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Paying off a student loan with a high interest rate can take a lot of time and money. But if you can reduce your rate, you’ll likely save money on interest charges — and might be able to pay off your loan faster.
Here are seven ways to lower your student loan interest rate:
- Refinance your student loans
- Sign up for autopay
- Look for loyalty discounts and more
- Make on-time payments
- Raise your credit score
- Use a cosigner when refinancing
- Negotiate with your current lender
1. Refinance your student loans
Student loan refinancing lets you pay off private or federal loans with high interest rates by taking out a new loan with different repayment terms.
It could also get you a lower interest rate, which will save you money on interest charges over time. You also have the option to refinance more than once if you qualify for even better loan terms later on.
If you decide to refinance, remember to consider as many lenders as you can to find a loan that fits your needs. Not all lenders will offer you the same rate or terms for student loan refinancing, so you’ll want to get actual rates from the best student loan refinance lenders before you make a decision.
Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in two minutes.
|Lender||Fixed rates from (APR)||Variable rates from (APR)||Loan terms (years)||Loan amounts|
|4.54%+||N/A||10, 15, 20||$7,500 up to up to $200,000
(larger balances require special approval)
|2.70%+||1.93%+||5, 7, 10, 15, 20||$10,000 up to $250,000
(depending on degree)
|2.97%+¹||1.99%+¹||5, 7, 10, 15, 20||$10,000 to $500,000
(depending on degree and loan type)
|3.34%+2||3.24%+2||5, 7, 10, 12, 15, 20||$5,000 to $300,000
(depending on degree type)
|4.41%+5||2.03%+5||10, 15, 20||$7,500 to $200,000|
|2.79%+3||2.39%+3||5, 7, 10, 12, 15, 20||Minimum of $15,000|
|3.46%+4||2.51%+4||5, 10, 15, 20||$5,000 - $250,000|
|3.05%+||3.05%+||7, 10, 15||$10,000 up to the total amount of qualified education debt|
|2.99%+||2.19%+||5, 8, 12, 15||$7,500 to $300,000|
|3.19%+||N/A||5, 10, 15||$7,500 up to $250,000
(depending on highest degree earned)
|2.99%+5||2.25%+5||5, 7, 10, 15, 20||$5,000 up to the full balance of your qualified education loans|
|Compare personalized rates from multiple lenders without affecting your credit score. 100% free!
2. Sign up for autopay
One of the quickest ways to get a rate discount is to check if your lender or loan servicer offers an automatic payment discount. Most autopay discounts reduce your rate by 0.25% percentage points. That might not seem like a lot, but every little bit helps.
|Without 0.25% discount||With 0.25% discount|
|How authorizing automatic loan payments can lower your student loan repayment costs. Assumes 10-year repayment term.|
In addition to lowering your interest rate, authorizing automatic payments can:
- Help you stay current on your loans
- Avoid costly late fees and damage your credit score
- Help you improve your credit by establishing a history of on-time payments
Here are Credible’s partner lenders that offer automatic payment discounts:
3. Look for loyalty discounts and more
Some lenders also offer loyalty discounts to borrowers that already have a relationship with them. These rate discounts are typically 0.25%, depending on the lender.
Because borrowers who earn their degrees are less likely to default on their loans, you might also be able to earn rewards on private student loans for earning good grades or graduating.
For example, INvestEd will deduct 2% from your original loan principle if you graduate from your program within six years.
Ask your lender if there are any other discounts you qualify for. You might be surprised at how much lower you can get your rate.
If you are able to refinance to a lower rate and also take advantage of any rate discounts you qualify for, you could save a lot of money in interest charges over the life of your loan. Use our calculator below to see what you might save by refinancing your student loans.
Step 1. Enter your loan balance
Step 2. Enter current loan information
Step 3. Enter your new loan information to start calculating your savings
If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $.
Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.
Checking rates won’t affect your credit score.
4. Make on-time payments
Some lenders offer an interest rate discount after you’ve made a specific number of on-time payments. Not all lenders offer on-time payment discounts, but it doesn’t hurt to ask yours if it’s available.
For example, MPOWER Financing offers a 0.50% rate discount if you make on-time, consecutive payments on your student loan for six months using autopay. Note that MPOWER isn’t one of Credible’s partner lenders.
5. Raise your credit score
To qualify for the lowest-advertised refinancing rates, you typically need very good to excellent credit — meaning a score between 740 and 850. If you have poor or fair credit, it might be a good idea to focus on improving your credit first so you can qualify for a lower interest rate later on.
Here are several ways to potentially raise your score:
- Review your credit report: Check your credit report to ensure there are no errors or fraudulent accounts in your name. If you find any inaccurate information, dispute the accounts with the major credit bureaus: Experian, Equifax, and TransUnion. Having incorrect information removed from your report could improve your score within a few weeks.
- Make payments on time: Your payment history comprises 35% of your FICO credit score. To boost your credit, be sure to pay all of your bills on time. Keep in mind that past missed payments can stay on your credit report for up to seven years. However, the longer you spend making on-time payments, the less impact those missed payments will have on your overall score.
- Pay down debt: Your credit utilization makes up 30% of your FICO credit score. To reduce your credit utilization (how much of your available credit you use), make extra payments toward your existing accounts, such as credit cards or student loans. As you lower your credit utilization, your score will gradually improve.
6. Use a cosigner when refinancing
If you have less-than-perfect credit, you might be able to lower your interest rates by refinancing your student loans with a cosigner. A cosigner is typically a friend or relative with good or exceptional credit as well as reliable income who will share responsibility for the loan.
Adding a cosigner reduces the risk to the lender, which could improve your chances of qualifying for a lower interest rate.
To qualify for cosigner release, you’ll typically need to:
- Make consecutive, on-time payments for a specific amount of time (typically 12 to 48 months, depending on the lender)
- Meet the lender’s eligibility criteria (such as credit score and income requirements) on your own
If you’re approved for cosigner release, your interest rate will likely stay the same. Here are Credible’s partner refinancing lenders that offer cosigner release:
|Lender||Variable rates from (APR)||Fixed rates from (APR)||Min. credit score||Cosigner release offered|
|N/A||4.54%+||Does not disclose||After 36 months|
|1.99%+¹||2.97%+¹||Does not disclose||After 36 months|
|2.51%+4||3.46%+4||670||After 48 months|
|2.19%+||2.99%+||670||After 12 months|
|Compare personalized rates from multiple
lenders without affecting your credit score. 100% free!
7. Negotiate with your current lender
While this strategy isn’t guaranteed, one way to potentially lower your interest rate is to negotiate with your current lender.
If you’ve improved your creditworthiness by increasing your income, paying down debt, or boosting your credit score, your lender might be willing to reduce your rate.
Keep in mind that this strategy won’t work for federal student loans — since you can’t switch servicers, there’s no incentive for your servicer to lower your rates. But if you have private student loans, this might be an effective way to score a reduced rate.
Other ways to save money when repaying student loans
If you’re not able to lower your student loan interest rates, there are other ways to tackle your student loans. Here are a few other ways you could pay your loans off faster:
- Pay more each month
- Deduct payments on your taxes
- Avoid alternative payment plans
- Use the debt avalanche method
1. Pay more each month
Try making larger monthly payments rather than the minimum amount due. While you may not lower your interest rate, you’ll end up paying less in interest over the life of the loan since you’ll pay off student loans sooner.
2. Deduct payments on your taxes
If you made payments toward your student loans, you might qualify for the student loan interest tax deduction. This will reduce your taxable income.
With the student loan interest tax deduction, you can deduct $2,500 or the amount of interest you paid during the tax year — whichever is less.
3. Avoid alternative payment plans
Income-driven repayment plans are great if you can’t afford to make on-time minimum payments every month. But they can extend your loan terms from 10 years to as long as 25 years. That’s a long time to be paying back your loans.
If you stick to the standard repayment plan, you’ll be paid in full within a decade. When you extend your loan term, you may get a lower monthly payment, but you can end up paying a lot more in interest.
4. Use the debt avalanche method
If you want to reduce how much you pay in interest, using the debt avalanche method could be a good way for managing your loans. By using this approach, you’ll tackle the most expensive debt first — which will save you money on interest charges and help you pay off your loans faster.
Here’s how it works:
If you decide to refinance your student loans, remember to consider as many lenders as you can to find a loan that fits your needs. Credible makes this easy — you compare your prequalified rates from multiple lenders in two minutes.