Best Low-Interest Student Loans of 2024

College Ave stands out as the best low-interest student loan lender overall due to its highly competitive rates and flexible repayment options tailored to borrowers' needs. It also offers customizable loan terms and a user-friendly application process.

When you take out student loans, you're responsible for paying back the principal balance as well as the interest that accrues daily. The interest rate on your student loan will have a major impact on the total cost of the loan. The lower your interest rate, the more money you'll save over the life of your loan.

To help you save money on loan costs, here are the best low-interest student loans and how to compare them.

Start with federal student loans

The best low-interest student loans are most often fixed-rate federal student loans offered by the Department of Education. Unlike private loans, federal rates are the same for all student loan borrowers and are not based on your credit score and income.

Below are the interest rates for federal Direct Loans disbursed between July 1, 2023, and July 1, 2024.

Federal student loans also come with unique borrower benefits and protections, such as forgiveness programs and income-driven repayment plans to help you manage your debt.

Generally speaking, you should maximize all of your federal loan options first, because of their competitive interest rates, repayment options, and forgiveness benefits. If you’ve used up your federal loan allowance and still need more funding, private student loans may be a good option.

Compare private student loan rates

Best low-interest student loans 

When comparing private student loans, look at factors like interest rates, fees, repayment options, terms, deferment and forbearance options, loan amount requirements, and any borrower perks. You may also see what rates you prequalify for without affecting your credit, before submitting a full application. 

Related: Can You Get a Student Loan With Bad Credit?

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best student loan lenders, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

• Repayment options: 30%
• Eligibility: 25%
• Interest rates: 20%
• Loan terms: 15%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

Federal vs. private student loan rates

Generally, borrowers take out federal student loans, private loans, or a combination of both. Each type of loan treats interest rates differently. 

Federal student loan rates are fixed, meaning once your loan is disbursed, your rate will never change. Also, most federal loans don’t require a credit check. Instead of basing your interest rate on your credit and financial situation, you’ll need to meet basic eligibility criteria like citizenship or permanent residency, age, and enrollment and institution requirements. 

The downside is that there are borrowing limits for most federal loans. In other words, you may not be able to cover all of your tuition and fees. 

Private student loans are provided through private financial institutions. Unlike federal loans, the rate you’re offered is tied to factors like your credit score, your income, and your debt-to-income ratio (DTI), among others. The stronger your credit, the more likely you can access a lender’s lowest rates.

If offered a private student loan, it might have a fixed rate, or a variable rate, which can change over time based on the rate market and economy.

How to get low-interest student loans

If you plan on taking out private student loans, here are some tips to help you get approved for the lowest possible interest rate: 

• Raise your credit score: Having a good credit score can help you save money on interest and qualify for the most competitive rates. Improve your credit by making payments on time, paying off all bills in full, and maintaining low balances on your credit card. Also avoid applying for too many loans or credit cards in a short period. 
• Add a cosigner: If you have a parent, partner, or family member who has excellent credit, ask them about being a cosigner. Adding a cosigner doesn’t just help your eligibility and approval odds, but can also help you get a lower interest rate.
• Sign up for autopay: Many private lenders offer an interest rate reduction for borrowers who sign up for automatic payments. Usually, the discount is 0.25 percentage points off your rate.
• Choose the shortest loan repayment term: A shorter loan term reduces risk for the lender, which translates to a lower interest rate. Just remember that choosing a shorter loan term means your monthly payments will be higher, but you’ll pay less interest over time. 
• Increase your income: Private lenders look for proof of income and employment when you apply for a loan. A higher income shows lenders that you’re reliable and can pay back the loan, which could help you qualify for a lower interest rate. 

Find Your Student Loan

Understanding student loan interest 

When you take out a student loan, the total amount borrowed is called the principal balance. Lenders charge interest on this amount as part of the cost of borrowing. How much you owe in interest is based on an interest rate, which is expressed as a percentage. This interest accrues daily, increasing the total amount you owe over time. 

As a borrower, you’re responsible for repaying both the principal balance and the interest, which together make up your total loan repayment amount. 

Private loan interest rates depend on whether you choose a fixed or variable rate. If you have a fixed rate, similar to federal loans, it won’t change during repayment. On the other hand, variable rates are at the mercy of economic factors outside of your control and can change at any time.