Millions of people every year have to take out private or federal (or both types) student loans each year to cover the tuition costs, course materials, and day to day living expenses associated with going to college. If you are due to be going away to college yourself in the near future, and the amount your family can afford to put towards it combined with any scholarships or grants you receive is not going to be able to adequately fund your college education, then you should be learning all you can about the different types of loans available to students to help you ensure you get the best possible deal.
After all, any debt you get into while in school is likely to stay with you for the next ten years at the very least. In some cases people are paying off student loans over twenty-five years, which is a huge proportion of your working life, so you want to make sure you are paying as little interest as possible.
Interest is accrued based on an annual rate (called APR) and means that the longer you have the loan, the more accrues and the more your loan eventually works out costing you. If you had an interest free student loan, no interest would ever be charged and so you would pay the exact dollar amount you borrowed back and not a cent more, despite what might happen with the rate of inflation over the period of your loan.
Unfortunately, there are no standard interest free student loans. The lowest interest rate, at a fixed rate of 5% APR, comes with the federal Perkins loan, and this is only available to students who can demonstrate a significant financial need when compared with other students at the same school. Also, the maximum amount you can be awarded as an undergraduate is $4000 per year, and this maximum is not even awarded to everybody accepted to receive the Perkins loan, so there is a strong likelihood you will also need additional funding.
The only way possible to get an interest free student loan, which could save you thousands over the course of the loan’s lifetime, is to get a loan from a charity or other non-profit organization. These are available to a very limited number of students in a given area who can demonstrate a real need for the loan, and can show they will benefit from it substantially more than other applicants. The number and location of organizations offering these loans varies from year to year, but if you are in serious financial hardship or could be considered exceptionally gifted it is definitely worth looking into loans of this type in your city or state.
If you can’t get any help from this route, then unfortunately you are going to have to take out student loans that will accrue interest. The federal loans are the best, but limited to smaller amounts of money. If you have to supplement what you can get in Perkins or Stafford loans with private loans, the best thing to do is shop around for the best deal.