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There Are More Options Than Just Variable Rate Loans For Students Heading Off To College

All the graduation celebrations are behind us, but the summer will go quickly and many families of college-bound students may be finding themselves holding a bill for remaining costs after financial aid and scholarships are applied. Turning to variable-rate private student loans is a risky move, and one that a majority of families are taking. “Given the current financial environment, with rising interest rates, families who choose a variable-rate loan to pay for college take a risk with rates based on benchmark indexes that change over time,” says Steve McCullough, President and CEO of Iowa Student Loan. “A fixed interest rate is locked in for the entire life of the loan and is a less risky option when rates are rising.” According to a report from LendEDU, 94 percent of private student loan applicants surveyed chose a variable interest rate at an average of 7.81 percent. There are alternatives, however, as state-based non-profit lenders, like Iowa Student Loan, can offer fixed rates. Applicants with credit scores of 739 can receive a fixed rate of 6.52 percent with deferred payments during college. They also offer competitive private student loan options for student borrowers, often with creditworthy cosigners, called the Partnership Advance Education Loan. And parents borrowing on behalf of their student to help cover college costs can apply for the College Family Loan, which includes fixed interest rates that are lower than the Federal PLUS Loans for parents. More details about these options as well as additional tools and resources to help families plan for college expenses can be found at www.IowaStudentLoan.org.

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