How do student loan interest rates work?

Possibly the most significant aspect of your student debt is the interest rate. Your interest rate for private loans will be determined, among other things, by your creditworthiness and that of any cosigners, as well as their income. You are more likely to be given a reduced interest rate if you have a strong credit rating and a consistent source of income.

Also, private student loans have an interest rate that is either fixed or variable. If you opt for a fixed rate, your rate won't change for the whole term of your loan. If you choose for a variable rate, your rate will fluctuate throughout the course of your loan and change based on the state of the economy. While you're in school, interest builds up on private student loans. This means that when you start making payments under a deferred repayment plan, your debt will be higher than the sum of your initial loan. Nevertheless, by choosing an in-school repayment plan where you make partial payments while still enrolled in school, lenders often let you save on interest.