How Private Student Loan Rates are Determined
At Credit Union Student Choice, these factors are considered when calculating your specific interest rate:
1) The student’s credit score
2) The co-borrower's credit score (if applicable)
Seem too easy?
It’s meant to be. Unlike other lenders who take the school you attend into account in determining your rate, Credit Union Student Choice believes in fair access to college financing for every credit union member.
So how does your credit score affect rate?
Most lenders use internal credit
tables that use a range of credit
scores to determine what
rate you will be offered. For example, a credit union may establish a
rate structure whereby a borrower with a credit score above 750
qualifies for the lowest rate, a borrower with a credit score between
749 and 700 qualifies for a higher rate, etc. This is called risk-based
lending and is quite common. However, since lender’s internal rate
tables can vary widely, it is important to shop around and review
multiple lenders to make sure you are getting the best deal possible.
Private or alternative student loan rates are generally variable.
This
means that the rate is not fixed, but floats with a market index such
as the Prime or LIBOR rate. Your rate will be tied to one of these rates. Usually you
will see lenders advertise a rate of Prime or LIBOR plus a certain
percentage (referred to as a "spread" or "margin"). This makes determining what
exactly you will pay difficult. However, by looking at how these rates
have fluctuated over time, you can get a rough estimate which will be
helpful for future budgeting.
Our Rates
Click here to see our current private student loan rates. You will be quoted your specific rate after you are approved for the loan.
