Student loan interest rates
Pay attention to the impact of student loan rates
Student loan interest rates are one of the single largest factors when selecting the right mix of financing options to help you pay for your post-secondary education.
The impact of student loan interest rates is a major reason to first examine your options for federal student loans. Student loan interest rates vary, and they fluctuate with the economy. Federal loans generally come with lower interest rates than private loans available through banks or credit unions, due to government subsidies. But you may be able to find private student loan rates that are comparable to the federal interest rates and have other, more flexible terms that align with your needs.
Over time, the accrued interest you'll have to pay on the loan can represent even more than the original amount you borrowed. And the longer your repayment period is, the more interest you will accumulate. That’s why it is so important to choose a student loan with low rates.
There are two broad types of student loan interest rates—fixed and variable. As the words imply, fixed rates do not fluctuate, but remain stable for the life of the loan. Variable rates fluctuate based on the broader economy and Federal Reserve policies. Private student loan rates can adjust monthly or quarterly throughout the year. The new rates for federal student loans are instituted on July 1 of each year.
Pay attention to the APR
It’s important to look beyond interest rates as well. One effective way of making valid apples-to-apples comparisons between competing student loans is to check the APR (annual percentage rate) of the student loan. You'll want the lowest possible APR you can get. An APR is expressed as a percentage and includes the annual cost of a college student loan, factoring in both interest and any fees.
An example of how student loan interest works
You'll find a host of calculators and other tools online that will help you calculate what you would owe each month on various student loans under various repayment plans, based on the student loan interest rate and repayment period of the student loan. To see how student loan interest rates impact the total cost of borrowing,
visit our repayment examples.
Now that you understand about student loan interest rates and APR, learn about what private student loan money can be spent on.
Learn more about our affordable Citizens Bank Student Loan™
Find helpful information about our affordable Citizens Bank Student Loan™
. If you still have questions, call a student loan specialist at 1-800-708-6684, and we'll help walk you through the process.