Deciding whether to choose a variable or fixed interest rate can be tough since there are advantages to both options. Variable rate loans start off with lower interest rates than fixed rate loans with similar repayment periods; however, the interest rate fluctuates as the interest rate of the base index changes. So, your monthly payment amounts will increase or decrease depending on if interest rates rise or fall.
With a fixed rate loan, the initial interest rate is higher, but remains constant throughout the life of the loan, so your monthly payment amount stays the same.
Consider these options to help you decide:
Both private student loans and federal student loans allow students and/or parents to borrow money to pay for education expenses. While there are many differences between the two, the primary differences are:
Learn more about federal student loans.