are student loans variable or fixed

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  • Should I choose a fixed or variable rate student loan?

  • If you’re comfortable taking a risk to potentially save on interest 鈥?and will be able to pay off your student loan fast 鈥?consider a variable rate. MORE: What do Fed rate changes mean for student loans? Fixed or variable student loan? All federal student loans have fixed interest rates.

  • What is a variable-rate loan?

  • Variable interest rates are only available on private student loans and refinancing loans. With variable-rate loans, the interest rate on your loan can change鈥攑erhaps monthly. They often start with lower interest rates than fixed-rate loans, but the interest rate can increase based on the index the lender uses.

  • What are the risks of a variable rate loan?

  • But risk is involved, as the variable rate has the potential to rise during the term of your loan. The potential advantage of a variable rate loan is that it may help you save on interest. However, this savings can happen only if the interest rate market holds steady or declines during your loan term.

  • What are the differences between federal and private student loans?

  • Federal student loans only charged fixed interest rates, and borrowers all have the same rate regardless of their creditworthiness. Private student loan lenders and refinancing lenders typically offer both fixed- and variable-rate loans. You have a predictable monthly payment.

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