Parents: Did you know you can help your students get lower interest rates on their loans? Or that you may qualify for lower interest rates if you opt for a parent PLUS loan? Here are just three steps you may want to take to save you and your child some cash in the long run.
Refinance the Loans
One of the first options you have when it comes to lowering interest rates for student loans is to refinance. For federal loans like subsidized and unsubsidized, you wouldn’t be able to do this through the government. The government only gives you the option to consolidate loans. This will make payments easier to track, but won’t lower the interest rate.
You would instead have to go through a private lender. This can result in lower payments, lower interest rates, and other benefits, but it’s not a guarantee. Shopping around can help you find the best option. Parents may want to consider co-signing with their child in order to get an even lower rate.
Parent PLUS loan interest rates change from year to year, although they are fixed once you take out the loan. You may also want to consider refinancing with a private lender. However, not every lender will take on a Parent PLUS loan and you may lose out on income-based repayment plans or loan forgiveness programs.
It’s important to weigh the pros and cons of refinancing before taking the jump.
Set up Automated Payments
Did you know that setting up automated payments can help you save money on student loan rates? The government actually offers a 0.25% discount if you set this up with your bank account. Many private lenders also offer similar options. This benefit is generally offered because it makes students and other borrowers less likely to fall behind on their payments.
Explore Rate Discounts
Parents and students may also be eligible for rate discounts. This is often only for private lenders though. Some banks offer borrowers a number of options for rate discounts for various criteria including
- Opening a bank account with the lender
- Making on time payments for a set period of time
- Becoming a repeat customer
- Earning above a certain GPA
- and more
If you’re curious about rate discounts you or your student could be eligible for, it’s essential to reach out to the lender. They may even have a program that’s not listed above!
Lower Student Loan Interest Rates
Refinancing is the major option when it comes to lowering interest rates on student loans, but that’s not the only card you may have to play to help your child. It’s important to note though that your options depend on what type of loan you took out, whether it’s a direct or unsubsidized loan, a Parent PLUS loan, a loan from your bank, or something else. Exploring the directions you can take sooner rather than later though can help you with big savings, especially in the long run.
If you’re interested in refinancing, be sure to check out our reviews of the best Student Loan Refinance Companies!