With the increasing costs of college education, many students find themselves making student loan payments of hundreds of dollars per month. Having a lower interest rate can help reduce monthly payments and decrease the amount paid over the repayment term of the loan. Borrowers have a few different options for ways to secure a lower interest rate on their school loans, although some borrowers may find that they already have the lowest possible interest rate.
Instructions
Keep Current Loans
1. Call your current lender and ask if they can reduce your interest rate. If you have been making payments on time for a number of years, make sure to emphasize this fact as it makes you a better candidate for an interest rate reduction.
2. Set up automatic payments on your student loan account. Some lenders offer an interest rate reduction of about 0.5 percent for borrowers who make automatic payments.
3. Ask your lender if they have any other programs to lower your interest rate if they don't agree to a rate reduction upon request.
Consolidate School Loans
4. Increase your credit score by checking your credit report for errors and paying down balances on your credit cards.
5. Apply for a private student loan with a bank, credit union or another type of lender.
6. Have someone with a very good credit score co-sign on the loan with you. This will help you get a better interest rate because the individual is deemed very fiscally responsible and is agreeing to be held responsible for making payments.
7. Compare your offered interest rate to the rate on your current school loans. Make the consolidation switch only if the rate offered is lower, even after taking origination fees into account. Also be aware that a variable rate could increase, so if the variable rate is barely lower than your current fixed rate, you may want to stay with your current loan.
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