What is a variable rate student loan
A variable rate is composed of two parts: a fixed margin and a variable interest rate index. Let’s break it down further… Fixed Margin. The fixed margin of a variable interest rate is based on the lender’s assessment of your anticipated ability to repay the loan, and it does not change over the life of the loan. On the other hand, the advantage of taking a variable student loan is that you start out with a lower rate of interest at the outset. If market continues to perform badly, interest rates will continue to stay lower than the rates on fixed-rate loans so you benefit from a lower overall payment.