There are various types of student loans all offering varying terms and different rates of interest. The interest rates can affect the total amount paid on a student loan. A fixed rate loan means that the student is required to pay a certain rate of interest that does not rise or fall throughout the loan term. By agreeing to a fixed rate, they may have access to a specialized student loan offering a low-capped interest rate. The benefits to a fixed rate loan include the knowledge of the exact repayments due over the loan term. This is useful in regards to planning the repayments of the loan. The downside is that if the interest rates fall below the fixed rate on your loan, then you are still obligated to pay the agreed rate of interest and not the lower rate.

The decision to select a fixed rate loan depends entirely on the person's requirements and financial options in regards to repayments. Most federal education loans are eligible for consolidation and in this case the student would be eligible to qualify for a uniquely low rate of interest. The interest rate is decided by finding the lowest average rate of interest over a time period. This interest is then fixed throughout the loan term.

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