American families which have to borrow for college tuition have an increasing number of low-cost alternatives to federal student loans. In times of financial aid shortages and tuition hikes this news is a really good one. This year the rates on subsidized Stafford loans were reduced in the last minute and this cut helps only students who are in financial need – those young people who don’t get eligible are still paying the rate of 6.8 percent (plus 1 percent in fees).
Among other options are for-profit loan lenders like Wells Fargo or Sallie Mae which market parent loans with the fixed interest rates of 5.5 percent. A San Francisco startup, SoFi, has managed to persuade alumni at over three dozen colleges to provide loans to students at interest rates starting around 6 percent. In addition, several states, charities and colleges offer loans with low interest rates, in some cases they make loans with zero rate.
Tips To Make The Right Choice
In order to find loans with low interest rates, it is better to check various resources offering private loans from for-profits and credit unions, but it is advisable to stick to options with fix rates because the rates may increase at some point while the loans with variable rates may be found with the interest of 2.25 percent.
For state, school, charity and startup programs it is preferable to start with the lists of zero-rate or low-interest student loans.
In case you are lucky to gain a cheaper loan, review the fine print thoroughly. With bargain loans the borrowers may be required to have co-signers, max out federal student loans first or make payments during schools.