Student loans are now cheapest through private companies

May 21, 2012 5:24:01 PM PDT
The cost of borrowing money to pay for college tuition just got cheaper. Up to now, the cheapest rates for interest paid on student loans always came from the federal government. Now that's apparently changing.

For the first time, banks and other private student loan lenders are now offering attractive fixed rate loans.

Sallie Mae and Discover became the latest companies to do that. They join Wells Fargo and five other private lenders in offering fixed low rates.

The rates vary, but Sallie Mae's fixed rate loans start at 5.75 percent. Compare that to the federal unsubsidized Stafford loans at 6.8 percent. Subsidized Stafford loans are also expected to spike to 6.8 percent this summer unless Congress acts.