Which lender is best for an undergraduate private student loan? Should interst rate be based on PRIME or LIBOR
One good place to compare interest rates on loans and credit cards is bankrate.com. They’re pretty much the standard – when you see a newspaper story talking about the average national mortgage rate for the week, they’re often quoting information from bankrate.com (which they’ll mention by name in the report)
Bankrate.com has a separate page for nationally-available educational loans, so I’ve linked directly to that page below.
As for Prime or Libor – they’re both tied to the same general international economic factors, and tend to shadow one another.
Prime is based on the rate that’s used when American banks exchange money between themselves, the LIBOR (which stands for London Interbank Offered Rate) is sort of the same thing for banks in the UK.
Both have a history of considerable volatility. The LIBOR, which is 3.31% now, has been as high as 7.453% since 2000, and as low as 1.2014. The prime is even more volatile. Keep in mind that your loan won’t be based strictly on the prime or LIBOR, but prime or LIBOR plus or minus something – so it’s not as if you just look to see whether the prime or LIBOR is the lower of the two.
NEVER borrow more than you absolutely must from private student lenders. In the world of educational assistance, private loans are far and away the most expensive form of aid, and therefore the aid that take the longest to pay back and the aid that will impact your personal finances for years and years to come.
