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Can I Get an Interest-Free Student Loan?

Interest-free student loans are rare and competitive, but you may be able to find options in your area.

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By Andrew Dunn

Written by

Andrew Dunn

Writer

Andrew Dunn is an award-winning mortgage and finance writer with a decade of experience covering the industry with articles published at Fox Business, LendingTree, Credit Karma, Axios Charlotte, and more.

Edited by Jared Hughes

Written by

Jared Hughes

Editor

Jared Hughes is a personal loan editor for Credible and Fox Money, and has been producing digital content for more than six years.

Updated March 29, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

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When you’re counting up the costs of attending college, don’t forget about interest. If you have to borrow to pay for your tuition or living expenses, you’ll need to eventually pay back every penny you borrowed, plus interest.

Federal student loans have interest rates between 5.50% and 8.05% for the 2023-24 school year, depending on the type of loan. Private student loans can come with even higher rates. But you may have options for lower-interest loans, or even a loan with no interest at all.

Where to find interest-free student loans

Interest-free student loans are rare, but can be found from some nonprofit organizations, charitable foundations, or religious institutions. Since you’re not paying any interest, these loans can save you thousands of dollars over the life of your loan and reduce your monthly payment.

A student loan calculator can show you just how powerful these programs are. A $20,000 student loan paid back over 10 years at a 5% interest rate will require you to pay $212/month, and pay nearly $5,500 in interest over the life of the loan. At a 0% interest rate, your monthly payment is just $167 and you would avoid interest altogether.

Eligibility for these loans varies, and some are location specific. Each interest-free student loan program also has maximum amounts you may be able to borrow.

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Tip:

It’s best to start your search locally. Your high school guidance counselor or college financial aid office may be able to point you toward interest-free loans you may qualify for.

Just like scholarships and grants, interest-free student loan programs are extremely competitive. Programs open to students across the United States include:

Who is eligible for an interest-free loan?

Every interest-free loan program has its own criteria for who qualifies. Some are based primarily on merit, while others are based heavily on financial need.

Since each program is so different, it’s hard to determine any hard-and-fast rules. Read the qualification criteria carefully before applying for an interest-free loan program. But you can expect to encounter a few of the following requirements to be considered:

  • U.S. citizenship
  • Residency in a particular U.S. state or city
  • Strong academic credentials on a high school or college transcript
  • Financial need, as determined by completing the FAFSA
  • Plans to study a particular subject
  • Essay composition
  • In-person interview

Many programs are limited to students in one particular geographic area, such as a state or metropolitan area. For example:

Others are based on particular interest groups. For example, the Military Officers Association of America offers an interest-free student loan program for children of active-duty or retired military officers.

Again, your guidance counselor or financial aid office may be the best resource for finding interest-free loan programs you may qualify for.

FAFSA and federal student loans

To qualify for an interest-free student loan, you’ll need to fill out the Free Application for Federal Student Aid, (FAFSA). This form can also make you eligible for a wealth of education financing options from the federal government.

Some of these are free. Many universities use the FAFSA to offer scholarships and grants for students with financial need. The federal government also offers Pell Grants to students with significant financial need. These grants are currently about $7,400/year, and do not need to be repaid.

You may qualify for other types of federal student aid, as well. One example is federal work-study, where you take a part-time job at your university or a local nonprofit. You’ll receive a paycheck just like any other employee, with the money helping you meet your higher education expenses. Work-study jobs have a host of protections, including a prohibition on being required to work during your class time.

Federal student loans are not interest-free. You’ll generally need to pay a fixed interest rate that’s set at the time you take out your loan. The rate varies based on the type of loan you choose. Currently, federal student loan interest rates are:

  • 5.50% for undergraduate students taking out Direct Subsidized Loans or Direct Unsubsidized Loans.
  • 7.05% for graduate or professional students with Direct Unsubsidized Loans.
  • 8.05% for graduate or professional students or parents of undergraduate students taking out Direct PLUS Loans.
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Important:

Through September 1, 2023, the interest rate on federal student loans was 0%, as part of the government’s response to the COVID-19 pandemic. Required loan payments were also temporarily suspended during this time.

While you do pay interest, federal student loans have a number of benefits you won’t find in other loan programs. Generally, you’re not required to start repaying your federal student loans until you graduate or leave school. You also may qualify for an income-driven repayment plan, where your monthly payment is capped at a certain percentage of your disposable income. And with subsidized loans, the government pays the interest accrued while you’re enrolled in school or in forbearance.

Additional options for college expenses

Paying for higher education can feel overwhelming, plenty of options do exist. If you aren’t able to qualify for an interest-free student loan, you may consider one of these two common ways to finance your college or university expenses.

Private student loans

Private student loans are available from banks and other lenders, and often used to cover gaps in higher education expenses not covered by federal student loans or other financial aid. These loans can have fixed or variable interest rates, set based on your credit score. If you have a limited credit history, you may be required to have a parent or family member cosign the loan, agreeing to be equally responsible for paying it back.

Private student loans generally do not have income-driven repayment plans, and you’ll be responsible for paying interest as soon as the loan is disbursed. But they can come with a couple of benefits: many private lenders allow you to defer loan payments until after you graduate. And you may qualify for a lower interest rate than on federal student loans if you have excellent credit.

The companies in the table below are Credible’s approved partner lenders.

Advertiser Disclosure
4.94.9

Credible rating

Fixed (APR)

4.17% - 16.69%

Loan Amounts

$1,000 up to 100% of the school-certified cost of attendance

Min. Credit Score

Does not disclose

Check Rates

on Credible’s website

View Details

4.84.8

Credible rating

Fixed (APR)

4.29% - 15.96%

Loan Amounts

$2,001* to $400,000

Min. Credit Score

Does not disclose

Check Rates

on Credible’s website

View Details

4.84.8

Credible rating

Fixed (APR)

4.39% - 15.45%

Loan Amounts

$1,000 to $350,000 (depending on degree)

Min. Credit Score

720

Check Rates

on Credible’s website

View Details

4.44.4

Credible rating

Fixed (APR)

4.43% - 14.04%

Loan Amounts

$1,000 to $99,999 annually ($180,000 aggregate limit)

Min. Credit Score

Does not disclose

Check Rates

on Credible’s website

View Details

4.84.8

Credible rating

Fixed (APR)

4.50% - 14.22%

Loan Amounts

$1,000 up to cost of attendance

Min. Credit Score

680

Check Rates

on Credible’s website

View Details

4.34.3

Credible rating

Fixed (APR)

4.50% - 15.49%

Loan Amounts

$1,000 up to 100% of school-certified cost of attendance

Min. Credit Score

Does not disclose

Check Rates

on Credible’s website

View Details

4.64.6

Credible rating

Fixed (APR)

4.56% - 8.34%

Loan Amounts

$1,001 up to 100% of school certified cost of attendance

Min. Credit Score

670

Check Rates

on Credible’s website

View Details

4.84.8

Credible rating

Fixed (APR)

5.75% - 8.95%

Loan Amounts

$1,500 up to school’s certified cost of attendance less aid

Min. Credit Score

670

Check Rates

on Credible’s website

View Details

All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms

Personal loans

Personal loans are a flexible form of financing that can help you make ends meet while you’re enrolled in college. These loans are typically borrowed as a lump sum and paid back at fixed interest rates and paid back over a period of three to seven years. You won’t need to put up any collateral since you qualify for a personal loan based strictly on your credit history.

You can use a personal loan for most types of expenses, though many personal lenders restrict you from using your loan money for tuition. But you may be able to use personal loans to help pay for living expenses, transportation, and other costs you incur while in school.

Meet the expert:
Andrew Dunn

Andrew Dunn is an award-winning mortgage and finance writer with a decade of experience covering the industry with articles published at Fox Business, LendingTree, Credit Karma, Axios Charlotte, and more.