Best rates for consolidating private student loans blind dating tip

Federal student loan rates are tied to a 10-year Treasury note — basically, this is a loan investors can make to Uncle Sam.When the rate of return (or yield) on this note rises, you will see it reflected in rising federal student loan rates.While your school is your lender for a Perkins Loan, Uncle Sam is your lender for Direct Loans.Only undergraduates are eligible for Direct Subsidized Loans.I was awarded a Perkins Loan each year as part of my undergraduate aid package, and it was always a welcome sight in my award letter.Your school, which functions as the lender in this case, awards Perkins Loans as part of a financial-aid package to students who demonstrate significant financial need — essentially, this means it will cost much more for you to attend school than your family can afford to pay; the bigger the gap, the more significant the need.I used Credible to get personalized offers for a hypothetical student graduating from my own alma mater, American University, in 2016.The personalized interest rates my “student” received ranged from 1.93% with College Ave to 7.49% with Citizens Bank.

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Officials add 2.05% to that number to determine the new rate for undergraduate Direct Loans, 3.6% to determine the rate for graduate Direct Loans, and 4.6% to determine the rate for PLUS Loans.

These percentages are interest-rate cushions set by Congress.

Below, I’ll list each type of loan in descending order of desirability, with the most favorable loans first.

A federal Perkins Loan is almost always going to be your best student loan option if you are eligible.

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