Interest Free Student Loans: Do They Exist?
What you’ll learn
- Do interest free student loans exist
- Where to apply for no interest student loans
- What low interest student loans and zero interest student loans are
Paying for college can be overwhelming. There’s a lot of different costs that go beyond the expected expenses like tuition and room and board. If you take out a loan, you may be asking yourself, are there such things as interest free student loans out there?
Low interest rate student loans & no interest student loans
Student loans can be a reasonable and common way to finance college tuition, books, supplies, room and board, and other costs associated with making education a reality. According to a recent study, more than half of families borrow to pay for college (though it covers the smallest portion of college costs when compared to other funding sources, like scholarships). Borrowing for college can be an expected part of the paying for college process – about 6 in 10 families who took out loans say it was always a part of their plan.
Families and individuals often borrow to pay for college, but with what kind of loans? And, with what interest rate? And, are there loans out there that are no interest?
The answer is yes. There are nonprofit organizations that make interest free loans to full time post-secondary students for education. Through a separate fundraising channel, the nonprofit covers all the costs, fees, and interest that usually comes hand in hand with a loan. One such organization is the Jewish Free Loan Association in Los Angeles that gives loans for not only undergraduate and community college education, but also, interestingly for professional school. This organization is, by the way, open to all residents of LA regardless of its name.
Types of interest free student loans
Before you jump in with both feet, you need to realize that an interest free student loan, is going to require that you have someone to guarantee the loan, sometimes two people. If you can find a guarantor to back you up, then you are golden. You should also know that while your loan repayments will be small and manageable, you will be required to start repaying the loan while you’re still a student. These hurdles may still make the interest free loan your best financial bet and you can combine an interest free loans with other products out there.
Low interest student loans are available, depending on your eligibility and/or credit. Federal student loans for the 2019-2020 school year were at 5.045% for undergraduate loans, and 4.529% for unsubsidized graduate loans.
If you get a subsidized loan through FAFSA (Free Application for Federal Student Aid) application, you do not pay on the interest of the loan while you are still in school. The government subsidizes, or takes care of that money, while you’re a student. Yes, you will accrue interest on the loan, but you’ll only be responsible for that interest after graduation.
Private loans are also available for students, but the interest rate will be determined by your credit. There are a variety of banks and lenders, with both variable and fixed rate student loans. Again, do your homework and research carefully.
Zero interest graduate student loans
Interest free loans for graduate students can be harder to come by but here’s another instance where Jewish Free Loan Association can help with law or medical or other post-grad programs. You can also talk to your professors and visit your university’s financial aid department. Don’t forget to search for graduate scholarships, grants, teaching assistantships, and other in-program financial help.
Education is important, and so is your post-college life, which can be impacted by some big choices you make now. Don’t take your financial responsibility lightly. Research all of the student loans available to you, and decide what products work best for you and your family.
For more eligibility information and to start your application process, click here.