5 Secrets To Save More Money On Your Student Loans

So, how do you exactly get a lower interest rate on your student loans?

Here are 5 ways to lower your student loan interest rate.

1.Refinance student loans

Student loan refinancing is the most effective way to lower your student loan interest rate. Student loan refinancing rates have dropped significantly and are as low as 1.99%. When you refinance student loans, you combine your federal student loans, private student loans or both into a new student loan with a lower interest rate. That lower interest rate means you could save thousands of dollars on your student loans. To qualify, you need a credit score of at 650 and recurring monthly income, among other factors.

A student loan refinancing calculator shows you how much money you can save when you refinance student loans.

2. Build a strong credit score

Your credit score is a pathway to more access to credit. If you want to know how to get a lower interest rate, having good credit can help. If you have good credit, you are viewed as a responsible borrower and more likely to repay your student loans. Therefore, lenders view you as less of a credit risk. To increase your credit score, start with developing a strong payment history. That means paying on time and not skipping any payments.

3. Pick a variable interest rate

A variable interest rate typically is lower than a fixed interest rate. A fixed interest rate means that the interest rate will never change during student loan repayment. A variable interest rate means that your student loan interest rate may change during repayment. In a rising interest rate environment, a variable rate student loan can become more expensive. However, in a decreasing rate environment, a variable interest rate student loan can becomes less expensive.

4. Choose the shortest repayment term

How do you get a lower interest rate? Choose a shorter repayment period. The standard student loan repayment period is 10 years. However, you can receive a lower interest rate if you choose to pay back student loans faster. For example, you will usually get a lower interest rate on a 5-year loan term than a 20-year loan term. While the monthly payment may be higher, the overall cost will be substantially less because you will save on interest costs.

5. Apply with a co-signer

If you have bad credit or don’t meet the qualifications to refinance student loans, you can apply with a qualified co-signer. A qualified co-signer can be a family member such as a parent or spouse with a strong credit score and income who assumes financial responsibility for your student loan, including for student loan refinancing. Your strong credit and income profile can help you get approved to refinance student loans and get a lower interest rate. Some lenders offer a “co-signer release,” which means you can release your co-signer from financial responsibility for your student loan once you get approved and make multiple on-time payments.

This article was written by Zack Friedman from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.