Variable Interest Rate Student Loans

Variable Interest Rate Student Loans

4 min read


This video explains how student loans work. I go over what they are, when they become due, how much they cost (compared to a credit card), and how to make them cheaper if you are having trouble repaying them off of your income. If you want to help us here at TSI we really appreciate all financial donations whether its $10 or $1000! Thanks for watching! 🙂

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Variable Interest Rate Student Loans

What Is a Variable Interest Rate Loan?

With variable interest rate loans, the borrower’s payments vary depending on a set index rate. The index rate changes monthly, but the total amount paid over time remains fixed. A variable-rate loan could make sense if you don’t want to lock yourself into a long-term payment plan. If you know the interest rates you’ll pay will change later, this type of loan may be right for you. You can sign a variable-interest rate student loan for any amount between $100-$10,000 at a variety of credit unions across the United States.

How Do I Qualify?

There are two ways to qualify for a variable interest rate student loan. The first way is to have excellent credit. Your FICO score should be at least 640. This means you’ve had no late payments on your previous loans and no missed payments. The second way to qualify is to take out a private student loan. Private student loans do not affect your credit score. However, they do carry higher interest rates than federal student loans.

When Can I Take Out My Loan?

You can apply for a variable interest rate loan anytime while enrolled in school. Most students wait until after graduation before taking out their loan, though. You can borrow the maximum allowable amount based on your income, family size and number of dependent children.

How Much Will I Pay?

The interest rate on a variable interest rate loan varies with market conditions. In fact, some lenders offer interest rates as low as 4 percent. While the lowest interest rate will always depend on your credit history, the average variable interest rate loan carries a rate of 8.25%.

Does It Make Sense To Get A Mortgage?

Many students rely on variable interest rate student loans instead of traditional mortgages. Mortgage interest rates have been rising since 2008, reaching 6.21% in 2017. Students can still get a mortgage without incurring high costs, however. Low down payments and low closing costs are standard, and many banks now offer zero percent interest.

Am I Eligible for Other Types Of Loans?

If you’re interested in applying for other types of loans, check our partner site LendEDU to compare loan options.

Variable Interest Rate Student Loans

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Variable Interest Rate Student Loans

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Variable Interest Rate Student Loans

What exactly are variable interest rate student loans?

A variable interest rate (VIR) student loan is a type of debt that has its own unique set of rules about how much the rates change throughout the duration of repayment. A VIR student loan can have different rates based on certain factors, such as whether the borrower is enrolled at a public university or a private institution, the amount being borrowed, and the borrower’s credit score. While some lenders may offer a fixed interest rate loan, those who use them will want to pay close attention to changes in fees and interest rates to make sure they don’t end up paying more than they planned.

How do variable interest rate student loans work?

The initial rate on a loan is the lowest possible payment you could expect to pay. However, many lenders may alter that rate depending on what kind of loan you take out, whether you borrow enough money to pay off your loan early, and where your lender ranks among the competition. If you choose to go into default, your payments increase substantially and your credit rating suffers greatly.

Is it really worth having a variable interest rate student loan?

If you plan on graduating in less than two years, then a variable interest rate loan might help you save money during undergraduate school. However, if you plan to graduate after five years or more, your best bet would be to avoid these types of loans altogether.

How can I find a good variable interest rate student loan policy?

To determine what kind of loan terms you qualify for, look for a lender offering 0% APR for six months or longer. You should also check out the lender’s interest rate history, average customer satisfaction rating, and how long it takes to receive the funds you need. Then, compare each lender to determine which offers the best interest rates over time. Keep in mind that lenders may offer several types of student loans, including Stafford, PLUS, Consolidation, Income Based, Graduated Repayment, and Pay As You Earn.

How can I pay off my variable interest rate student loans faster?

You can pay off your debts more effectively by consolidating your loans into one monthly payment instead of splitting them between multiple accounts. This can reduce your total amount owed by thousands of dollars over the course of repayment. Even though consolidating loans may seem like an added cost, it can actually save you money in the long run.

What else should I know before taking out a variable interest rate student loans policy?

Before choosing a lender, consider their reputation, service options, and return policies. Also, keep in mind that although your lender may offer lower interest rates, they may charge hidden fees and require you to sign additional contracts. Do not let these extra costs scare you away from using a loan; just make sure you understand all of the fine print associated with your specific loan.

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