Fed Financial
Interest rates on Private Student Loans too High?!?! What do I do?!?
I have two private student loans and the interest rate in my opinion is outrageous. One is 12.25% and the 2nd is 18.125%. I pay $200 over the min. monthly payment amount. I am going to be calling the lender (Sallie Mae) in a day to get this straightened out. I feel I need to know if these interest rates are crazy, or am I?! I have heard that private student loans interest is based on your credit score (is that true?) I have a pretty good one . !! Any help?! Thanks. ;)
Public Comments
- Was this a school-channel or direct-to-consumer loan? Do you remember you or your parents interacting through/with the school during the loan processes? If not, it was likely the latter which typically has a higher interest rate. The reason for this is that you were able to access the money quickly/with less process time. Private loans ARE based on credit scores, so improving your credit score is something you should consider (even if you don't have a loan, you should always be concerned with your credit score). You may also consolidate the two loans into one payment plan at a lower or better rate. Sallie Mae are crooks in my opinion, so perhaps you should look around at a different lender. Just be careful of bait-and-switch tactics. It's good that you're paying above the balance, challenge and budget yourself to try and increase the amount you pay per month. EDIT: by the way, if you only have a poor credit score and that's the reason behind the high interest rate, and if you can improve it enough... its possible that you can lower your interest rate to 8% Good luck.
- Interest rates on your private loans are based on your credit history or that of your cosigner’s, if you have a cosigner. Your private loans’ interest rates are calculated using the Prime Rate, a short-term market interest rate, plus a margin. The Prime Rate is a variable rate, meaning it changes over time, and it is a market rate, meaning we do not set it. The Prime Rate is covered in most major newspapers, such as the Wall Street Journal, and is currently at 7.75 percent. Your loan's margin is fixed and would have been disclosed to you when you received your Sallie Mae loans. When you add the Prime Rate and your margin, you have your private loan's interest rate. If you are interested in trying to lower your private loan's interest rate, you may want to consider refinancing your private loans with a Private Consolidation Loan (PCL). In fact, 75 percent of our Private Consolidation Loan customers lower their interest rates when they refinance and obtain a Private Consolidation Loan. Sallie Mae advises customers to apply with a credit-worthy cosigner to lower their interest rate even further. You are welcome to contact our customer service team to see whether Private Consolidation is for you. The toll-free number is 866-380-5005. Customer representatives are ready to assist you Monday to Friday, 8 a.m.-11 p.m. Good luck!
