Student loans have become a necessary evil for countless Americans, but that doesn’t mean you have to over pay when turning to a private student loan lender to fund a college education. With the number of student loan lenders growing and now including fintech startups and traditional banks, borrowers have a lot of loans to choose from. In other words, they have plenty of shopping to do.
And while customer service and on-time payments matter a lot, ultimately the interest rate on the loan is going to determine which lender you choose to work with. When it comes to interest rates, lenders are going to charge different rates for different products.
Fixed rate student loans are going to come with a higher interest rate, but there’s more predictability in expenses over the life of a loan. Variable rate student loans, on the other hand, may have a lower interest rate to start with, but that can change based on the LIBOR, or the rate a group of international banks charge each other when making big loans. The LIBOR impacts the interest rate borrowers pay on everything from student loans to mortgages. With the LIBOR increasing compared to a month ago and even a year ago, the interest rate on variable loans is going to increase accordingly.
With that in mind, Earnest, the student loan lender out of San Francisco, has been doing a brisk business in refinancing loans, and their rates are subject to change as mentioned earlier. From December 14 through January 30, the interest rate on variable loans at Earnest inched up to between 2.4% to 6.03% compared to between 2.18% and 5.86%. Fixed rate student loan refinancing went up to between 3.6% and 6.74% from 3.38% to 6.74% in the same time frame.
Keep in mind that the lowest rates are available to the most qualified student loan refinancing applicants. Typically, student borrowers need to have a high income as well as great credit in order to obtain a refinance loan with the best terms.
Author: Andrew Rombach
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