Variable interest rates are often tied to common indices like the Prime Rate or LIBOR (The London Interbank Offered Rate) and can change as frequently as every 30 to 90 days.
For example, for loans with a rate tied to the Prime Rate, when the Prime Rate goes up, the interest rate of a variable student loan rate subsequently rises and when the Prime Rate goes down, the interest rate will subsequently decrease. The fixed interest rate remains constant throughout the life of the loan.
Borrowers should generally maximize their federal loan options before resorting to private loans. Banks and lenders – not Congress – set the interest rates, loan limits, terms, and conditions of private loans. In addition, in most cases, borrowers must have a high school diploma or equivalency.
They usually carry higher, variable interest rates, and lack the flexible repayment options of federal loans. Anyone who is enrolled in a degree, certificate, or other approved program at an eligible school and is a U. There are other criteria, including prohibitions on aid for most incarcerated students and a rule that students convicted under federal or state laws of sale or possession of illegal drugs cannot get federal student aid in certain cases.
By Brianna/Mc Gurran/Nerd Wallet It's a cruel fact of life that paying off your loans doesn't just mean repaying the amount you borrowed.
Refinancing might also extend your repayment term or lower your monthly payments. And if you refinance federal loans into a private loan, you risk losing important protections, such as flexible repayment options and the ability to postpone payments when you're unemployed."There are some private loans that are including some consumer protections in their loans these days," says Heather Jarvis, an attorney specializing in student loan training and education based in Wilmington, North Carolina. This is the question many people ask when faced with mounting student debt or multiple student loan payments.While it’s true that refinancing student loans is often a practical idea that may even save you money, it’s also a big financial decision to make.Student loan refinancing is the process of replacing an existing student loan with a new loan that has new terms such as interest rate, monthly payment amount and repayment period. Say you can pay off your student loan debt quickly—a variable rate student loan may be a cost-saving solution if the rate is lower than available fixed rates and if the rate does not increase above the available fixed rate during the repayment period.Student loan consolidation is the process of taking multiple student loans from one or several providers and consolidating them into a new single student loan with new terms such as the interest rate, monthly payment amount and repayment period. Just remember, the longer it takes you to pay off the loan, the more opportunity there is for variable interest rates to change.