Our experts answer readers' student loan questions and write unbiased product reviews (here's how we assess student loans). In some cases, we receive a commission from our partners; however, our opinions are our own.
The interest rate is the top factor many borrowers take into account when choosing a student loan. Low-interest student loans reduce the overall cost of your borrowing. You can qualify for the lowest rates if you have an excellent credit score and a stable all-around financial situation.
You'll find many of the best low-interest student loans also included in our our picks for the best private student loans, as the interest rate range is a key component we use to determine a student loan product's quality.
The Best Low-Interest Student Loans
- Federal Direct Subsidized Loan
- Federal Direct Unsubsidized Loan
- Earnest Undergraduate Student Loans
- SoFi Undergraduate Student Loans
- College Ave Undergraduate Student Loans
- Custom Choice Undergraduate Student Loans
- Sallie Mae Undergraduate Student Loans
Compare the Best Low-Interest Student Loans
Our Experts for the Best Low-Interest Student Loans
We consulted loan and financial experts to give their insights into finding the best low-interest student loans for your needs.
- Sean August, CEO at The August Wealth Management Group
- Ryan Wangman, loans reporter at Personal Finance Insider
Methodology: How We Picked the Best Low-Interest Student Loans
Personal Finance Insider's goal is to help smart people make the best possible decisions with their money. To do that, we combed through many student loans, comparing interest rates, terms, and fine print so you don't have to.
We rate all student loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others. They are:
- Interest rate (20% of rating)
- Fees (20% of rating)
- Term lengths (15% of rating)
- Repayment options while in school (15% of rating)
- Borrower accessibility (15% of rating)
- Customer support (7.5% of rating)
- Ethics (7.5% of rating)
Each category's weighting is determined based on its importance to your borrowing experience. Rates and fees have the biggest impact on the total cost of your loan, so we weigh those the most heavily. Customer support and ethics are still crucial parts of the borrowing experience, but do not directly tie to a student loan's terms, so they have less of an impact on the overall rating.
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College Ave Undergraduate Student Loans
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Sallie Mae Undergraduate Student Loans
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Ascent Undergraduate Cosigned Credit-Based Loan
Best Low-Interest Student Loan Frequently Asked Questions
The best way to get a lower interest rate on your student loans is to improve your financial situation. This includes boosting your credit score, lowering your debt-to-income ratio, or increasing your income.
Federal student loans almost always have the lowest interest rates available. There are some cases where borrowers with excellent credit can get better rates, but federal loans are usually the best bet.
No, the rates on federal student loans are set for a given school year. Rates may change year over year.
1. How much you need to take out. Don't take out more than you need. The more you borrow, the higher the overall cost of your loan.
2. What your interest rate is. Your interest rate goes a long way in determining the overall cost of your loan. Generally, borrowers with better credit scores receive lower interest rates.
3. When payments begin and interest starts to accrue. You need to begin repaying some lenders immediately after taking out the money, while others allow you to wait until a six month grace period after graduation. Sometimes, interest also begins to accrue right away, while other loans don't accrue interest until after your grace period is over.
It's almost always better to get a student loan with a lower interest rate, if possible.
However, there are exceptions. For example, say you are offered a lower interest rate with Lender A than Lender B, but Lender A will only allow you to take out a loan over a three-year term length. In this case, you can't afford the monthly payments. Lender B allows a seven year term length. While you'll pay a higher rate with Lender B, it allows you to spread your costs over more time (making it more affordable for your monthly budget).
If you are able, you should always pay off any outstanding debt obligations as soon as possible. This includes low-interest student loans. If your means are more limited, focus on paying down higher interest-rate debt first, such as credit cards.
The Best Low-Interest Student Loan Interest Rates
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Federal Direct Subsidized Loan
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Federal Direct Unsubsidized Loan
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Earnest Undergraduate Student Loans
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SoFi Undergraduate Student Loans
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College Ave Undergraduate Student Loans
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Custom Choice Undergraduate Student Loans
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Sallie Mae Undergraduate Student Loans
Federal Direct Subsidized Loan
Why Direct Subsidized loans stand out: Subsidized loans are made based on financial need, and the government pays the interest on your loan while you're in school and for an additional six months after you graduate. This means you won't accrue interest charges until you have a stable financial footing after school. The loans also have some of the best rates on the market.
Additionally, federal loans are eligible for certain protections, such as the federal repayment pause. They also would qualify for the widespread loan forgiveness from the Biden administration that is currently being challenged in court.
Watch out for: Limited maximum loan amount. You're only able to borrow up to $23,000 in subsidized loans over the course of your academic career. If you need more than that, you'll have to get another loan from a different lender.
Read more about direct subsidized loans >>
Federal Direct Unsubsidized Loan
Why Direct Unsubsidized loans stand out:
What to watch out for: Limited maximum loan amount. You're can take out as much as $31,000 in unsubsidized loans over the course of your academic career, including the maximum of $23,000 you can receive in subsidized loans. If you need more than that, you'll have to get another loan from a different lender.
Read more about direct unsubsidized loans >>
Earnest Undergraduate Student Loans
Why Earnest stands out: The ability to skip one payment every year. You can request your first skip once you've made at least six months of consecutive on-time, full principal and interest payments, as long as your loan is in good standing. However, interest will accrue during this time, and the lender will extend the final payoff date of your loan by the length of the skipped payment period.
What to watch out for: May need a cosigner. Borrowers without established credit histories may need to enlist someone else, such as a parent or friend, with a more extensive credit history to get a loan.
Read our full Earnest review »
SoFi Undergraduate Student Loans
Why SoFi stands out: Unemployment protection on its student loans. Eligible borrowers are able to suspend payments on your loans if you lose your job through no fault of your own, for up to 12 months. SoFi will also provide job-payment assistance. However, interest will continue to accrue during this forbearance period and will be added to your principal.
What to watch out for: High minimum loan amount. You must borrow at least $5,000 to get a loan from SoFi. If you want to borrow less, you'll need to choose a different lender.
Read our SoFi student loan review »
College Ave Undergraduate Student Loans
Why College Ave stands out: Variety of term lengths to choose from. You can choose from term lengths of five, eight, 10, and 15 years with College Ave.
What to watch out for: Late payment fee. You'll pay a late payment penalty of 5% of the amount due, capped at $25.
Read our College Ave student loan review »
Custom Choice Undergraduate Student Loans
Why Custom Choice stands out: Balance reduction after graduation. Custom Choice will give you a 2% reduction of your loan's principal after you graduate. This may not seem like much, but will save you some on the overall cost of your loan.
What to watch out for: No mobile app. If you want to be able to manage your loan on the go, you won't be able to do so with Custom Choice.
Read our Custom Choice student loan review »
Sallie Mae Undergraduate Student Loans
What makes Sallie Mae stand out: Study service included at no additional cost. Sallie Mae offers four months of the study service Chegg for free with its loans. Chegg offers expert Q&A, and students can submit up to 20 questions per month.
What to watch out for: Can't choose your term length. Sallie Mae will assign a term length between either five, 10, or 15 years to you.
Read our Sallie Mae student loan review »
Other Low-Interest Student Loans We Considered
- Navy Federal Undergraduate Student Loans. This lender has good minimum rates on its fixed loans, but its variable rates start substantially higher than competitors and eligibility requirements are strict.
- MPower Financing Undergraduate Student Loan. MPower is a good option for international students who might not otherwise qualify for a loan from most lenders, but its interest rates are considerably more than the other lenders in this guide.
Low-Interest Student Loan Provider Trustworthiness
We've only selected private student loan lenders with no public controversies in the last three years. We've also compared each institution's Better Business Bureau score.
The BBB, a non-profit organization focused on consumer protection and trust, evaluates companies by judging a business's responses to consumer complaints, honesty in advertising, and clarity about business practices. Here is each company's score:
| Lender | BBB grade |
| N/A |
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| A+ |
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| A+ |
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| A+ |
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| N/A |
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| A+ |
Of our top picks, only the Department of Education and Custom Choice are not currently rated an A+ or higher by the BBB. The BBB doesn't rate governmental agencies, and Custom Choice isn't rated by the BBB either. That said, this doesn't necessarily reflect either lenders' trustworthiness, and you should ask others about their experiences with the businesses before deciding whether to borrow from the lenders.
Our Experts' Advice for Choosing the Best Low-Interest Student Loan
How do borrowers find loans with low interest rates?
Sean August:
"Federal loan options generally offer lower interest rates than those of private lenders. Unfortunately, I cannot recommend any specific lenders. However, I will say that online banks have proven to be more competitive in regard to the rates they offer since they have lower overhead costs."
Ryan Wangman:
"I recommend finding lenders that allow you to prequalify for loans — meaning you can see rates without negatively impacting your credit scores. Our guide may help you identify lenders who offer low interest rates. An excellent credit score helps, as well as a solid overall financial situation. "
What repayment terms should I look for when choosing a low-interest student loan?
Sean August:
"The best private student loans offer flexible repayment terms that fit your budget and lifestyle. This may include options to make interest-only payments while in school, defer payments until after graduation, or choose a longer repayment period."
Ryan Wangman:
"Take special note of your loan's term length. The best term length for you depends on your financial situation. A longer term length means smaller monthly payments — but you'll pay more in overall interest. A smaller term length means you'll save money on interest in the long run, but you'll pay more each month."
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
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