Low Interest Student Loans

Written by Mark Sanfilippo
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The phrases "low interest" and "student loans" seem to fit naturally together. There's a good reason for this. Thanks to the William D. Ford Federal Direct Loan program there are some great low interest Federal loans that students can take advantage of in order to obtain a college education. The interest rates on some of these loans can be absolutely amazing in comparison to those on other types of loans.

With the tuition costs of public schools averaging around $13,000 a year and private schools averaging around $28,000 a year, you can see that it doesn't take long for a massive amount of student loan debt to build up. Fortunately, there are some great low interest loans out there that make it possible to pay off these gargantuan debts. The main loan type that you're likely to be concerned with are Stafford loans.

Stafford loans are adjusted annually, but are currently enjoying record lows. For loans that have been disbursed after July 1, 1998 the current interest rate on Stafford loans is +1.7 percent while the student is enrolled in school and during the grace period. Following the grace period the rate goes up to +2.3 percent, but it's important to remember that these rates can, and most likely will, change on July 1st when the rates are annually readjusted.

Interest Rate Caps

Another great advantage of Direct Student Loan interest rates is that there is generally a cap for these rates. The Stafford loans described above have a maximum interest rate cap of 8.25 percent. Even at this maximum interest rate, this is still a very good loan option for most students and certainly one that all students should consider.


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