Your loan document should reference 2 rates: deferral period margin and repayment period margin. This typically means your rate for the corresponding period is either the Prime rate or LIBOR plus whatever rate listen. So, if you have a deferral period margin of 4.5% and your lender bases their rate off of the 3 month LIBOR (currently 5.5%), your interest rate during any deferral periods (payments not required) would be 10%. Even though payments are not required, you will still accrue interest and that additional amount will be added onto your principal balance either quarterly or when your loan enters repayment. You can make interest only payments to prevent interest from being capitalized, which means when you go into full repayment your balance should be the same as the original amount w/ fees. Your repayment period margin is calculated the same way…assuming LIBOR is being used, LIBOR plus the rate specified gives you the rate applicable during repayment periods. Have you maxed your allowable amount for Federal student loans? If your father is willing to co-sign, is he willing to put it solely in his name? Co-signers have just as much financial responsibility to the borrowed amount as the main borrower does. He can be the borrower with you being the student and possibly get a lower rate along with lower origination/guarantee fees. This route would mean you coulnd’t include that loan in a Private student loan consolidation down the road if you had other Private loans qualifying for consolidation. Hope all of that helps!

Credit card companies have some competetive rates now that might work for you. It isn’t classified as student loan debt so you can’t take advantage of that tax credit for the interest paid on it…and you don’t get the deferral period…but since it is a small amount, something like 0% for 6 months, or the newer promotions like 4.9% fixed for the life of the balance could be an option also. Unsure of your financial status and if payments while attending school are possible…but this route would give you a much lower rate meaning less paid in interest at the end…and you avoid those silly origination/guarantee fees up front. Is your father able to take out a Federal PLUS loan?

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Yes, it’s possible

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