Student Loans Sallie Mae Rates - Students will now pay lower interest rates for their loan. However, the Sallie Mae price cut likely won’t attract a surge of new borrowers. Formally known as SLM Corp., Sallie Mae offers education loans with variable interest rates that tend to be higher than the rates on federal government student loans.
More On Student Loans Sallie Mae Rates.
Most federal loans come with a fixed rate of 6.8 percent. As a result, private student loans are widely regarded as a last resort in paying for college, after scholarships, grants and federal loans have been exhausted.
Sallie Mae executive Charlie Rocha notes that private loans can help bridge the gap after families max out federal student loans limits. The new cap on Sallie Mae’s rate will be 9.875 percent plus LIBOR, which is the interest rate that banks charge each other for loans. The new lowest available rate will be LIBOR plus 2 percent, which reflects a half percent rate reduction.
It’s worth noting that benchmark interest rates, such as LIBOR, are at historic lows, meaning the interest rates tied to them are poised to rise incrementally. The exact interest rate Sallie Mae assigns loans varies depending on the borrower’s credit score and the type of repayment option selected. Students who choose to pay interest charges on the loan while they’re in school are given more favorable rates. Sallie Mae encourages this option because it minimizes the impact of compound interest and lowers the cost of the loan over the long term.
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