Funding University, a private student loan lender, has lowered interest rates on its student loans significantly, from 15.99 percent to 9.99 percent.
The move from Funding University goes against the grain of the times; most private student loan lenders have raised interest rates recently. In addition, there has also been a hike in federal student loan interest rates.
Funding University’s decision to lower its interest rates on private student loans by a significant margin gives borrowers an opportunity to save a little money on more expensive interest rates.
Throughout May, LendEDU reported on various private student loan lenders raising their interest rates. Sallie Mae heightened their undergraduate variable rates on student loans from a range of 2.87 percent to 9.91 percent to the current range of 3.00 percent to 10.01 percent.
Also in May, private lender College Ave moved their variable rates on undergraduate loans from between 3.22 percent and 9.64 percent to between 3.22 percent and 9.89 percent. Additionally, variable graduate loan rates went from between 4.20 percent and 9.00 percent to the current range of 4.20 percent and 9.02 percent.
Finally, PNC hiked up their undergraduate variable rates on private student loans from between 3.77 percent and 10.81 percent to between 3.99 percent and 11.03 percent. PNC’s low end on their fixed interest rates for undergraduate student loans moved from 6.23 percent to 6.26 percent.
All of these interest rate hikes from the private student loan industry come on the heels of the Federal Reserve raising interest rates on new federal student loans. Direct Subsidized and Unsubsidized Loans for undergraduates saw a jump in interest rates from 3.76 percent to 4.45 percent. Direct Unsubsidized Loans for graduate students now have an interest rate of 6.00 percent, while interest rates on Direct PLUS Loans were raised to 7.00 percent.
The rise in interest rates across the board in both the federal and private market makes it more expensive to borrow money for education, but the moves also are indicative of a healthy economy, which is welcomed news for everyone.
When interest rates are rising in the market, it is expected that all types of lenders will follow suit and raise rates. This is especially true for variable rates that move in synchrony with the current market interest rate. Fixed rates may still be open to change, but once the fixed rate loan is disbursed, the rate that was agreed upon remains stagnant regardless of the market’s behavior.
Author: Mike Brown
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