When you take out a student loan, the rate of interest charged when you start to repay the loan is written in the promissory note that you sign. Your signature on this document asserts that you agree to this interest rate. However there are ways of obtaining a lower rate of interest in order to lower your monthly payments or to help you repay the loan sooner than the agreed upon term of the loan.
The methods of lowering the rate of interest you pay on your student loan depends on the lender you use. Wells Fargo, for example, will decrease the interest rate by 0.50% when you show that you have graduated from the program for which you obtained the loan. This is part of the Wells Fargo Student Graduation Benefit Program. You can also qualify for a further reduction of 0.25% if you agree to automatic withdrawals of the payment from your bank account on the date at which each payment is due. However, these reductions only apply to student loans obtained after July 1, 2008. Contact your lender and ask if there are any such programs available to lower your interest rate.
By paying more than the minimum payment each month you can also lower the amount of interest that you pay on your student loan. The interest charged is based on the outstanding balance at the end of the month and the lower the balance the less interest you pay. Increasing the payment amount by as little as $50 will work wonders in helping you pay off your loan sooner, thus reducing the total amount of interest you pay.
If, when you graduate from the program you are taking, you obtain a position working in public service, you can take advantage of a loan forgiveness program for public service employees. As part of the College Cost Reduction and Access Act which came in force in 2007, any monies that you still owe on your student loan after you have been working in the public service sector for ten years can be wiped out. Although you have been making payments for ten years, if you make the minimum monthly payment each month, the outstanding balance will be paid in full when you meet the requirements to qualify for this program.
Those students who have several student loans can benefit from consolidating the loans into one and have only one monthly payment after graduation. In this way you save money with a lower interest rate and quite often the combined payment is much lower than the total you would pay if you keep paying the loans separately.
The best advice is to speak with a loans officer at the financial institution you use and perhaps you will be able to work out a plan to lower the interest on your student loan.