I'm a little perplexed at a new discovery and would appreciate someone who knows a bit about the workings of student loans enlightening me.
Over the summer I applied for and accepted a loan from Discover for just under $8,000 at a rate of prime+1%. I was pretty happy when I found that, with a cosigner, the interest rate was so low. This was after applying to several places and finding this to be the lowest.
Fast forward to this semester, and I'm applying for student loans to cover this school year, fall and spring instead of just one semester. Loan amount is just under $17,000. I applied to three places, and just checked in with Discover to see what kind of interest rate they would offer on the loan. It was so low for the other loan, I like working with them on the phone and through their website, and I imagine repayment would be simplified if all my loans were from the same place, so I was hoping Discover would prove to be the best option again (hopefully at prime+1%). However, I got off the phone with them while ago and they're only offering me prime+4.25%. That seems to me to be a pretty big jump, and I can't imagine what has changed over the last three months since I applied for my summer loan.
I checked my credit report just a week ago, everything seems to be in order, and my score is 720. Not that it should matter since my parents cosigned. They have great credit, though I don't know a number. The only things they owe any money on are two loans for relatively new cars they bought in the last year or two, everything else is paid off, very low balances on their credit cards, always paid off in full, etc. Now, Dad is retired, so income is really low. And when I applied to SunTrust for a student loan they originally declined because of his "income to debt ratio" was too low. Could that have anything to do with the jump in interest rate from Discover?
I'm just kind of stumped at why this would be. Maybe it has nothing to do with me or my folks but is just the way of the world. Can anybody shed any light on this?