It is easy to fall into the trap of going for the low rates on student loans without reading all of the fine print. This can lead graduates and undergraduates to taking out loans that are not fit for their circumstances and leave them struggling to pay them off for many years. Interest rates and add-ons are what students should pay attention to in order to avoid going into default and ruining their credit score.

However, there are a few important ways that graduates and undergraduates can find the best interest rates that won't break their bank accounts.


When shopping around for student loans, students are easily swayed by the low interest rate figures they see on the forms or advertized. What they don't pay attention to are the added on fees that make the entire student loan unaffordable for the student's economical lifestyle. The fees that are tacked on are usually unnecessary, bloated payments that do nothing, but generate more money for lenders and have no actual effect on the loan itself.

Student Loan

Student Loan


Fixed rates don't change over time like variable rates, making them predictable over the time period of paying the loan. Variable rates can be beneficial, if they're locked in at a low rate before they start to rise. However, taking out a loan with a variable rate can be a gamble, as it can go lower after a student has already locked in, forcing him to pay a higher rate than that of the current market. By choosing a fixed rate, the student avoids this gamble and have a steady interest rate for the duration of the loan.


Students can sign up for auto-debit, which performs transactions from the bank directly to the student loan account. Not only does this avoid having to remember payment dates, but it also reduces the interest rate over time. This reduces the hassle on the student's part. He receives the statement online, saying how much is owed that month, and all he has to do is ensure that there are sufficient funds to make the payment.


Federal loans are known for having fixed rates on student loans, as well as having the lowest interest rates. By taking out federal loans first, and supplementing them with a private one, a student can get the most out his loans by having the cheapest loans first to pay for tuition and other costs of college living, while paying off these federal loans with a private loan.




Failing to pay back on student loans not only ruins a student's credit score and credit rating, he will have to pay a hefty price for going into default: his tax refund can be used to offset the balance of the remaining loans, his paycheck can be garnished if he obtains employment, or he can be sued by either federal or private lenders. However, ensuring that one gets the most out of his student loan an interest rates can prevent these troubles later on, and keep the student out of the red.

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