Borrowers who want to lower the interest rate on their federal student loans have a new option, the Wall Street Journal reported today. Citizens Financial Group announced yesterday that it is accepting applications from both parent and student holders of federal loans to refinance into private loans at the Providence, R.I.-based bank. Some borrowers who have good credit scores could get a lower interest rate than what they’re currently paying. Citizens’ fixed interest rates start as low as 4.74 percent, while variable-rate loans, whose rates can change each month, have rates as low as 2.31 percent. The lowest rates are given to borrowers with very high credit scores and long-term employment and who also have a Citizens checking account and set up automatic bill payments for their loan. In contrast, parents who signed up for a federal Plus loan to help their kids pay for college would have received a fixed interest rate between 6.41 percent and 8.5 percent since the 2006-07 academic year. Before then, Plus loans carried variable rates. Undergraduate student borrowers of unsubsidized Stafford loans—the most commonly used federal loans—pay fixed rates ranging from 3.86 - 6.8 percent.
