Sallie Mae to Drop Student Loan Interest Rates in April
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UPDATED: Mar 8, 2013
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Sallie Mae, one of the nation’s largest private student loan lenders, has announced that it will be offering lower interest rates for graduate borrowers.
Effective April 1, 2013, borrowers of the Smart Option Student Loan will be able to obtain variable- or fixed-rate financing featuring these new low interest rates.
The new variable interest rates will range from 2.25 to 7.5 percent and are tied to the Libor index. Fixed-rate financing will be set between 5.75 and 8.875 percent.
A Sallie Mae news release explained that these new low rates compare favorably when held against the government’s Direct PLUS Loan interest rates.
Patricia Christel, Vice President of Corporate Communications at Sallie Mae, told loans.org that Sallie Mae chose the month of April for several reasons that benefit borrowers.
“April is the beginning of the financial aid award letter season for the coming academic year, and the time when many students start to make decisions on how to pay for college,” she said.
Libor, the infamously manipulated interest rate index that made headlines last year, was also chosen for a specific reason.
“Libor is a commonly used index for variable rate loans,” explained Christel.
Despite these new low interest rates, borrowers are advised to use caution before borrowing student loans from Sallie Mae. There are other avenues of college financing, including the government’s federal student loan program.
“Which loan program is ‘better’ is an individual decision dependent on the student’s circumstances and preferences,” said Dewey Knight, Associate Director of Financial Aid at the University of Mississippi, in the news release. “We highly recommend that our students research both loan programs and choose the option that best meets their individual needs.”
Even Sallie Mae echoed Knight’s wise and cautious advice.
“We encourage graduate students to carefully weigh all available financing options, rates, fees, and total costs along with their career plans in mind,” said Christel.
Given the planned date of this development, Nikki Lavoie, Communications Manager for Sallie Mae, ensured loans.org that the lowering of interest rates on April 1 is not an April Fools’ joke.