Pay off student loansRefinance student loans

What’s a Variable vs. Fixed Rate for Student Loans?

variable vs fixed rate

This post may contain affiliate links. You can read my full affiliate disclosure here.

When you refinance student loans, you get to choose between a fixed and variable interest rate on your new loan. But what’s the difference between a variable vs. fixed rate on student loans, and which one is better? We’ll take a closer look at the differences between the two to help you decide which rate type makes sense for your finances.

What’s a fixed interest rate?

With a fixed interest rate, what you see is what you get. Your rate will stay the same over the life of your student loan. Even if the market fluctuates, your interest rate on your student loan is locked in.

When you refinance student loans, you can choose a fixed rate if you want your rate to stay constant over the life of your new loan. Note that all federal student loans automatically come with fixed rates.


  • With a fixed rate, you don’t have to worry about your rate increasing.
  • You can know upfront exactly how much you’ll spend on interest (unless you lower it further by refinancing again).


  • Fixed rates typically start out higher than variable rates. At the time of writing, for example, LendKey’s partner lenders offer fixed rates starting at 3.39% but variable rates starting at 1.90%. (Rates can change, so head to LendKey’s website to check its current offers.)

What’s a variable interest rate?

Unlike a fixed interest rate, a variable rate could change over time. Banks typically tie their variable rates to a market benchmark called the LIBOR, a rate which is calculated each day by the Intercontinental Exchange (ICE).

You can look at historical rates to get a sense of how they’ve fluctuated over certain time periods. But past changes don’t necessarily reveal anything about future fluctuations.

Unfortunately, there’s no way to predict how a variable rate could change in the years to come.


  • Your variable rate will likely start lower than a fixed one would, saving you some money on interest when your loan balance is at its highest.
  • Some lenders set a cap on variable rates, so it can only get so high.


  • Your variable rate could go up over time, perhaps costing you more in interest than a fixed rate would.

Variable vs. fixed rate on student loans: Which should you choose?

So, when it comes to a variable vs. fixed rate, which should you choose on your refinanced student loan? Well, there are a few factors to consider:

Your comfort level with risk

One is how comfortable you are with risk. A variable rate is more risky than a fixed one, because even though it starts low, it could go up over time.

If you don’t feel comfortable with this uncertainty, you might prefer a fixed rate for the peace of mind.

Your plans for student loan repayment

A second factor is how long you plan to spend repaying your student loans. If you’re stretching repayment out over 10, 15, or 20 years, you’re probably better off going with a fixed rate, since a variable rate could change a lot over all these years.

If, on the other hand, you plan to pay off your loans in a short period of time, say five years or fewer, you might be able to reap the benefits of a low variable rate without having to worry about it increasing all that much.

Crunching the numbers could help you decide

If you’re not sure whether the up-front savings of a variable rate are worth it, a student loan calculator could help you decide, such as this one from LendKey.

Enter both the fixed and variable rate to compare how much you’d spend or save. You can also customize your calculations based on your repayment term.

By crunching the numbers, you’ll have a clear sense of what to expect and a better understanding of which rate type, a fixed vs. a variable rate, makes sense for your student loans.

And before choosing any offer, make sure to shop around and compare offers from multiple lenders. That way, you can find the best possible rate for your refinanced student loan.

Want better rates? Here are the best banks to refinance student loans:

Variable rates start at...Fixed rates start at...Repayment termsWelcome bonus Check your rates
refinance student loans4.54%4.49%5 - 20 years$200Visit LendKey
refinance student loans4.99%4.47%5 - 20 years$200Visit Earnest
refinance student loans4.22%3.97%5, 7, 10, 15, and 20 years$120Visit Laurel Road
refinance student loans4.53%4.40%5 - 20 years$100 or $200, depending on the amount you refinanceVisit Credible
refinance student loans5.09%4.74%5, 7, 10, 15, and 20 years$100Visit SoFi
refinance student loans4.53%4.83%5, 7, 10, 15, and 20 years$100Visit ELFI