Your offer with us will include a variable interest rate that is made up of a fixed margin rate applicable to your unique loan application, and a variable base (or benchmark) rate. The benchmark rate we use is the 30-day average SOFR and is calculated as the average of the SOFR rates observed over the preceding 30 calendar-day period.
What is SOFR?
SOFR is based on the rates that financial institutions pay one another for overnight loans or repos and is published daily by the Federal Reserve Bank of New York (Fed). In 2017, a group of large financial institutions known as the Alternative Reference Rate Committee (ARRC) chose SOFR which was endorsed by the UK Regulator, the Financial Conduct Authority.
The average SOFR rate over the last 6 years has been 1.5%, and you can read all about this rate in the article below.
Things you need to know
- All lenders offering loans with variable interest rates track against a specific benchmark rate
- One of the main causes for increases in benchmark rates is the impact of macroeconomic conditions of a country when inflation rises
- Take a look at the history of the SOFR rate from its first publication in April 2018
You are only required to repay your Prodigy loan 6 months after your classes end as a full-time student (3 months after disbursement as a part-time student). You are, however, welcome to repay your loan at any time with no penalties where you can reduce your interest charges. Since you’ll only need to repay your loan later, it’s important to consider the long-term performance of the SOFR benchmark rate.