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 potentially until June 30, 2023, per an executive order by the President. Interest will not accrue during this time period. For more information, please visit ed.gov.

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 Credit1 – access funds with fixed rates from 3.95% APR (with discounts)2.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of use.

Contact your legal, tax and financial advisors for advice on deciding whether this is the right product for you. Terms and conditions apply.

Product is not available in all markets. For a complete list of locations, visit firstrepublic.com/locations. Applicants must meet a First Republic banker to open account. This is not a commitment to lend. Loan approval is subject to a completed application with associated documentation and confirmation that income, liquidity, credit history and other application information meet the minimum requirements for this product. Applicants should discuss line of credit terms, conditions and account details with their banker.

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