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Prime Index & APR
Estimate the cost of your loan
(for Certified Private Loans only)
About the Prime Index
How is it calculated?
For a Certified Private Loan the Interest Rate is calculated as the Prime Index plus the applicable Margin percentage.
The interest rate will never be higher than 18% per year, regardless of the Prime Index.
When does the Prime Index change and how is its value determined?
The Prime Index will change quarterly on each January 1, April 1, July 1 and October 1. On each change date the Prime Index is the highest rate of interest listed as the prime rate in the Money Rates section of The Wall Street Journal on the first Friday of the calendar month preceding the interest rate change date. If The Wall Street Journal is not published or the prime rate is not listed on the first Friday, then the next published value of the prime rate will be used to set the Prime Index. The Prime Index is a pricing index and does not represent the lowest or best interest rate available to a borrower at any bank at any given time.
What is the current Prime Index value?
| Quarter | Prime Index | Set as WSJ prime rate on |
|---|---|---|
| Jan 1 – Mar 31, 2010 | 3.25% | Dec 4, 2009 |
| Oct 1 – Dec 31, 2009 | 3.25% | Sep 4, 2009 |
| Jul 1 – Sep 30, 2009 | 3.25% | Jun 5, 2009 |
| Apr 1 – Jun 30, 2009 | 3.25% | Mar 6, 2009 |
| Jan 1 – Mar 31, 2009 | 4.00% | Dec 5, 2008 |
| Oct 1 – Dec 31, 2008 | 5.00% | Sep 5, 2008 |
| Jul 1 – Sep 30, 2008 | 5.00% | Jun 6, 2008 |
| Apr 1 – Jun 30, 2008 | 6.00% | Mar 7, 2008 |
| Jan 1 – Mar 31, 2008 | 7.50% | Dec 7, 2007 |
| Oct 1 – Dec 31, 2007 | 8.25% | Sep 7, 2007 |
| Jul 1 – Sep 30, 2007 | 8.25% | Jun 1, 2007 |
About Interest Rates and APR
What is an Interest Rate?
- The interest rate is used to calculate the actual amount of interest that accrues on your loan
- For example, if your principal loan balance is $10,000 and your interest rate is 10% (and you make no payments), then your loan will accrue $1,000 (= $10,000 x 0.10) in interest after one year
What is an APR?
- The Annual Percentage Rate (APR) takes into account the interest rate, fees (if any), length of your deferred phase and how interest capitalizes
- The APR is a number you can use to compare loans from different lenders since their interest rates, fees, deferment options and capitalization policy may differ from our Certified Private Loan
- The APR does not represent the rate at which interest accrues
- The APR may be different during the deferred phase and the repayment phase
Why would the Interest Rate be different from the APR?
- Our Certified Private Loan has zero origination fees, automatic in-school deferment and no interest capitalization during the deferred phase – as a result, the deferred phase APR will be less than the interest rate
- For our loans, accrued interest capitalizes at the start of the repayment phase – since we do not charge repayment fees, and assuming you make all your scheduled payments on time, the repayment phase APR will be equal to the interest rate
Monthly Payment Examples
The following two examples depict the APR and monthly payment on a $10,000 Certified Private Loan. The APR and monthly payment amounts may change if the interest rate changes.
In these examples interest rates are based on Prime Index of 3.25%.
College Students
| Principal loan amount: | $10,000 |
| Origination fee: | $0 |
| Repayment period: | 180 monthly payments (15 years) |
| Grace period: | 6 months |
| Interest Rate1 | Lowest Prime Index plus 1.00% (Interest Rate = 4.25%) |
Highest Prime Index plus 7.75% (Interest Rate = 11.00%) |
||||
| Loan taken in | Deferred Phase APR |
Repayment Phase APR |
Monthly Payment | Deferred Phase APR |
Repayment Phase APR |
Monthly Payment |
|---|---|---|---|---|---|---|
| 1st Year (Freshman) | 3.98% | 4.25% | $88.82 | 9.43% | 11.00% | $166.82 |
| 2nd Year (Sophomore) | 4.06% | 4.25% | $85.63 | 9.84% | 11.00% | $154.32 |
| 3rd Year (Junior) | 4.14% | 4.25% | $82.43 | 10.30% | 11.00% | $141.82 |
| 4th Year (Senior) | 4.22% | 4.25% | $79.23 | 10.79% | 11.00% | $129.31 |
1 The borrower's actual interest rate might be different from the one depicted above and will be based on the borrower's and cosigner's credit information.
Graduate Students
| Principal loan amount: | $10,000 |
| Origination fee: | $0 |
| Repayment period: | 240 monthly payments (20 years) |
| Grace period: | 9 months |
| Interest Rate1 | Lowest Prime Index plus 1.00% (Interest Rate = 4.25%) |
Highest Prime Index plus 7.75% (Interest Rate = 11.00%) |
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| Remaining years of graduate study | Deferred Phase APR |
Repayment Phase APR |
Monthly Payment | Deferred Phase APR |
Repayment Phase APR |
Monthly Payment |
|---|---|---|---|---|---|---|
| Four | 3.96% | 4.25% | $73.76 | 9.33% | 11.00% | $154.30 |
| Three | 4.04% | 4.25% | $71.13 | 9.72% | 11.00% | $142.94 |
| Two | 4.11% | 4.25% | $68.50 | 10.15% | 11.00% | $131.59 |
| One | 4.19% | 4.25% | $65.87 | 10.62% | 11.00% | $120.23 |
1 The borrower's actual interest rate might be different from the one depicted above and will be based on the borrower's and cosigner's credit information.
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