The 3 Best Ways To Lower Your Student Loan Interest Rate Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Nejron Photo/Shutterstock January 19, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald. Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans. Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Tens of millions of Americans have borrowed money to pay for college. If you are one of those borrowers, chipping away at student loan debt might be one of your big financial goals. If you’re trying to pay down private student loan debt, a good place to start is to see if you can . Financial experts have a number of tips in their toolkit that could help you here — from automating your payments to refinancing. Below are three ways to lower the interest rate on your student loans and trim your student loan payments in general. 3 ways to lower your student loan interest rate
The best method for lowering your student loan interest depends on your overall financial picture. 1 Refinance your student loans
Best for Those who have a solid credit score and want to pay off their loan quickly
If you have a solid credit foundation, are employed and plan to pay off your loan quickly, you may want to consider your private student loans. Well-qualified applicants may be able to take advantage of lower interest rates that could save money on monthly loan payments and overall interest fees. Refinancing costs have come down markedly due to the coronavirus pandemic, with fixed APRs as low as 2.3 percent and variable APRs as low as 1.74 percent. You can to see where current rates stand with our daily rate trends. You may be able to refinance a student loan if you have bad credit, but your rates will likely be higher. A good credit score, by comparison, might improve your odds of qualifying for a lower interest rate. To , be sure to follow good credit habits. Paying on time is a must. Reducing the balance on your credit cards (and thereby lowering your ) might help too. It’s also okay to be strategic and refinance multiple times, since there are no prepayment penalties on federal or private loans, and most loans don’t charge origination fees. However, if you have federal student loan debt, be sure to weigh the into a private loan. Refinancing will cause you to lose federal borrower protections, like the automatic forbearance period and interest waiver through . Private student loans are also not eligible for the broad student loan forgiveness measures announced by the Biden administration. That trade-off may not be worth it. Loan Student Key takeaway With the decrease in interest rates, it’s possible to save money on student loans by refinancing. But weigh your options carefully before proceeding, particularly if you have federal student loans. 2 Take advantage of discounts
Best for Borrowers with predictable income or those who have multiple accounts with the same company
One of the simplest ways to lower your interest rate is by automating your payments. Many lenders offer discounts of 0.25 percent to 0.5 percent if you set up autopay from a checking or savings account. It might not sound like much, but it can add up over time. You could save around $25 a year on a balance of $10,000. “This may be the simplest and quickest way to realize a reduction in interest and requires little effort on the borrower’s part,” says Jon Long, an attorney with Long, Burnett, and Johnson who specializes in student loan debt. With some lenders, you might be able to qualify for loyalty discounts as well. Loyalty discounts, if you can find them, reward borrowers (and co-borrowers) who have other accounts with the lender — like a savings account or another loan. SoFi, for example, offers a “member discount” if you take out a student loan after taking out a or an . Check with your lender to learn what’s available. Loan Student Key takeaway Autopay is a straightforward option for borrowers with little to no downside. It might also be beneficial to take out a student loan from a company with which you have an existing relationship. 3 Negotiate with your lender
Best for Those who got their student loans during high-interest-rate environments
If you borrowed at the private level or if you have already refinanced, you might consider shopping around for a more competitive and presenting it to your current lender. Although it’s a long shot, the lender might be willing to match that rate to keep your business. might help you if you need to show better credit or more income to qualify for a lower interest rate. However, be aware that your co-signer will be equally responsible for the loan. That’s a significant risk to the co-signer. If you fail to make timely payments, both of your credit ratings could suffer damage and you both could be financially liable for the debt. Loan Student Key takeaway Compare interest rates and see if your current lender is willing to negotiate. What to do if you can t get a lower rate
The money moves above may not be the right fit for every student loan borrower. However, there are other ways to trim your student loan costs, even if your interest rate remains the same. Deduct interest payments from your taxes
You may be able to deduct a portion of your student loan interest payments from your topline earnings. If you’re eligible, the deduction could offset the amount of income you have to claim and reduce your tax obligation. Here’s how it works for the 2021 tax year: Individuals with an of less than $70,000 (or married filers whose income is less than $140,000) can deduct up to $2,500 worth of interest payments. Phaseouts occur for single filers who make between $70,000 and $85,000 and joint filers earning between $140,000 and $170,000. The student loan interest deduction is also an above-the-line exclusion from income, so you can claim the deduction even if you on your tax return. Check for cash back specials or rebates
Though it’s not a lower interest rate, some do offer cash back specials and refinancing rebates. Such offers could help you spend less money in the long run — if you use the cash wisely. Credible, for instance, offers a if you’re able to find a lower rate than what it offers you. Adjust your payment plan
Experimenting with different payment plans might also help you maximize your money and pay less in interest over time (even at the same interest rate). There are multiple strategies you can try with this approach, such as: . Making multiple payments a month. on the loans with the highest interest rates first. As you reduce your loan amount in regular increments, you’ll lower how much interest you pay in each installment. “Many people find a way to bring in extra income, anything from online tutoring or yard work to a traditional part-time job to put toward student loan debt,” says Michael Micheletti of Freedom Financial Network. “If you can pay more, make sure to contact your lender or servicer and request that your extra payments go toward the outstanding balance, versus your next payment.” Final considerations
Lowering your interest rate is one approach that could help you pay less overall on your student loans. But it’s not the only strategy that works. Being financially savvy is the best way to save money in the long run. If you can’t qualify for a lower interest rate, try to find out why. Your credit score may be holding you back. Improving your credit can help you not only with your student loans, but with other types of financing as well. SHARE: Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald. Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans. Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. Related Articles