How do interest and fees accrue on my student loans?. The big advantage of a federal loan is that the rate remains fixed, and the interest rate is generally (though not always) lower than privately offered options.
The fixing of the rate means it’s not subject to market fluctuations; if general interest rates go up, your loan rate remains the same.
The amount of interest you eventually pay depends on whether your loans are subsidized or unsubsidized.
With subsidized loans, the government pays the interest during your education.
With unsubsidized loans, the interest accrues.
Alternatives to federal loans are those offered by private providers, such as Wells Fargo or Sallie Mae.
The interest rates can vary widely with these lenders depending on a variety of factors.
They can be as little as 2.5% or as much as 12%.
Private lenders will fix your interest rate depending upon your credit score and the ratio of your debt to income.
Typically, the more favorable these are, the lower the interest rate offered.
Private loans tend to have less flexible repayment options than federal loans.
Find out more about your student loans and their interest rates here:
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