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Comparing 3Rivers’ Student Loans: Fixed vs. Variable

Since 2009, 3Rivers has offered student loans to help members pursue higher education. As part of our education programs, we work with students to find ways to minimize student loan debt. Our hope is to reduce the cost of college by choosing an affordable university, picking a career that will sustain the student's desired lifestyle, and funding college in the most efficient ways possible with grants and scholarships first. We offer a student loan only after other resources are exhausted. In addition to our existing variable rate student loan, we now offer a fixed rate student loan for families looking to better manage college debt.

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What's the difference between a fixed and variable rate loan?

A fixed rate loan is just that - fixed. It is a loan with a set, unchangeable interest rate. This provides consistency and stability over the course of the loan, and means there is no worrying about what may change. When taking the loan, the borrower knows exactly what the interest rate will be over the repayment period. Taking a fixed rate loan "locks in" the interest rate today and makes the future more predictable.

Variable rates, on the other hand, can change. We base our variable rate loans on the Prime Index - a federal interest rate published in the Wall Street Journal. This means that when the US economy does well, interest rates increase. When periods of recession come and the economy doesn't do as well, interest rates go down. Typically variable rates are offered at a lower starting rate than a fixed rate loan because of this unpredictability. Visit this page for the history of what the Prime Index has done since 1947.

Both loans operate the same way at 3Rivers, and neither carries origination or early payoff fees, making it one of the most affordable options available. Your choice comes down to personal preference.

Fixed Rate

  • Doesn't change - your rate today is what you'll always have
  • Pay for this stability with a slightly higher rate
  • Payments don't change over the repayment period of the loan
  • Borrow up to $40,000 over 5.5 years
  • Repay the loan over 10 years after graduation

Variable Rate

  • May change as the economy changes - stronger economy than today, higher rate. Weaker economy than today, lower rate.
  • Payments may change occasionally as the Federal Reserve adjusts the Prime Index
  • Borrow up to $60,000 over 5.5 years
  • Lower offered rate up front
  • Repay the loan over 20 or 25 years after graduation

Which is right for me?

There are a lot of "what-if's", and no one piece of advice will apply to all borrowers. Here are some considerations:

  • How much will you need to borrow? Having a longer repayment period will keep payments more manageable on high balance loans.
  • How quickly will you pay off the loan? The lower offered variable rate may be a better option for you if you intend to pay off the loan during school or quickly after graduation.
  • How comfortable are you with change? Fixed rates don’t change, but this stability comes at a higher up-front cost. A variable rate may adjust, but typically comes with a lower interest rate up-front.

Speak with one of our college funding advisors to determine what will be best for your unique situation!

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