College Loan Interest Rates

How college loan interest rates are calculated

College loan interest rates are calculated based on a published index such as the Prime Rate or LIBOR (London Inter Bank Offering Rate) plus a margin based on your credit score and credit history. If a cosigner is required, your interest rate will be determined based on your credit, and your cosigners' credit.

Because the interest rate is variable, it will fluctuate over time. Interest begins accruing when the loan is disbursed.

What will your interest rate be?

It's not possible to determine your exact rate unless you apply for a college loan. However, you can get a feel for where your general interest rate is based on your credit report, which you can obtain for free from AnnualCreditReport.com. The more late payments, overdrawn accounts, and other credit issues there are, the more likely it is your interest rate will be higher.

We always recommending checking your credit report and ensuring that it's free of errors, omissions, and inaccuracies before applying for any student loan so that you get the best interest rate possible.

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How to lower your interest rate

Some college loan lenders offer discounts to borrowers for automatic debit or consecutive on-time payments. This can translate into significant savings over the course of repayment. The typical discount is 0.25% for signing up for automatic debit. It is recommended that you contact your lender for a full list of deferment options.