3 Ways to Lower Your Student Loan Interest Rate

First Republic Bank
September 8, 2021

Like many college-educated adults, you may be concerned about the balance of your student loans. Interest rates can have a significant impact on the overall balance of your outstanding student loans.

The bottom line is — a lower, fixed interest student loan may give you an opportunity to save more in the long term.

In this article, we will focus on setting up automatic payments to get discounted rates, improving your credit score and refinancing your student loans with a Personal Line of Credit. These strategies can help you in reducing your effective student loan interest rate.

1. Get discounts by automating payments

Depending on your lender, you may have an option to get discounted interest rates by setting up automatic periodic payments. Based on the terms and conditions of your loan, you may be able to start making automatic payments while you are still in school.

Besides, setting up automatic payments is a great way to make sure you don’t miss your loan payments and end up with late fees.

Lastly, if you decide to set up automatic payments, make sure to regularly monitor your bank account to minimize any additional fees that may be charged.

2. Improve your credit score

To get the best available rate and term options from lenders, it is wise to improve your credit score before applying for a loan.

While the specific steps to improve your credit score will depend on your personal financial situation, here are three general tips that can help:

  • Lower your credit utilization ratio: The credit utilization ratio can be defined as the percentage of your total available credit that is currently being utilized.

Higher balances as reported on your credit report will give you a higher utilization ratio — which can damage your credit score. For instance, if you have maxed-out credit cards, paying them off first can help you in lowering your credit utilization ratio and thus improving your credit score.

  • Review your credit reports: A credit report is a summary of your personal credit history. It includes your identifying information and information about your credit history — like how you pay your bills and more.

Reviewing your credit report can help protect your credit history from mistakes, errors, or signs of identity theft. Notifying the credit reporting agency of any inaccurate information can improve your score as soon as the correct information is updated. Learn more about how to get your free annual credit reports.

  • Never miss your payments: Making on-time payments to your lender can have a positive impact on your credit score. So, stay on top of your payment schedule by setting up due date alerts and/or automating your payments.

3. Refinance your student loans with a Personal Line of Credit

Refinancing your student loans with a First Republic Personal Line of Credit is a great way to reduce your student loan interest rate.

With low fixed interest rates with discounts, a Personal Line of Credit can also be used for other purposes, such as minor home improvements, paying medical expenses, auto refinancing, family planning, tax payment and more.

Please note, a First Republic Personal Line of Credit is not a student loan, and you may be permanently giving up the benefits of a student loan. This may include certain deferment, forbearance and forgiveness options. Please consider this as you make a decision to refinance student loans and talk to a banker if you have any questions.

Currently, all payments for certain types of federal student loans are suspended until August 31, 2022 per an executive order by the President. Interest will not accrue during this time period.

Learn how a Personal Line of Credit can help you in paying off your student loans and more.

Ready to take the next step?

At the end of the day, the best strategies to reduce your student loan interest rate will differ based on your financial background and personal goals. If you think First Republic’s Personal Line of Credit can help you in achieving your long-term goals, connect with a banker to see your available options today.

First Republic’s Personal Line of Credit – access funds with fixed rates from 2.95% APR (with discounts)1.

1. Annual Percentage Rate. Rates effective as of 05/02/2022 and are subject to change.

If the Account is closed, the rate will increase by 5.00%. Rates shown include relationship-based pricing adjustments of: a) 2.00% for maintaining automatic payments and direct deposit with the Account, b) an additional 0.50% for depositing and maintaining a deposit balance of at least 10% of the approved loan amount into the Account, and c) an additional 0.25% for depositing and maintaining a deposit balance of at least 20% of the approved loan amount into the Account, with the option to deposit up to half of that 20% into an Eagle Invest account.

Banking products and services are provided by First Republic Bank, Member FDIC and Equal Housing Lender

Eagle Invest is an investment advisory service offered by First Republic Investment Management, Inc., and sub-advised by BlackRock FutureAdvisor, Inc. (FutureAdvisor). First Republic Investment Management, FutureAdvisor and Fidelity Investments, Member FINRA/SIPC, are unaffiliated SEC-registered investment advisors. FutureAdvisor is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. $5,000 minimum investment required.

Investment Advisory Services are offered through First Republic Investment Management, an SEC-Registered Investment Advisor and a wholly owned subsidiary of First Republic Bank.