How short or long your student loan term is dramatically changes how much total interest you’ll pay. A fixed rate won’t change during your loan term, but variable rates can decrease or increase based on market conditions. Unlike federal student loans, which offer only fixed interest rates, some private lenders offer fixed or variable student loan interest rates. When calculating your student loan interest, keep in mind that there are a few other key factors at play: Additional factors to consider when calculating student loan interest Prequalification allows you to input basic details about yourself and your desired loan in exchange for a snapshot of the rates and terms offered. To find out what interest rates you'll receive, take advantage of lenders' prequalification features, if available. Keep in mind that the lowest interest rates advertised on lender websites may not be available to you. The higher your credit score, the lower your interest rates. Private student loans, on the other hand, will often do a credit check and set interest rates according to your creditworthiness. Federal student loans offer the same interest rate to all borrowers, regardless of credit score or income. The interest rate you're offered depends on the type of lender you're pursuing and your financial picture. On the flip side, a longer term for your student loans will lower your monthly payment but will accumulate more interest charges over time.īefore borrowing student loans, make sure you know all of the term options your lender offers so you can choose the right path for your financial needs. Some lenders offer lower interest rates as an incentive for a short term length. Terms for private student loans can be as short as five years and as long as 20 years.Ī shorter loan term can help you save more money on interest charges during your repayment period but result in a larger monthly payment.
Like private student loan amounts, private student loan repayment terms vary by lender. However, student loans that are under an alternative payment plan offer terms from 10 to 25 years. For federal student loans under a standard repayment plan, the default loan term is 10 years.
Your loan term is the amount of time you have to repay the loan in full. What to do when you lose your 401(k) match Should you accept an early retirement offer? How much should you contribute to your 401(k)?
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