SoFi Raises the Variable Student Loan Refinancing Rates
Image of the Federal Reserve building in Washington D.C.
It’s official. The Federal Reserve’s interest rate increase last month is starting to show up in some loan products including student loan refinancing. Fixed rate borrowers are safe for now, but those with variable interest can expect to pay more.
That’s the case at SoFi, one of the leading student loan refinancing lenders based in San Francisco. As of April 1st the interest rate on a variable student loan at SoFi increased both on the low and high ends of the range. Borrowers will now pay anywhere from 2.565 percent to 6.490 percent interest on a variable refinance loan. That compares with 2.365 percent to 6.29 percent interest just a month ago. The interest rate on SoFi’s fixed rate products held steady at 3.375 percent to 6.74 percent from March to April.
In mid-March the Federal Reserve raised interest rates by a 0.25 percent with the Fed signaling two or more interest rate increases in 2017.
“The simple message is the economy's doing well,” Federal Reserve Chair Janet Yellen said in March. “It's performed well over the last several years. The unemployment rate has moved way down, and many more people feel optimistic about their prospects.”
The Fed is also forecasting another rate hike in 2018 if the economy continues on its current trajectory.
There is some good news for private student loan borrowers stuck in a variable rate loan. Refinancing into a fixed rate loan could save some money on interest if the Fed continues to raise rates.
The real loser in the interest rate increases is new borrowers coming into the system. Anyone taking out loans for the 2017/2018 school year are likely to see a higher rate than the current 3.76 percent interest the government charges student loan borrowers. Congress changes the interest rate on new federal student loans changes each summer and it is mostly based off current markets.
Image Copyright © Stefan Fussan