Student loans serve as a valuable resource to bridge financial gaps when scholarships, grants, and other forms of aid fall short. However, it’s important to note that student loans come with a cost. In addition to repaying the principal balance (the initial borrowed amount), student loans also accrue interest. These interest rates play a crucial role in determining the total amount owed and significantly impact monthly payments. Before committing to a loan, compare interest rates to ensure that your debt will be manageable after graduation.
Below we’ve listed our top-rated student loan options with the lowest advertised interest rates. Keep in mind that only the most creditworthy borrowers will receive the lowest rates available, and that variable rates can increase in the future.
Best for: Residents of, or students in, Arkansas.
Best for: International and DACA students who have a lower credit score.
Best for: Residents of, or student in, Texas.
Best for: Borrowers looking for a repayment term that matches their budget.
Best for: Borrowers who want a competitive interest rate and strong borrower benefits.
Best for: Borrowers who want a competitive interest rate and flexible repayment options.
Best for: Borrowers who want an income-based repayment (IBR) loan.
Best for: Borrowers who want to work with a nonprofit that offers flexible repayment plans.
Best for: Borrowers that were high-achieving undergraduate students.
Best for: Borrowers who are residents of or students in Indiana.
Best for: Borrowers that want to work with a credit union or community bank.
Best for: International and DACA borrowers without a cosigner.
Best for: Borrowers who want competitive interest rates and a flexible forbearance policy.
Best for: International student borrowers with no cosigner.
Best for: Borrowers who want competitive interest rates and a flexible repayment plan.
Best for: Borrowers with a strong credit score or a creditworthy cosigner.
If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking Apply below.
Interest rates will vary significantly based on the lender and type of loan. So, there really isn’t a specific threshold of what is considered a “good” interest rate. Generally speaking, however, an interest rate at or above 10% is considered very high, while interest rates less than 7% are on the lower end.
Across all student loans, 5.8% is the average interest rate. Use the average interest rate as a marker when determining if the interest rate offered to you is good.
While the interest rate on your student loan is an incredibly important factor, it is only one piece of a much more complex puzzle. When selecting a student loan, you should also consider factors such as whether the interest rate is fixed or variable, the repayment period, and the projected monthly payment.
A fixed interest rate will remain the same throughout the life of the loan, while a variable interest rate is subject to change due to market conditions. So, if you borrowed a loan with a 5% fixed interest rate, it would remain at a 5% interest rate up until the day you pay it off. On the other hand, if you borrowed a loan with a variable interest rate starting at 5%, the rate could fluctuate up and down throughout the life of the loan.
There are pros and cons to both fixed and variable rate loans. Select the option you feel most comfortable with.
Generally speaking, the longer the repayment period, the more you will pay over the life of the loan. Consider the repayment periods offered to you and how they will impact what you pay throughout repayment.
Interest Rate
5%
5%
Repayment Period
10 years
15 years
Monthly Payment
$318
$237
Total Paid
$38,184
$42,703
With a shorter repayment period, you will have larger monthly payments. However, if you’re able to afford them, a shorter repayment period can save you quite a bit over the life of the loan.
During repayment, you will be required to make at least the minimum monthly payment on your loan. As illustrated by the table above, the monthly payment will change based on the repayment period and interest rate you have.
Some private student lenders may only offer one or two repayment periods. Before agreeing to a student loan, consider the projected monthly payment amount. If the amount does not seem feasible for you given your projected monthly income after graduation, you may want to explore other student loan options.
Before agreeing to any loan, it’s important to do your research. To simplify the search process, we built Sparrow.
Rather than hopping from site to site comparing loans one by one, Sparrow allows you to compare personalized, pre-qualified student loan rates from 15+ lenders in one form. To find the best student loan rate for you, start the process with Sparrow.
Sparrow’s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.
