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Can anyone give me an idea about student loan interest rates?

I am writing this to get some information about student loan interest rates. I would like to know if I can manage the repayment without many problems. What is the prevailing federal student loan interest rate? How does it compare to private loans? Another thing is, how long does it take to pay off student loans? I want this information in relation to the Earnest student loans. I am just about to take one, so I want to make sure it is a viable option for my purposes.

Rodney Fox

in Student Loans

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Bethany Evans on May 23, 2018

Luckily interest rates on federal student loans are some of the lowest in the market. According to Federal Student Aid, the prevailing rates for 2017-18 undergraduate are set at 4.45 % for loans. So it would be safe to say that you can easily manage the repayment without too many problems. However, talking of interest rates on student loans in general, there is quite a variation depending on where you get it from. These general guidelines can help you understand it better:

  1. The federal loans are given in three categories: undergraduate, graduate and direct plus loans. The undergraduate loan is taken directly by students to cater for their studies. The second type is taken by students for their studies at post-graduate level. The third one is taken by parents on behalf of their children. The interest rates at the moment are 4.45% for undergraduate, 6% for graduate and 7% for direct plus loans. You can find out how the annual adjustments are made at US News.
  2. Concerning the Earnest loans for students, they are refinancing loans. Nerdwallet informs us that refinancing means replacing an existing students’ loan or loans with a single lower interest loan. In brief, your existing loan is taken over by Earnest, then you repay them at a lower interest rate. The site also tells us the following:
  1. You qualify for the loan if you have sufficient income, manageable credit, and regular savings.
  2. They will take over your loan if it is not from Sallie Mae, which by the way, is another loan providing organization.
  3. Refinancing will deny you the opportunity to benefit from income-driven repayment and loan forgiveness if you are on a federal loan. As you will learn from Student Aid, the income-driven plan involves adjusting your monthly repayment to an amount commensurate with your income, or family size. Loan forgiveness means you are exempted from paying for the rest of your loan, after making at least 120 monthly payments. To qualify you must have signed for an income-driven repayment plan.
  4. The repayment rate is 3.25% to 6.32% depending on the type of loan. The loan repayment period is between 5 and 20 years. You also get to choose the exact number of months for which you will be making repayments. There should be absolutely no confusion when repaying.  

Cynthia Baker2 years ago

Personally, I have never been a fan of the Earnest student loans program. The offer does not add up to me. You first get financed through a loan, then they buy off your loan and you pay them. So why not just pay the original financier. I know there is this whole story about lower repayment rates. However, there is a catch. As mentioned above, you have to forfeit the other rebates that you may have benefited from in the original arrangement, when the going gets tough. I have been asking myself if it is not just another way of ensuring you repay the loan, without wriggling out of it somehow. I will stick with federal loans anytime. Their repayment is direct enough without any complications. If you dedicate yourself to pay every month, it is no problem. If there is a problem, then you can flexibly reschedule. 


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