Student Loan Interest Rates
Posted By: Dr. Frugal in Loans on 08/06/2007 at 08:33:44
Stafford loans first disbursed on or after July 1, 1995 have a variable interest rate, which changes on July 1 of each year based on Treasury Bill rates, but can never exceed 8.25%. Rates as of July 2002 were the lowest in the history of the student loan program: 4.06% for Stafford Loans and 4.86% for PLUS loans.
Stafford loans obtained through lenders associated with Sallie Mae, the largest education finance company in the United States, may be eligible for decreased interest rates if the first forty-eight payments are made on time. Considering having payments automatically deducted from your checking account each month to make sure you're not late with the payment.
If you don't have a Sallie Mae loan, consider transferring your loan or refinancing it with a Sallie Mae lender to take advantage of Sallie Mae's incentives, like interest reduction. Other lenders may offer similar rewards. When rates are low, you can take advantage of the opportunity to pay off your loans more quickly by continuing to make the higher payments even though your required payment is lower.
The sooner you start paying off your loans and the larger your monthly payment, the less your loans will cost you in the long run. It may be difficult for the first few years to pay more than the minimum, especially if your loans are very large or your income is very low. If you find yourself having difficulty making your loan payments, it's better to be proactive than to make late payments or default on your loans. Call your lender at the first indication that you may have trouble with the monthly payments.
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