Student Loan LIBOR Rate
Private college student loan interest rates are calculated based on a published index such as the Prime Rate or LIBOR (London Inter Bank Offering Rate) plus a margin based on your credit score and credit history. If a cosigner is required, your interest rate will be determined based on your credit, and your cosigners' credit.
Click for more information on the Prime Rate.
What does LIBOR stand for? LIBOR stands for London InterBank Offer Rate. It is the interest rate at which lenders can borrow funds from other banks, and is based on the average interest rate paid on deposits of U.S. dollars in the London market. The rate is set by the British Bankers Association and released daily.
How does this affect my private student loan? Typically, alternative student loans are based on either a 1-month or 3-month average of the LIBOR index. With student loans, the LIBOR rate is set by the lender based on you credit history and which repayment plan you elect to use. You can ask your lender if your private student loan interest rate is based on either the Prime Rate or LIBOR, so you know how they arrive at the rates you are offered.
What is the current LIBOR rate? You may use the widget below (courtesy of WolframAlpha), for the most up-to-date figures.
Can I choose between Prime and LIBOR? You may not choose which index your lender uses when processing your alternative student loan. Be sure to compare lenders before you apply so you know which lender uses which index. It is common for a lender to provide a different interest rate based on the index it uses.