Fixed Rate Student Loan Guide
From tuition and books to room and board, college can be very expensive. As a result, many students rely on private and federal student loans to help them pay for their education.
Fixed-rate student debt, in particular, is a very common option for students in need of assistance.
Fixed-rate student loans are loans that have fixed interest rates, meaning the interest rate remains the same for the entire loan term.
This makes it easier to manage your loan payments as they are the same from month to month.
Types of Fixed-Rate Student Debt
Fixed-rate student debt is available through both federal and private student loans — each of which has advantages and disadvantages.
- Private Student Loans
Private student loans are loans borrowed from any lender aside from the federal government,
These loans can offer low interest rates, flexible repayment plans, and generous loan limits. They can also be easier to qualify for than federal loans and are available to half-time students.
Private student loans can also be a great way to supplement your federal student loans if you need a little bit of extra financial aid.
- Federal Student Loans
Federal student loans are loans funded by the federal government.
These loans are a great option as they offer low interest rates, a variety of income-based repayment plans, and various loan forgiveness programs.
Federal student loans generally offer more flexibility than private student loans.
Benefits of Fixed-Rate Student Debt
Fixed-rate student debt is great for students who want their payments to be predictable and for those that don’t expect to pay off their debt before the loan term is over.
Benefits of fixed-rate student debt include:
● Available from a variety of lenders
● Fixed monthly payments
● Flexible repayment plans
● Low interest rates
● Can be used for any education expenses
● And more
While variable-rate student debt may offer low introductory rates, fixed-rate loans are a great option for students who prioritize predictability.
How Much Does Fixed-Rate Student Debt Cost?
The total cost of your student debt is dependent on your interest rate, loan balance, term, and fees — all of which vary on a lender by lender basis.
Interest rates on private student loans tend to fall between 4% and 13%, depending on your credit score and financial wellbeing.
For federal student loans, you can view the current interest rates here. This page also has information regarding federal student loan fees and loan limits.
Private student loans are typically available in amounts equal to your school’s certified cost of attendance, which includes tuition, living expenses, books, and more.
Once you receive your loan offer, you can enter your term, balance, and interest rate into a loan calculator to see your monthly payments and the total cost of your loan.
Lastly, many loans will carry various fees, including origination, prepayment, late payment, and other fees. Be sure to carefully review your loan terms to ensure you are aware of any fees you might be responsible for.
Applying for Fixed-Rate Student Debt
To make your application process as easy as possible, make sure to keep these tips in mind when applying for student loans.
- Find a Lender
If you’re applying for private student loans, it’s important to research and compare rates and terms from several different lenders.
For federal student loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA).
This application is used to determine your financial eligibility for various federal student loans and grants.
- Gather Your Documents
Before applying, be sure to gather the documents that you’ll need to complete your application.
This may include:
● Personal identifications
● Social Security Number
● Bank statements, pay stubs, and tax returns
● College enrollment information
● Cost of attendance
● And more
Each lender will have its own application requirements, so be sure to check with your lender for a more comprehensive list.
Once you’ve chosen a lender and gathered your documents, it’s time to apply.
After submitting your application, be sure to stay in contact with your lender in case they need any more information to process your application.
If you are approved, you’ll receive a loan offer, which you can choose to accept or decline. If you agree to the terms, you can sign your loan agreement and receive your financial aid.
Monthly payments at 5% interest rate on a 10 year loan with a $22,000 balance