Student loans aren’t created equal. This is mainly due to the interest rates borrowers have on their private student loans.
While a lot of factors go into the overall expenditure on any student loan, it behooves a borrower to compare private student loan interest rates on different loans on a consistent basis. Since variable rate loans, normally the cheaper option, change depending on the LIBOR, an interest rate seen in one month can be a lot different the next month.
The LIBOR is the rate that a group of international banks charge each other when making big loans. This rate determines the rate on all sorts of loans including a private student loan. According to Bankrate, the three month LIBOR rate stands at 1.03% which is up from 1.00% last month and 0.62% a year ago. This means the average rate on variable rate private student loans is going to rise.
Staying on top of rate fluctuations is important for any borrower, especially for a student borrower. Take College Ave, the student loan lender created by a team of “recovering” corporate executives who wanted to streamline student loan origination. During the past few weeks, their interest rates on variable loans changed as the LIBOR increased.
On College Ave’s variable rate undergraduate loans, borrowers will pay anywhere from 3.09% to 9.56% as of Feb.1 which is up from between 2.96% and 9.45% on Jan. 1. The fixed rate undergraduate loan rate remains the same between 5.74% and 11.85%.
The interest rate on a graduate variable loan increased to between 4.07% and 8.90% as of Feb. 1 compared to 3.47% to 7.11% on Jan. 1. Additionally, the fixed rate on graduate loans increased at College Ave to anywhere between 6.73% and 11.35% as of Feb.1 compared to 5.68% to 7.83% on Jan. 1.
During the same time frame, the parent variable rate loan interest rate came in at between 4.4% and 6.42% compared to 4.32% to 6.29%. The fixed rate on parent loans remained flat at 6.54%.
On the refinancing front, borrowers also paid more in January when compared to December. College Ave was charging variable refinancing rates of 2.625% to 5.875% on Dec. 15, but these rates increased to between 2.75% to 6.00% as of Jan. 25. The fixed rate remained the same between 4.75% to 7.35%. Student loan refinancing is a decent option for graduated student loan borrowers who bring high income and credit to the table.
Author: Donna Fuscaldo
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