1. Perkins Loans – These are absolutely exceptional loans that are only available for individuals that have exceptional needs. What this means is that only students that really need additional funding will be able to qualify.

The interest rates on Perkins loans is a spectacular 5%, to be paid back over a 10 year period. On top of that, interest doesn’t accrue and payments don’t have to be made while you’re still in school. If you can qualify for Perkins loans, they are definitely the lowest interest loans that you’ll be able to get.

2. Subsidized Stafford Loans – These loans are really hard to beat because you don’t pay any interest at all while you’re in school. The government pays it for you. Once you have been done with school for six months you will assume the payments and will start paying interest. Most other types of student loans out there will accrue interest while you’re in school so this is by FAR the best low interest student loan. Interest rates on these loans is fixed and is currently at about 5.5%.

3. Unsubsidized Stafford Loans – Although you don’t have to make payments on these loans while you’re in school, interest still accrues. They are still a great option but obviously don’t have some of the advantages of the subsidized Stafford loan. These loans have a fixed interest rate which is nice. Right now that interest rate is sitting at 6.8% – very reasonable for a student loan.

If you want, you can make payments while you’re in school. This will save you some money on interest but this isn’t required. If you choose to not make payments while you’re in school, the loan with be re-capitalized after you graduate. That means that the interest that accrues will be added to the principle of the loan after graduation. You will then start paying on the loan as you normally would. This can be avoided by making payments while you’re in school.

Generally speaking, private student loans are available to anyone. However, depending on your current circumstances, they may or may not be the best option for you. Private student loans often carry interest rates that are somewhat higher than other options, so you have to be very careful before signing on the dotted line.

Before you go ‘private’, make sure that you get all of the government guaranteed loans you can. Stafford loans are spectacularly cheap, and going with a private loan before you go Stafford is a huge mistake. That said, sometimes a private loan is the only option, so here are some of the options you have.

Astrive Student Loans

Astrive student loans are private loans that are provided by the Union Federal Savings Bank. Like any other lending institution, they won’t provide funding to anyone. To be eligible for a loan through Astrive, you usually have to provide proof of enrollment, proof of income, citizenship status, credit history, and personal references.

Astrive doesn’t provide loans to individuals who live in Texas, Wisconsin, Washington, or Iowa. If you live in those states, you would need to probably find a cosigner who lived in another state.

The rate you will end up paying with an Astrive student loan will depend entirely on your credit history, the credit history of your cosigner, and the current rates as determined by the one month London Interbank Offered Rate.

Chase Education Finance

Chase Education Finance is a program created by JP Morgan Chase, and Co. With this program, you most definitely don’t have to worry about whether your loan was provided by a reputable bank.

Chase funded private student loans are available for both undergraduate and graduate students. The loans amounts are dependent upon what year the student is in school. For example, a first year undergraduate student can take out up to $5,500 per year, while a first year graduate student can take up to $20,500 per year.

The interest rate you would expect to pay with a Chase private loan is between 6% and 6.8%, depending on your credit history.

Chase will only loan to qualified borrowers and to find out whether you qualify, you will have to apply with Chase. They will obviously determine your eligibility based on credit history and employment status.

Evaluate Your Financial Position

College can be a hectic way of life with many ups and downs and unexpected challenges. However, for many young adults, the biggest shock comes after graduation, when you’re confronted with thousands of dollars in student loans that must be repaid.

Record low interest rates have made payments more manageable, but that is all changing. Federal student loan rates are adjusted every July 1st, based on rates for short-term Treasury bills, which have been rising.

If you are out of school and pay your student loans, you can shield yourself from higher rates by consolidating. You lock in the weighted average of all your loans up to the nearest one-eighth of 1 percent.

If you are not financially able to start paying off, or keep paying on, your loans, you are eligible for financial hardship deferments. If you consolidate your loans, you lose your ability to defer payments so make sure you are ready to make your monthly payment for 10 or more years before you consolidate.

How To Consolidate School Loans to Lower Your Interest

The general rule of thumb is that you should consolidate any Stafford loans that were disbursed before July 6, 2006. Graduates that consolidate during their grace period are eligible for a 0.6 percent interest rate reduction.

If you consolidate Perkins loans, you lose repayment benefits like loan forgiveness and a nine-month grace period, as well as subsidized interest during any deferment period. They also have a 5 percent fixed rate, so there is not an advantage to consolidating them.

When you consolidate, you can also stretch out the payment period for up to 30 years. By extending the term of the loan, you reduce your monthly payments, a useful feature for recent grads with little cash; but should consider paying it off way before then due to all of the extra interest you would be paying.

You can always increase your payments. There are no penalties for paying off your loan early. Not everyone can consolidate. Most lenders require a minimum of $7,500 in loans, and some set the minimum balance at $10,000.

Federal law prevents most borrowers who have already consolidated from doing so a second time, even if they locked in at a higher rate. And if all of your loans are with one lender, you’re required to consolidate with them unless they do not offer the service.

Shopping For A Loan Consolidator

Many lenders offer a quarter-point reduction for borrowers who agree to have payments automatically debited from their bank accounts. And some offer a reduction after you make 36 on-time payments.

You need to talk with several companies before making up your mind which company to go with. When discussing the terms of the loan, your research will pay off and you will be able to negotiate additional lower interest discounts if you have similar offers from other companies to compare.

Another good idea is to narrow down your choice by using a loan analyzer at Finaid.org. which will break down the discount rates in real dollars. This will help you to get a good idea of what each lender’s discount is worth over the long term.

This may seem like a lot of time and effort by doing all of this research, but it will pay off in the end. You will be paying this debt for many years and will want to know you have made the best decision.

Many students go through their youth with little desire to even consider reading a statement from their lender for their student loans.  This can be a dangerous decision because it can quickly sneak up on you and come to bite you in the rear.  I suggest that you take the time if you are in college now to pay attention to when you have to start paying your lender and how much.  If it has jumped on your back recently like a clinging monkey then you might need to take action immediately to get a good plan set up for your student loan repayment.

There are a couple simple things to find out to make sure that you can get on the right track to paying off your loans.

1. What is the loan classified as?

There are many types of loans that are out there and they all are going to have different requirements for you based on what terms they have established with the loan.  Many students will find American government funded loans such as the Sallie Mae, Stafford, Perkins, or PLUS loans. 

There are certain loans where you will have the full responsibility and then there are loans like the PLUS loan that is your parents obligation to repay.  If your parents have done that for you then I would suggest that you are a very lucky person.  I would look to do what you can to help pay for it in the future if you are able to create financial security in a short period after college.

There should be a thorough list of paperwork that you should keep by your organized in a file of some kind or typed up on to a computer.  Read through all of the terms to know when you have to start paying and how much is required of you.  Also get a good understanding of any penalties you may have for late payments, just to know what you would have to deal with and how short of a leash your lender has given you.

If you have lost the paperwork then contact the school’s financial aid office to get documentation on what you owe.  This information is easy to gather and shouldn’t take too long for you to get back on track if you have been a miserable mess for the past couple years.  If the school doesn’t have it then they will get you in touch with who does.  This is information that is your legal possession that you can always gain access to.

2. How much am I going to pay you?

When you apply for these loans there are decisions made by the Department of Education as to how much they can offer to your student situation.  They might give you more than you need or not enough and require you to go get another loan from another source.

You will receive statements probably at the end of each semester that you are in school giving you an understanding of how much you borrowed and how much you owe.  Keep these on file just in case if there are errors in their system as to what actually is going on.  This will save you a lot of time.

Make sure that you separate your forms from any scholarships that you may have received because there are plenty of documents out there from many different companies.  Make sure you know first if you are getting a Pell Grant or some kind of scholarship before you get a student loan and for how much because the last thing you want is to get a loan that you don’t need.

3. Who is it that I am paying back?

When you make a decision to go with a certain type of a loan you will also decide which bank you will lend from.  The bank usually will go through a thorough process and decide on how much to give you and then if they do pay you it will probably be on a semester basis until you are finished with school.  Make sure to stay in school if you can to avoid the messy idea of deferring payments.  Many students do it for plenty of solid reasons and it can be taken care of, but with some banks it can be a hassle.

The bank will sell off the loan to Sallie Mae to make more money and in turn you become the possession of Sallie Mae, which is the government established Student Loan Marketing Association.  This association was established to create more loan opportunities for students across the country and has been hailed as one of the best achievements in government action along with the creation student loans since in the 20th century.

Now there are going to be times when Sallie Mae will not only buy up the loan, but sell it to other companies and each time this transaction may happen with your loan, you will be notified so you know who it is that you are paying your bills to.  The terms and conditions will stay the same, but make sure to be on the ball because some companies may be less lenient then others.