Effective April 1st, U.S. Bank has lowered the minimum interest rate on their No Fee Education Loan from 5.20% (Prime + 1.95%) to 4.20% (Prime + .95%). Their maximum rate remains unchanged at 12.20% (Prime + 8.95%). Since lenders do not make public how their loans are distributed across the range of interest rates, it is challenging to determine exactly how this impacts future borrowers (i.e., impossible to know what their credit requirements are to earn their lowest rate loan) This change puts U.S. Bank back in line with other for-profit lenders (excluding Citibank) whose minimum rates are all currently below 4.25% (see SLA Private Loan Options here). Citibank's minimum rate is currently 5.13%.
For those trend spotters out there, US Bank is the second lender in the last month to announce an interest rate reduction. On March 1st, Chase lowered their maximum interest rate on their private loans to 8.75%. With schools in the process of selecting lenders for 2010-11, it will be interesting to see if there are more interest rate reductions to come.
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