Another student loan question!

Nursing Students General Students

Published

Okay, so I am having to take out a private student loan. Of course, it has a variable interest rate. I have never had to do this before, so I am kind of confused. I have an index rate, plus a margin. Will the index always stay the same, and the margin increase/decrease? Also, is there a website where I can look at the increases/decreases of the last year?

Thanks for any help.

Specializes in SRNA.

The index is likely either based on LIBOR or the Prime Rate, the margin is the percentage above the index that is selected by the lender based on your credit worthiness. For example, some lenders use Prime -0.5%-6.0%, which means that when you apply, the lender will tell you what you qualify between that -0.5% and 6%. (You can get a rate under Prime if you have excellent credit/cosigner with excellent credit, by qualifiying for a margin of -0.5%, deducting half a percent from the index rate.)

For example, the Prime Rate currently is 5.0%, so if you have a margin of 3%, your current rate would be a total of 8%. The index will vary based on economic decisions made by the Fed (in the US) and by the British Banker's Association (if LIBOR based).

The index rate will vary during the life of your student loan, you will want to find out how many times per year the lender will adjust based on these changes. The lender I chose (Chase) does this quarterly.

You can check out this chart to see the historical Prime Rate, as well as other indices:

http://www.moneycafe.com/library/prime.htm#chart

Thanks! Your post was very helpful. I also am taking my loan through Chase. The letter they sent me today, says the index is 6%, any reason why it wouldn't be 5%?

Specializes in Hospice / Ambulatory Clinic.

The index is not always prime rate.

Specializes in SRNA.
Thanks! Your post was very helpful. I also am taking my loan through Chase. The letter they sent me today, says the index is 6%, any reason why it wouldn't be 5%?

Check to see which index they are currently using, I think they recently switched from LIBOR to Prime, but I'm not 100% sure. They were very helpful on the phone and answered all of my questions easily.

Okay, so I am having to take out a private student loan. Of course, it has a variable interest rate. I have never had to do this before, so I am kind of confused. I have an index rate, plus a margin. Will the index always stay the same, and the margin increase/decrease?

This wont be a helpful reply, but why didnt you ask the loan grantor these things before deciding to take out the loan?

Uhmm...why even post a reply that isn't helpful. Alot of your posts are that way.

This won't be helpful either, but why even waste your time reading and responding if you are never helpful, or friendly for that matter. (As a majority of your posts are)

Thanks for nothing.

Uhmm...why even post a reply that isn't helpful. Alot of your posts are that way.

This won't be helpful either, but why even waste your time reading and responding if you are never helpful, or friendly for that matter. (As a majority of your posts are)

Thanks for nothing.

Because I just need to know why you would get yourself into a loan w/o understanding how the vig works. It blows my mind.

A large portion of the US is in serious financial trouble. Decisions like the one you are making are part of the reason.

While I may not be the friendliest poster on the board, I am far from unhelpful. The amount of private messages I receive regarding financial matters is staggering.

Well, that is great for you.

And, no I don't fully understand all this private loan stuff, because I have never had to take one until this semester. It isn 't an option for me, because I do not have enough to cover tuition. I was simply asking which number stayed the same, and which number increased/decreased. The index or the margin. You were not helpful to me, and continue to not be by writing things that mean nothing to me. I need help on a simple question, not lectured about who they whole United States has financial problems. Is that so hard to ask?

I KNOW I can call the loan company, but before I sat on hold for 3 days with a screaming 2 year old, I figured I would get some advice from people who have been through this.

You were not helpful to me, and continue to not be by writing things that mean nothing to me.

Oh, they must mean something, you seem compelled to vehemently reply.

No, you say you are helpful, so help. Saying things that have nothing to do with the question are not helpful nor do they mean anything to me.

Do you have any advice for the original question I asked, or not?

No, you say you are helpful, so help. Saying things that have nothing to do with the question are not helpful nor do they mean anything to me.

Do you have any advice for the original question I asked, or not?

Regarding your original question, I do not have any advice. I am against borrowing money so I could not in good faith advise.

I am going to remove my subscription to this thread, feel free to PM me with any further questions and/or discussion.

+ Add a Comment