Variable rates are subject to change throughout the life of the loan. Student loan lenders typically set variable rates based on an economic indicator known as the London Interbank Offered Rate, or Libor.

Do variable interest rates change?

A variable interest rate fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically with the market. ... Variable interest rates can be found in mortgages, credit cards, corporate bonds, derivatives, and other securities or loans.

Do Variable rates change monthly?

A variable rate mortgage will fluctuate with the CIBC Prime rate throughout the mortgage term. While your regular payment will remain constant, your interest rate may change based on market conditions. This impacts the amount of principal you pay off each month.