Student Loan Interest Rate Should Not Deprive You Education

2007-03-08 10:33:40

( Financial )



There is one thing that no one can take away from you for the rest of your life: education. Unfortunately, college education has become a major expenditure. You would be fortunate to receive scholarships and grants to aid you through until you graduate. Or, you may work while simultaneously attending college which can be stressful on you.

A good alternative to pay for your college degree is a student loan. Like high mortgage interest rates, you may think that high student loan interest rates make it difficult to pay your student loans. You don’t have to make this a hindrance to earning your college diploma since student loans come in two types: government student loans and private student loans.

Government Student Loans

You will find it easy to apply for government-guaranteed student loans. These loan types are popular primarily because they have lower student loan interest rate (usually tied to the prime index rate or Treasury bill rate) than most other varieties of loans.

If you will be eligible for the subsidized student loan, you will not be charged any interest until six months after you graduate. Unsubsidized loan, however, will give you the option to pay the interest while in school or to defer interest payments until repayment of principal begins. In both cases the federal government guarantees the loan, which ensures a very low student loan interest rate.

Private Student Loans

Non-government loans are available from banks, credit agencies, and other financial institutions. In non-government student loans, you pay off the loan interest right away.

Private loans are not as easy to apply for as government loans because typically the lender will require you to provide a guarantor to your loan. If you can convince your parents or grandparents to act as guarantors on your loan, you can negotiate for a lower student loan interest rate.


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