A lot of different factors go into determine the rate for a student loan. This includes rather or not the loan is backed by the Federal Government or if it is a private loan. It also depends on which Federal student loan that is being applied for.

For example, a Stafford loan was previously based on an adjustable formula, the rate was set annually based on the prevailing 91 day Treasury bill, but as of July 1, 2006, the rate was fixed at 6.8%. However, some loan providers will forego a portion of the margin they are entitled to under the Federal program, and will offer rates lower than the standard rate. It pays to shop around, because not all lenders charge the same rate.

In fact, some lenders will offer incentives based on payment history and the amount of debt. Keep in mind that these are the practices of the individual lenders, a Stafford student loan is not based on credit rating, it is based upon need, and so even if your credit rating is not the best, you may still qualify for the loan.

Keep in mind that you may also pay for a loan origination fee up to 4% of the loan value. A portion of this loan actually goes to the Federal government to reduce the cost of the loans. Some lenders will reduce the percentage of the loan origination fee, so it does pay to shop around, so that you can lower the loan rate.

Also, if you don't pay your loan you may be charged a late fee and a collection fee. Remember, these are loans, not grants and you have to pay them back, otherwise you will severely damage your credit rating.

All things considered, a lot of different factors go into determining the loan rate for a student loan. But don't assume that all student loans will have the same rate of interest. Even though you are applying for a Stafford loan that is backed by the government, the rates charged by one lender may vary from the rates charged by another.