With peak lending season upon us, six lenders have recently changed the margins on their private student loans with the overall trend being down (four of the six reduced margins). Here is a table (sorted alphabetically) showing both the current rates and the previous rates:
| Current | Previous | ||||||
| Max. | Max. | ||||||
| Lender name | Low | High | Fees | Low | High | Fees | |
| Chase | 4.14% | 9.79% | 0% | 3.76% | 8.76% | 0% | |
| Citibank | 3.63% | 11.38% | 3% | 4.13% | 11.88% | 3% | |
| Citizens | 3.35% | 11.60% | 0% | 3.35% | 13.35% | 0% | |
| Sallie Mae | 2.88% | 11.25% | 0% | 2.88% | 10.25% | 0% | |
| SunTrust | 4.13% | 11.63% | 0% | 4.13% | 11.88% | 0% | |
| Wells Fargo | 3.50% | 9.99% | 0% | 4.25% | 11.24% | 0% |
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Observations:
- Wells Fargo and Citizens had the most dramatic declines with Wells Fargo reducing their lowest rate by 0.75% and their maximum rate by 1.25% and Citizens dropping their maximum rate by 1.75%. Given the small percentage of borrowers able to get the "as low as" interest rate, reductions in the maximum rates are more significant for borrowers.
- Sallie Mae's increase in their maximum rate (to 11.25%) corresponded with a new payment option of a fixed $25 payment while the student is in school. It would seem likely that most borrowers will select this payment option over the interest-only payment that Sallie Mae also offers. Those selecting the interest-only payment option will have an initial interest rate range of 2.88% to 10.25%.
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Check out SLA's Private Loan Options page for a neutral and comprehensive list of private loans that can be a useful resource for your students (for a list of schools using SLA Private Loan Options, see this earlier post). Why keep track of these lender changes, when SLA can do the job for you?
Tim - how do you know that the high range is the more meaningful number without knowing specifically the distribution of borrowers along the entire rate range? Just curious if there is data out there we're missing. Hope you're enjoying your summer!
Peter Carroll
http://www.overturemarketplace.com
Posted by: Peter Carroll | July 02, 2010 at 05:34 PM