Sallie Mae is lowering interest rates on private student loans, but these loans still remain far more costly and less attractive than getting federal student loans from the U.S. government.

According to the New York Times, Sallie Mae is slashing the the cost of borrowing on private loans beginning May 10.

The new rates on Sallie Mae's private loans will range from LIBOR plus 2.5% to LIBOR plus 9.875%. That's down from previous rates, which ranged from LIBOR plus 4% to LIBOR plus 12.5%. LIBOR stands for the London Inter-Bank Offer Rate; that's the rate that banks charge one another when they extend loans to each other.

Basically, the rate cuts mean that Sallie Mae's private loans will range anywhere from 2.88% to 10.25%. The exact rate charged depends on a person's credit and whether or not the student borrower has a parent or another person serving as a co-signer.


Federal Loans Better Than Private Student Loans

If you've got private loans, it's obviously a better financial deal to have a rate drop. So that's an improvement for those with private loans. However, anyone borrowing money for college will always be better off with federal loans directly from the U.S. Department of Education. These are obtained through your college financial aid office.

Federal student loans offer many advantages over private loans, including:

-Lower interest rates, many capping out at 6.8%
-Cheaper fees
-Loan subsidies, where the government pays the interest on many loans while students are in school
-Better loan forgiveness options
-Better deferment and forbearance choices
-More flexibility in repayment schedules
-A standardized process for fixing defaulted loans and wiping clean bad credit after a loan delinquency has been resolved

Unfortunately, private student loans are a big cause of indebtedness for a whole generation of college grads, and even those who never finished college. As I explained in a recent article for WalletPop, private student loans are also driving people to take desperate actions to pay off those debts.

If you're struggling with college debt, consider these types of programs that will help you eliminate your student loans:

-Service-based work activities, such as becoming a police officer, firefighter or social worker
-Volunteer work, such as joining VISTA or the Peace Corps
-Working for the federal government and taking advantage of the Federal Student Loan Repayment Program
-Working in the medical arena as a doctor, nurse or other specialist, in places where there is a critical shortage of healthcare experts
-Enrolling in the armed services (i.e. Army, Navy, Air Force or Marines)

Read this post and the related content on how to pay off student loans fast, including getting help from student loan assistance programs. Also, refer to my book Zero Debt for College Grads for an extended list of specific programs to help you tackle student loan debt.

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Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times best selle, 'Zero Debt: The Ultimate Guide to Financial Freedom.'