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Is it possible to acquire a lower interest rate on a student loan if you overpay on initial payments?


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Matthew Hunter’s Answer

Hello Ethan,


Overpaying on initial payments of a student loan does not decrease your loans interest rate. When you take out a student loan it will have either a fixed or variable interest rate already determined. By paying more toward your initial payments you will lower your principal balance (the total amount of the loan you still have to pay back). Lowering your principal balance by paying more than required each pay period you will have less interest accrue between payments which will result in you paying less money over time.


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Updated Translate

Syed’s Answer

Hi Ethan, per Mathew's answer, overpaying on initial payments of a student loan does not decrease your loans interest rate. However, it is possible to refinance with a different lender at a lower interest rate. One should only pursue this if one has a stable, good-paying job after graduation. Federal student loans have some protections for the borrower that private student loans do not. Sometimes it can make sense to keep the existing loans in place, if they're federal loans, even if the interest rate is a little higher than private student loans. I hope this helps!

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