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Posted in Student Loans
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Question By
eclose0923

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UNCool CUGrad "help" email - BE CAREFUL
Credit Karma sent out an email promoting CUgrad as a way to lower student loan payments - fabulous if I can lower the interest from 7.5% to 4% right? HOWEVER after reading the FINE PRINT I see that the variable (adjusted every quarter) interest rate can pop up as high as 18%
Doesn't seem like such a great deal after all - Why would Credit Karma promote something like this???

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Variable Interest Rates

Helpful to 4 out of 4 people

Most student and consolidation loans have variable interest rates. The total interest rate on a loan is based on the government set prime rate plus an extra amount that reflects your credit history. The prime rate goes up and down depending on the economy, so as that changes, your loan's interest rate also changes. Right now the rate is extremely low, 3.25%. It has been at this level for quite sometime, so while most lending houses verify the rate to make necessary adjustments quarterly and some even monthly, you probably haven't seen a difference in your total rate in a while if at all. Once the prime rate changes however, you will see your rate change as well. What cuGrad is doing is absolutely nothing different from what other lending houses do as far as their variable interest rate practices.

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