skip to main content

Changes to Loan Interest Rate Calculations

Part of the way the interest rate is calculated on many private student loans is changing. Learn more:

The benchmark used to calculate the variable interest rate of many student loans, possibly including yours, will change from the London Inter-Bank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR).

Over the past several years, the LIBOR benchmark has become less reliable and more prone to issues.  As a result, federal experts identified several alternative methods to calculate interest rates.  Since then, regulators and Congress have laid out a plan to transition away from LIBOR. You should see this change reflected in financial markets and on your variable interest rate loans by the middle of 2023, at the latest.

As a result of Congress passing the Adjustable Interest Rate (LIBOR) Act in 2022, most LIBOR-based loans will transition to using SOFR. Congress has determined that the new rate benchmark is comparable to the previous one, which means the new rate should not change how much you pay over time, on average.

Since this is a shift from one interest rate index to another, this is not a refinance of your student loan; it is merely a change to the benchmark we use to determine your variable interest rate. This will happen automatically, and you should not notice a difference in the way we service your loan.

  • If you have a fixed rate loan with us, there is no change to your loan at all.
  • If you have a TREE loan with us (indicated on your statement by a Lender Name of 832995), there is no change to your loan at all.
  • If you have a FFELP loan (Stafford, PLUS, FFELP consolidation, SLS, indicated on your statement by a Lender Name of 832994) with us, there is no change to your loan at all.
  • If you applied for and received a variable rate EDvestinU loan from us on or after December 9, 2021 (indicated on your statement by a Lender Name of 632996), your loan is already indexed to SOFR, so your loan is all set, and no further changes are necessary.

The new rate does not impact any other terms, conditions, or benefits associated with your student loan.

What happens next?
We will send additional notifications to you via e-mail, if applicable, and USPS prior to the implementation of the change. The change will be effective at the beginning of July and does not require any additional action on your part. 

Will my monthly payment change?
On average, your new interest rate should be comparable to the old rate. That means you will generally pay the same amount that you would have before the change.  

As a variable rate loan, your monthly payment amount may have changed on a regular schedule since your loan was disbursed. It will continue to change on a comparable schedule according to the terms and conditions of your loan. Only the benchmark used to calculate the variable interest rate will change.

What is my new interest rate?
Your interest rate remains variable. It will change with the same monthly frequency as how it changed before, based on the terms and conditions of your loan.

We will calculate your interest rate using the SOFR-Based Spread-Adjusted benchmark index plus whatever margin you originally agreed to when taking out the loan.   For example, if you have a 1-month LIBOR + 6.00% loan, you will soon have a 1-month spread-adjusted CME Term SOFR + 6.00% loan.

Will this impact my other student loans?
Federal student loans (Stafford, PLUS, FFELP or Direct Loan consolidations) are not impacted by this change. Those loans have interest rates set by law, so no update is needed.

Other private education loans may be impacted. If your loans used LIBOR, they will change to a new benchmark index.

Fixed rate loans are not impacted by this change, at all.

Where can I go to see the new SOFR rate?
The new SOFR rate, for the year starting July 3, 2023, can be accessed here:

Then click on the View Consumer Rates Summary box.  The index for your loan is in the 1-month column.

Can I opt-out or are there other options?
No, you cannot opt out, because LIBOR will not be available after June 30, 2023. Congress has provided the guidance on how we can adjust the benchmark for your loan. This ensures that both you and your loan holder have a predictable and stable way to calculate your rate.

Could this happen again?
Federal regulators and Congress took steps to reduce the chances of the benchmark changing again. Although there is always the possibility of a similar change in the future, you should not experience any disruptions.

How does SOFR differ from LIBOR?
SOFR has several characteristics that make it much safer and more stable than LIBOR. It is:

  • Based on an active underlying market with a diverse set of borrowers and lenders
  • Based entirely on transactions (not estimates)
  • Produced in compliance with international best practices
  • Included in multiple market segments, to ensure robust transaction volumes in a wide range of market conditions


What if I have more questions?
That’s what we’re here for!  

Call us at 800.719.0708

Monday - Thursday 8AM - 8PM ET
Friday 8AM - 6PM ET

Fixed Rate and Variable Rate

Loans of all types, not just student loans, are either fixed rate or variable rate.  

  • With fixed rate loans, the interest rate doesn’t change for the life of the loan.
  • With variable rate loans, typically there’s two components: an interest rate index and a margin. The rate can go up or down, depending on changes to an interest rate index. It could be the Prime Rate, or a U.S. Treasury Bill rate, or a common index called LIBOR. The margin doesn’t change.