Can I Lower My Student Loan Interest Rate?

One of the common questions we get here at the StudentLoanDown blog is, “Can I lower my student loan interest rate?”

Whether you’re looking to lower your monthly payment because you can’t afford it or are just interested in decreasing the total interest paid to your lender, below is beneficial information about lowering interest on student loans. 

When student loan borrowers sign their
promissory note
agreeing to pay back the loan, they are also agreeing to the interest rate detailed in the contract. For some student loans this will be fixed, but for others it will be variable (a margin that is later added to a base rate). Federal student loans made after the date of July 1, 2006, have fixed interest rates. Many private student loans provide both variable and fixed interest rate options.

Your promissory note serves as a lock, bolting down the terms on your loan (including interest rate or rate margin). Unfortunately you aren’t able to “refinance” a student loan the way you can with other consumer credit products, but there are certainly options to lower your monthly payment and reduce the amount of interest you’ll pay over the life of the loan.  

Quick tangent: For those of you still in school and are wondering how to pay for college, it’s important to be proactive when thinking about student loans and student loan payment.  By using the Wells Fargo student loan calculator, we can help you plan out the road ahead to understand what you’re borrowing at what rate, so you don’t find yourself unable to make student loan payments later. End tangent.

Now, let’s talk about the options.

Consolidate: When it comes to student loan consolidation, you may end up reducing your current monthly student loan payment by extending your repayment period. However, that means you would actually end up paying more for the loan’s lifespan than if you continue paying just the original monthly loan amount. If you’re looking for some payment relief and are willing to pay more (or make higher payments later to avoid accruing additional interest), student loan consolidation could be the answer. Consider using Wells Fargo for a Private Student Loan Consolidation.

Pay off the debt: Some borrowers might consider using a different consumer loan (personal, home equity loan, etc, depending on the assets) to break even with their student loan payment. This option has a couple substantial things you may want to consider. You would end up losing several benefits of student loans like deferment and forbearance options, as well as the potential tax deduction.

Get the debt forgiven:  There are some federal student loan programs that will forgive a certain amount of a student’s student loan debt. There is a federal loan forgiveness option available to students working in public service that can help many straighten out their student loan payments. 

Use borrower benefits: Another potential option is to ask your lender if they offer any benefits that could reduce your student loan interest rate. For example, some lenders offer a discount if you make your payments automatically.

Though it may seem like a long complicated road to freedom in regard to your student loan interest rate, the aforementioned options will help you in potentially lowering that interest rate the best and easiest way for you.

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6 Responses to Can I Lower My Student Loan Interest Rate?

  1. Jennifer says:

    If I consolidate my Private Student Loans with Wells Fargo will I still be able to claim the interest on my Taxes or do I lose this Benefit?

    • May says:

      Hi Jennifer,

      I consolidated my student loan with Wells Fargo. My payments have decreased significantly as well as my interest. And yes, they will send you a 1098E at the end of the tax year. You can also find it online by logging in.

  2. Lauren says:

    Hi, I have two sepearte types of loans. One I took out myself and one that is parent plus. I have IBR for the one in my name, and graduate extended for my parents. I want to lower the interest rates on both. I cant consolidate a parent plus loan (my understanding) so how can I get a lowered interest rate on it, its at 7.9%

    • studentloandown says:

      Hi Lauren, you may not be able to consolidate your two loans together, but you may be able to consolidate the Parent PLUS Loan by itself into a Direct Consolidation Loan. However, if you consolidate a parent PLUS loan, your new Direct Consolidation Loan cannot be repaid under the IBR Plan. You can check out http://www.ed.gov for more information on Federal loans, and talk to your student loan servicer for complete details.

  3. Chad says:

    HI. I took my Federal student loan in 2008. Since then the interest rate has gone up by 2.5%. According to the above this should have been a fixed rate.
    I believe at some point the loan was sold to another federal lender. Does this provide a loophole to increase my “fixed” rate?

  4. juli michel says:

    I have my student loans consolidated at 8% is there anyway to get a better rate i already have auto pay on it

The Student LoanDown

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