Affected by the government shutdown? You may be eligible for payment forbearance on your SoFi loan. Contact us.

SoFi Blog

Tips and news—
for your financial moves.

How to Choose Between Variable And Fixed Rate Student Loans

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks may help you save money, pay off loans sooner, and reduce stress over student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent student loan decisions.

So, you’ve settled on student loan refinancing. You’ve filled out the application, have gotten approved (congrats!), and now you’re faced with a couple of loan options—including the choice between a fixed vs. variable rate student loan. Even if you’re already familiar with both, factors like changing interest rates and your own financial situation have bearing on which type of loan is right for you.

What do you need to know before making a decision? Here’s the scoop on how these two options differ.

Fixed-rate student loans:
Generally have a higher interest rate than variable rate student loans
Are not affected by interest rate changes
Charge the same interest rate over the life of the loan

Variable-rate (or floating-rate) student loans:
Generally have a lower initial rate than fixed rate loans
Are affected by interest rate changes, so your loan’s rate can go up or down on a monthly, quarterly, or annual basis

How to Choose
Your final decision depends on your situation.

If you plan to pay off your loan relatively quickly (lucky you), a variable rate student loan may help you save you money. However, be aware that the longer it takes you to pay off the loan, the more opportunity there is for interest rates to rise. You can mitigate your risk by choosing a lender that caps its variable rates.

Related: How To Evaluate a Variable Rate Loan

If you don’t plan to pay off your student loan quickly, if your future income level is uncertain, or if you’re simply uncomfortable taking on extra risk, consider a fixed rate student loan. In today’s low interest rate environment, fixed rates can be competitive. If you have a high interest rate grad school loan, for example, you could get a lower fixed rate by refinancing.

Whether you choose a fixed rate or variable rate student loan, the main thing to remember is that the rate you got when you first took out your loan doesn’t have to be the rate you’re stuck with for life. Knowing your refinancing options can help put your mind at ease—and hopefully save you some money, to boot.

Editor’s Note: This is an updated version of a post we originally published in September 2013. We welcome new comments and questions below.

Read more

Student Loan Options: What is Refinancing vs. Consolidation?

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent decisions about your student loans. And while you’re at it, check out SoFi’s new Student Loan Debt Navigator tool to assess your student loan repayment options.

Student loans have a way of making you feel powerless. But the truth is, you have more control than you think. That’s what our Student Loan Smarts series is all about—helping you understand all of your options so you can make decisions that fit with your financial goals.

One of those options? Choosing to consolidate or refinance student loans. But what is consolidation, what is refinancing, and how do you know which one (if either) is right for you?

Read more

3 People From Different Walks of Life on Conquering Student Loan Debt

Welcome to our new 3 People series, where we meet three professionals from diverse backgrounds, cities and careers, who open up about their finances, careers and overcoming student loan debt. Each person’s financial picture, student loans, and repayment strategy differs; however, each refinanced their student loans through SoFi to take control of student debt and pay off their loans faster.

The years following undergrad or grad school are filled with opportunities for you to own your career. Unfortunately for many, along with honing skills and making great connections comes a not-so-fun task: paying down student loan debt. On the plus side, since student loans represent investments in your future, they’re considered “good debt.” Yet, recent statistics put nearly 40 million Americans (including approximately 70% of bachelor degree recipients) in debt with student loans totaling about $1.2 trillion.

Read more

How and When to Combine Federal Student Loans & Private Loans

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent decisions about your student loans. And while you’re at it, check out SoFi’s new Student Loan Debt Navigator tool to assess your student loan repayment options.

One of the biggest student loan myths out there is that borrowers can’t consolidate federal student loans and private student loans into one loan.  It’s understandable why people think that, since this wasn’t an option for many years.  But now that the choice is available, it’s important to understand whether federal and private loan consolidation is right for you – especially when there’s the potential for significant cost savings on the line.

Read more

What’s the Difference Between Federal Student Loan Consolidation and a "Private Consolidation Loan"?

 

If there’s anything clear about student loans, it’s that the terminology associated with student loans is often far from clear.  Take the words “consolidate” and “refinance,” for example.  Both of these fall into the category of “things you can potentially do with your student loans” and as a result they’re often used interchangeably.  But the terms can have different implications based on the context in which they’re being used.

So here’s the scoop:

Read more
Page 2 of 3123
TLS 1.2 Encrypted
Equal Housing Lender