Best-Variable Rate Student Loans in 2025

About 13% of all money borrowed for higher education comes from private student loans and other nonfederal lenders, according to the College Board. Unlike a federal student loan, a private loan may allow you to choose a variable interest rate, which typically has a lower initial rate than a fixed-rate loan. However, variable-rate loans have downsides, too.

This guide covers the best variable-rate student loans, how to compare your options, and when a variable rate may be right for you. Abe stands out as a top private student loan lender for variable-rate loans based on its competitive variable rates, high annual loan limits, and unique on-time payment discount, earning it 4.2 out of 5 stars.

Current private student loan rates

Best variable-rate student loan lenders of 2025

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best student loan lenders for variable-rate student loans, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

• Repayment options: 30%
• Eligibility: 25%
• Interest rates: 20%
• Loan terms: 15%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

What is a variable-rate student loan?

A variable-rate student loan has an interest rate that can change over the life of the loan. This differs from a fixed-rate student loan, where the interest rate always remains the same. This also means that fixed-rate loans have the same monthly payment for the entire repayment period.

The interest rate on a variable student loan is tied to an index or benchmark interest rate, such as the Secured Overnight Financing Rate (SOFR), instead of being fixed. Typically, the introductory interest rate on a variable loan is lower than a fixed-rate loan, but it's not guaranteed to stay at that level. Anytime the index goes up or down, the interest rate will change to reflect the movement in the index.

Additionally, when the interest rate fluctuates, it also affects your monthly payment amount. You might see a monthly change to your student loan payment, which can make budgeting a little more difficult with a variable-rate student loan.

These factors often make variable-rate loans less desirable in the eyes of borrowers.

“I rarely run into people looking for variable-rate student loans,” says Jack Wang, a college financial aid adviser at Innovative Advisory Group. “Almost everyone I've dealt with is looking for fixed-rate loans.”

Check Out: The Pros and Cons of Student Loans: Are They Right for You?

Who should consider a variable-rate student loan?

Even though variable-rate student loans tend to be less popular than fixed-rate loans, they can be a good choice for some borrowers, especially if the initial interest rate is very low or guaranteed for a certain amount of time.

In particular, you might want to consider a variable-rate student loan if you:

• Plan to quickly repay the loan: If you intend to pay off the loan before the interest rate changes, a variable-rate student loan with a low initial rate could be one of your cheapest borrowing options.
• Plan to refinance soon: If you expect to refinance a variable-rate loan before the end of the initial rate period, this could be a savvy way to save money. 
• Expect interest rates to fall: You might opt for a variable-rate loan if “you think we're in an economic environment where interest rates are expected to fall in the future,” Wang says.

How to compare variable-rate student loans

If you're interested in a variable-rate student loan, it's important to compare several loans to make sure you're getting the best one for your financial needs. Here are the specific factors you'll want to consider:

• Introductory interest rate: This is usually set at a lower “teaser” rate so the loan looks more affordable compared with a fixed-rate loan. Make sure you know how long the introductory rate will last and how the rate will change once the introductory period ends.
• Rate caps: These caps are the maximum level of interest you might be charged, as well as the maximum number of times the rates can change. “For variable-rate loans, the most important factor is to understand the limits and frequency of potential changes,” says Wang. “Most loans will have a periodic (e.g., annual) and/or a lifetime cap on how much rates can change.”
• Loan terms and repayment flexibility: How long is the repayment term and do you have multiple options to choose from?
• Fees: Make sure you understand any fees that might apply to your loan, including origination fees, prepayment penalties, or late-payment fees.
• Forbearance options: If you need a payment pause for any reason, does your private lender offer any kind of forbearance?
• Cosigner release: If you apply for your loan with a cosigner, your lender may allow you to release the cosigner after a predetermined number of on-time payments, although not all lenders offer cosigner release.

Read More: How To Take Out a Student Loan

Variable vs. fixed student loans: Which is better?

The right kind of student loan depends on the borrower, their financial situation, and current economic conditions.

A variable-rate student loan might offer more advantages to you if you plan to quickly repay or refinance the loan, or it might be the better option when interest rates are likely to fall in the future.

Fixed-rate loans may be the safer option for borrowers who intend to repay their loans over a longer period of time or when the economic outlook suggests higher interest rates in the future.

See Also: Fixed- vs. Variable-Rate Student Loans: How To Choose the Best Option

When deciding between a fixed- or variable-rate loan, Wang suggests that borrowers focus on their monthly cash flow.

“People get stuck on the introductory rate for variable loans,” he says. “They understand that the rate can change, but they don't consider the impact the higher payment will have on their overall budget.”