Will your student loans be affected by increased interest rates?
Yesterday, I asked how the Bank of Canada's decision to raise interest rates would affect student loans. Terry Wong, Vice President, Treasury and FX, at Vancity Group was able to provide answers.
Each individual's situation is unique and there are a variety of different factors involved, including the term of the loan, whether it is linked to prime interest rates and any concerns about market inflation, wrote Wong in an email.
"For example, if a student’s loan is based on short-term rates and the prime changes, then they will see their rates affected. Whereas on a fixed rate loan, there may be some time before seeing any impact, and in some cases, this increase may not have any direct relationship with the change in interest rates."
Students and their parents might also want to note that while the Bank of Canada rate may be the primary rate, the actual rate that borrowers and lenders receive on the market will depend on their personal situation and needs, and the rate may be more, or less than the short-term primary rate, Wong said.