Student loan interest rates are moving higher with many private lenders including College Ave, the Wilmington, DE-based private student lender. In May, College Ave raised rates on its variable rate student loan products and lowered rates for many of its fixed rate student loans at the same time according to LendEDU.
Take its undergraduate fixed student loan offer for starters. At the start of May, College Ave was charging anywhere from 5.75 percent to 11.85 percent in interest. As of May 15, the rate dropped to between 5.24 percent and 11.76 percent. The variable rate undergraduate loan increased from 3.22 percent to 9.64 percent at the start of the month to between 3.22 percent and 9.89 percent by the middle of May.
Meanwhile borrowers of a variable rate graduate loan as of May 1 dealt with interest rates ranging between 4.20 percent and 9 percent, but the new rate increased slightly to between 4.2 percent and 9.02 percent as of May 15. On the flipside, the fixed rate graduate loan dropped from between 6.73 percent and 11.33 percent at the start of the month to between 6.22 percent and 10.89 percent by the middle of May.
Undergraduates and graduates can take advantage of a reduced interest rate when it comes to College Ave’s fixed rate loan, but the same can’t be said of College Ave’s parent student loans. While the low end interest rate on fixed rate loans was reduced to 6.36 percent from 6.54 percent, the high end was increased to 10.82 percent from 6.62 percent at the start of May. On the variable parent loan side of things, the interest rate went to between 4.33 percent and 8.8 percent in the middle of May from 4.57 percent to 6.54 percent at the beginning of the month.
The changes on the part of College Ave and other lenders result from the Federal Reserve raising interest rates which often signals rate hikes among lenders. These rate changes make it more expensive to borrow money overall, but the actions by the Federal Reserve also indicate that the economy is humming along which bodes well for everyone.
In a market with rising interest rates, it is common for all types of lenders to raise the rate of interest they charge on loans. This becomes especially important for variable rate loans that move in lockstep with the prevailing market interest rate. Fixed interest rate offers are still subject to change; however, once a fixed rate loan is dispersed, the rate that was decided upon remains static despite the market fluctuation.
Author: Donna Fuscaldo
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