How Do Variable Interest Rates Work?

When choosing a loan, you’ll likely encounter both fixed and variable interest rates. If you’re new to these terms, here’s what they mean and the pros and cons of choosing either. We’ll also discuss how Study Loans’ interest rates are calculated.

Fixed vs. variable interest rates

A fixed interest rate is fairly simple; it’s a set rate which will remain the same for the entire lifetime of your loan (i.e. how long you have to repay).

Variable interest rates are slightly more complex but easy enough to understand. A variable interest rate can change over the lifetime of your loan. It has two parts – first the fixed margin which is assessed through your ability to repay the loan. This part is locked in at the time you accept your loan. Second, the interest rate index which uses international interest rate standards to set a fair rate – this is the part which goes up or down.

Pros and cons

Deciding between a fixed or variable interest rate for your loan is mostly personal preference. To help you compare, we’ve compiled some pros and cons for each type of rate.

Interest Rate Type Pros Cons
Fixed ·Your repayments will not change, making them easier to calculate and helping you to budget

·They can be better for long-term loans (10-20 years) as interest rate indexes can fluctuate heavily over such a long time

·Whenever interest rates go down, you’re locked into the same rate and your loan is, in comparison, more expensive
Variable ·Often start lower than fixed interest rates which means savings straight away

·A good fit for short-term loans (months, 1-2 years) as interest rate indexes fluctuate less over the short-term

·Variable interest rates that begin lower than fixed ones can increase to meet the fixed rate or sometimes exceed them


Study Loans interest rates

At Study Loans, we use competitive variable interest rates to offer the best deals to our students. We’re transparent about all fees so you can plan and budget for your loan payments each month. Our risk-based pricing model considers your financial situation, the interest rate index data and how long is left on your loan. Interest rates are calculated daily and charged monthly to ensure we’re always giving our students the best deal. Learn more about our interest rates and loans.

Helping to make education accessible for all Australians

Education is the gateway to so many opportunities, and at Study Loans we’re aiming to open those gates to as many students as possible. We’re Australia’s first private loans provider for education with a wide range of courses available to choose from. Try out our loan calculator to see what loan you may eligible for.

Can I Afford to Study in Australia?

By far one of the biggest questions students have about their studies is ‘How can I afford this?’ The best way to build a realistic budget and understand your finances is to break down your costs. We’ve split potential study expenses into three categories – tuition, study resources and living expenses – to help you make sense of your budgets.

  1. Tuition

Even though domestic students in Australia have access to government assistance for higher education, it’s not a perfect system. Postgraduate Master’s degrees are not covered under the scheme and once you reach your loan limit, you’re ineligible for further financial assistance. There are also a range of short courses which are only a few thousand dollars, for which you may not wish to begin a HECS-HELP debt.

Luckily, there are other financial support systems available. Study Loans are Australia’s first private student loans provider with hundreds of available courses to choose from. Whether you’re considering a career in STEM, beauty, finance, business or any other area – we’ll have a partner institution to help you get certified. Use our Loans Calculator to check how much of your tuition can be covered or browse our full range of courses.

  1. Study resources

Every course requires equipment, textbooks and tools to help you succeed while learning. It’s important to budget for these expenses as there aren’t really any financial assistance options here. Big ticket items like computers and necessary software and textbooks will take up the bulk of this budget. Other hidden extras are much smaller, such as stationery and notebooks. To estimate these expenses, request a study curriculum so you can research the cost of resources you’ll need.

  1. Living expenses

Living expenses include everything from accommodation to groceries, transport, utilities, entertainment and lifestyle needs. The Department of Home Affairs expects international students to have a minimum of $21,041 to cover 12-months of living expenses. This is a good ballpark figure to start with and find ways to minimise. For example, living rent-free with family, searching for student discounts and riding a bike all cut down on these costs.

Making study affordable for every Australian

Education is the best pathway to a bright future. While it can be expensive, it’s also incredibly worthwhile.  Study Loans exists to support domestic students in Australia to achieve their education goals. Learn more about how our private loans work, or if you have any questions, call 1800 324 909 or email

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Study Loans Australia Pty Ltd (ABN 13 618 345 314) Australian credit licence 498589
whose registered office is at Level 5, 570 St Kilda Road, MELBOURNE VIC 3004.