Private Student Loan Borrowers With Variable Interest Rates See Increases
While most federal student loan interest rates are fixed, many private student loan interest rates are variable. Variable rates change over time, and often are impacted by market conditions and government policies that affect interest rates. Just like home mortgages, auto loans, and credit card debt, variable private student loan interest rates have been affected by the Federal Reserve’s repeated interest rate increases over the course of the last year. These increases have had a broad impact on the financial sector, even for loans that are not directly tied to the Fed’s rate., a private student loan refinancing marketplace, interest rates on 5-year variable-rate private student loans averaged a shocking 13.69% last week.
Private student loan borrowers with variable interest rates have very limited options. Aside from temporary hardship programs , a borrower’s only recourse might be to refinance the loan through a different private student loan lender to obtain a comparatively lower, fixed interest rate. But newly-disbursed private student loans are also facing high fixed interest rates in the current environment. Fixed interest rates for 10-year private student loans averaged 7.
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