Variable vs. Fixed Interest Rates | Sallie Mae

Interest rate is the rate charged to borrow money. When you take out a loan, you pay it back with interest, so you pay back more than you borrowed. A fixed interest rate is usually a little higher than a starting variable interest rate. However, with a fixed interest rate, you’ll have predictable monthly payments, which can make it easier to stick to a budget or plan for college. On the other hand, a variable interest rate may vary based on the financial markets. Usually, variable interest rates start lower than fixed interest rates helping you save money for college. It is important to bear in mind that variable interest rates could go up or down due to an increase or decrease in the loan’s index. Watch this video by Sallie Mae to learn more about the benefits and considerations of fixed and variable interest rates for your private student loan. Talk to your private student loan lender so you can understand your options and choose the right ones for you.

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