which of the following loans will typically offer the lowest interest rate?
- Payday loan
- Federal Student Loan
- Private Loan
- Both A and C
Answer: Federal Student Loan
Interest rates on Federal Stafford Loans are fixed. The current interest rates for new Federal Stafford Loans in 2015-2016 are 4.29% for undergraduate students and5.84% for graduate and professional students. Interest rates are the same for subsidized and unsubsidized Federal Stafford Loans.
Private student loans are not funded or subsidized by the federal government; instead, they are funded by banks, credit unions, or other types of lenders. The bank or lender – not the federal government – sets interest rates, loan limits, terms, and conditions of private student loans.