Wondering what the interest rate on a student loan means? MEFA’s Jonathan Hughes explains everything you need to know about interest rates, including the difference between a fixed rate and a variable rate, and how your credit score can affect your loan options. For more information on the interest rates, watch MEFA’s video, Fixed vs. Variable Student Loan Interest Rates.
Please note that this transcript was auto-generated. We apologize for any minor errors in spelling or grammar.
[00:00:00] Hi folks, Jonathan from MEFA here. If you’re looking to borrow to pay for some of your college bill, you’re gonna have a lot of choices. Deciding which loan is right for you may be dizzying, so you’ll need to know how to compare your options. Let’s start with interest rates. Remember, families should borrow federal student loans first.
In this video, we will be discussing interest rates for private educational loans. The interest rate is how much you’re charged for borrowing, so the lower the rate the better, but that’s not all you need to know. There are two types of rates fixed and variable. When the interest rate is fixed, that means it will not change for the life of the loan.
You always know what it will be. Variable rates can change depending on the market. Variable rate loans can change their rates once a year, once every three months, or even once every month. And then finally, for most educational loans, the interest rate you get depends on your credit score. So you may see language like rates [00:01:00] as low as, which means that only the most credit worthy applicants will qualify for that lowest advertised rate.
If you’re approved with a lower credit score, your interest rate will be higher within that spread. Well, that’s all for now. So if you have any further questions, here’s how you can reach us.
