8 low-interest student loans

NEW YORK (CNNMoney) -- Falling interest rates are enabling a growing number of companies, state programs, and foundations to offer alternative education loans that are significantly cheaper than some of the federal government's offerings.

Some banks and credit unions, for example, are offering fixed-rate loans (which generally require the student and parent to take joint responsibility) at rates as low as 5.5%. You can shop for these private loans at sites such as custudentloans.org, overturemarketplace.com, simpletuition.com or studentchoice.com.

CNNMoney has identified eight other little-known startups, state programs and foundations that offer bargain loans charging as little as 1%. Some even offer the chance to get as much as 75% of the debt forgiven.

While these loans are less costly than the 7% annual percentage rate charged for unsubsidized federal Stafford loans, benefits such as income-based repayment and student loan forgiveness can make the Stafford a better deal in many circumstances, say experts such as student loan attorney Heather Jarvis. For students who need to borrow more than federal student loans allow, however, these low-cost options present a good alternative to federal parent PLUS loans -- which don't offer such nice post-grad perks and charge a total annual percentage rate of 8.8% with fees.

Of course, even low-interest loans have to be repaid. So Jarvis and other experts warn students to keep their total borrowing—even of bargain loans—below the amount they realistically expect to earn in their first year after graduation.

Low-interest alternative student loans

Name Qualifications APR
Georgia Student Access Loan Students in Georgia with a 2.0+ GPA who have exhausted all other aid programs, including the parent PLUS loan. 1.00%
Pickett & Hatcher Educational Fund Students with a 2.0+ GPA and a cosigner. 2% while in school, 6% after graduation
Questa Foundation Students from Northeast Indiana who have a 2.75+ GPA. Those who graduate and work in the area can get up to 75% of the loan forgiven. 3.25%
Dakota Education Alternative Loan - North Dakota Students from or attending college in North Dakota with cosigner with credit score of at least 575. 4.6%
Dakota Education Alternative Loan - Regional Students from or attending college in South Dakota, Minnesota, Montana, Wyoming or Wisconsin with cosigner with credit score of at least 575. 6.27%
SoFi Students attending participating colleges. No cosigners needed. Some forgiveness possible. 6.38%
RISLA Immediate Repay Loan Students from or attending college in Rhode Island. Cosigner needed, but eligible for release after 24 on-time payments. 6.39%
RISLA Deferred Repayment Loan Students from or attending college in Rhode Island. Cosigner needed, but eligible for release after 24 on-time payments. 7.49%
NOTE: Rates are accurate as of July 16, 2012, but subject to change. Interested students should check the websites for up-to-date information.
Interest-free loans

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.97%3.98%
15 yr fixed3.11%3.05%
5/1 ARM3.40%3.32%
30 yr refi4.05%4.05%
15 yr refi3.19%3.12%
Rate data provided
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