NEW YORK - Sallie Mae is lowering the interest rates it charges on its student loans. But that likely won't attract a surge of new borrowers.
Formally known as SLM Corp., Sallie Mae offers education loans with variable interest rates that tend to be higher than the rates on federal government student loans. Most federal loans come with a fixed rate of 6.8 percent.
As a result, private student loans are widely regarded as a last resort in paying for college, after scholarships, grants and federal loans have been exhausted.
The new cap on Sallie Mae's rate will be 9.875 percent plus LIBOR, which is the interest rate that banks charge each other for loans. The new lowest available rate will be LIBOR plus 2 percent, which reflects a half percent rate reduction.
It's worth noting that benchmark interest rates, such as LIBOR, are at historic lows, meaning the interest rates tied to them are poised to rise incrementally.