Did you know that you could negotiate loan rates and terms on any new federal student loans? To learn more, read below for my Tip #6 in a series of “Seven Smart Ways to Pay Off Student Loans Fast.” Read also Tip #1, Tip #2, Tip #3, Tip #4, and Tip #5.
Tip #6: If you’re willing to negotiate and ask for more favorable rates and loan terms than you’re first offered, you can find many lenders that will agree to charge a lower rate than the federal maximum interest rate.
Every July 1st Congress adjusts the interest rate caps charged on federal student loans. However, contrary to popular belief, Congress doesn’t “set” the rates for federal student loans. Instead, the feds impose a “maximum” interest rate that lenders can charge, then lenders set their own rates based on what the market will bear.
Interest rates are currently being reduced for federally subsidized Stafford loans. (With subsidized loans, the government pays the interest on the loans while the student is in school). As of this writing, the interest rates on new subsidized Stafford loans are:
6.0% for loans first disbursed July 1, 2008 to July 1, 2009
5.6% for loans first disbursed July 1, 2009 to July 1, 2010
4.5% for loans first disbursed July 1, 2010 to July 1, 2011
3.4% for loans first disbursed July 1, 2011 to July 1, 2012
Bonus Tip: Ask a lender for lower interest rates based on:
having payments automatically deducted from your checking or savings account,
making a set number of ‘on time’ payments (24 to 48 months of on time payments often qualifies you for a rate cut, and a few lenders will give you a break even sooner), or
earning good grades, or qualifying for any other incentive programs a lender offers
Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, speaker, and author of 15 money-management books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.
Lynnette has been seen on more than 1,000 TV segments nationwide, including television appearances on Oprah, Dr. Phil, The Dr. Oz Show, The Steve Harvey Show, Good Morning America, The TODAY Show and many more.
All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.