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Fixed Interest Rate Student Loans

Mitchell Said:

Anyone know of a private student loan that has fixed rate interest?

We Answered:

The previous reply is incorrect. Private student loans are almost always a bad idea, unless you find the right one.

Example: Pickett-Hatcher Educational Fund Loan, $5500.00 annual max, $22000.00 lifetime max, 2% in school, 6% out of school, credit based, requires cosigner, no fees.

www.phef.org

And yes, it's legit. I'm in their program.

Stay away from the bank and finance company private student loans.

Jean Said:

What is a good fixed-interest rate private student loan?

We Answered:

Bad news. The loans you are looking for don't exist.

The only lenders that make fixed rate educational loans are the lenders who participate in the government's Stafford and PLUS loan programs.

If you need a private (non-governmental) educational loan, you will have to take on a loan with a variable interest rate, tied either to the US prime rate, or the LIBOR (London InterBank Offered Rate).

As you have probably already figured out, both of those financial standards are subject to volatility - the LIBOR is around 2.75 right now, but it's been as high as 5.70 in just the last 11 months, and as high as 6.83 in the last 8 years. The prime has been even more volatile.

There's a reason that educational lenders only make variable rate loans - that's because you're going to be holding on to the lender's money for a long, long time.

Remember - a loan is an investment. Investors make an investment when the potential return on that investment will be at least high as anything else they could have done with that money.

For your purposes, they won't make you a loan unless they are confident that their return (the interest you pay) will be at least as high as other things they could have invested money in. Lenders assure that by tying your interest rate to the ups and downs of other financial instruments.

So - the answer is "no legitimate lender" makes fixed rate 10 to 30 year educational loans - other than the federal government. (which is exactly WHY the federal government makes those loans fixed)

I hope that helped.

Jesus Said:

I consolidated my student loans in 2005. Is there a way to get a lower interest rate at this point?

We Answered:

Not by consolidation. Once you consolidate, you can't do it again in your lifetime. Your lender may have some sort of incentive programs for you to pay early, often or ontime but they will vary depending on your lender. I know Sallie Mae has/had a program called "Great Rewards" that lowered the interest rate after you made a few years worth of payments without ever being late. Other programs will lower your interest rate if you agree to do an auto draft directly from your checking or savings account. Call your lender and ask if they have any programs to lower your interest rates.

Marian Said:

Any lenders that consolidate 5 different Sallie Mae student loans and a fixed rate 30yr loan on my condo?

We Answered:

yes they do it here http://www.loansandinsurances.com/

Shawn Said:

What is better, a fixed interest rate on my student loan, or a variable interest rate?

We Answered:

Fixed. Variable rate loans are a ripoff and only available through the alternative Private student loan sharks. All federal student loans are fixed and they will be the best rates. Avoid private student loans like the plague.

Jeffery Said:

What does a "variable interest rate" on my federal student loans mean? Can someone explain how that works?

We Answered:

The reason some of your loans hold a fixed interest rate of 6.8% is because those Federal Stafford Loans were disbursed after July 1st, 2006, when all Stafford Loans disbursed after that date were given a fixed interest rate.

When dealing with the rest of your Student Loans, did you take out any Private Student Loans? If so, those loans would hold a different interest rate than your Federal Student Loans. Your Federal Student Loans which carry a Variable interest rate mean that every July 1st your interest rate is subject to change which is dictated by the Federal Government. The Federal Government sets the interest rate every July 1st based on what the Federal T-bill is being traded at.

The only way to have your Variable interest rate Federal Student Loans obtain a fixed interest rate is through the FFELP Consolidation Loan Program. What happens is all your Federal Student Loans will be added together and based on a weighted average of your current interest rates; a new fixed interest rate will be applied to your Federal Student Loans. I hope this makes it a little more clear for you. For more information on current Federal Student Loan interest rates please visit the source below.

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