of loan agreements is the ability of students to secure lower interest rates to help pay for tuition, room and board, books and other expenses related to education. Finding the best possible interest rates often requires a combination of filing paperwork with the government, such as through the national FAFSA financial aid form available online, along with researching supplemental private loan rates from individual lenders.

Many federal student loans carry a fixed rate determined annually, with common rates falling between three and eight percent. Private student loans, on the other hand, typically base interest rates on the London Interbank Offered Rate, or LIBOR, combined with a lender-specific percentage that may be as low as two percent or as high as 10 percent. The interest rates on such loans vary not only in terms of the economic climate, but also upon the individual credit and income situation of the borrower.

Interest rates for student loans are also affected by the repayment plan associated with the loan itself. While some loans are repaid only after a student has graduated, dropped out of college, or has taken on a part-time course load, others can be repaid shortly after disbursement. Loans may carry smaller interest rates while a student is in school, and making payments during this period can lead to significant interest discounts.

Discounted student loan interest rates may also be available from private lenders who offer other products such as bank accounts, by making consecutive payments on the loan without any late installments or from enlisting the assistance of a co-signer to help shoulder the responsibility of repayment.