Fixed vs. variable rates: Which should Nepali students choose?
If you’re a Nepali student considering aninternational student loan, one of the most important decisions you’ll face is choosing between a fixed or variable interest rate. This choice affects how much you’ll repay over time, how predictable your monthly payments will be and how much financial risk you’re willing to take on while studying in the U.S. or Canada.
While both options have pros and cons, the best choice depends on your personal situation, risk tolerance and postgraduation plans. This article breaks it down so you can decide what works best for you.
What is a fixed interest rate?
A fixed rate student loan ensures your interest rate stays the same for the entire life of your loan, regardless of what happens in the broader economy.
Pros of fixed rate student loans
- Predictable monthly payments
You’ll always know what you owe, making it easier to budget during and after school.
- No surprises
Even if interest rates rise globally, your rate will not change.
- Good for long-term planning
This is especially helpful if you’re supporting family members back home or sending money to Nepal after graduation.
Cons of fixed rate student loans
- Higher starting rates
Fixed rates can be slightly higher than variable rates at the beginning.
- Less benefit if markets drop
If interest rates fall globally, you won’t see a lower rate on your loan.
Fixed rates work well for students who value stability and want to avoid financial surprises, especially during their optional practical training (OPT) or post-graduation work permit (PGWP) job search period.
What is a variable interest rate?
A variable interest rate can change over time. It’s typically tied to a benchmark rate, such as the Secured Overnight Financing Rate (SOFR) in the U.S. or a similar rate in Canada. If that benchmark goes up or down, your interest rate will follow.
Pros of variable-rate student loans
- Lower starting rate
These loans often begin with a lower rate than fixed-rate loans.
- Potential savings
If global interest rates stay low, you could pay less in total interest over the life of your loan.
Cons of variable-rate student loans
- Payment uncertainty
Your monthly payments could increase if interest rates rise.
- Difficult for budgeting
Financial planning is harder when your payments keep changing.
- Greater risk if you don’t earn U.S. or Canadian income after school
If your rate increases but your income remains limited or in Nepali rupees, repayment can become stressful.
Variable rates can work well for students who expect to pay off their postgraduate education loan quickly or who are comfortable with financial risk.
A quick comparison: Fixed vs. variable
|
Feature |
Fixed interest rate |
Variable interest rate |
|
Monthly payment |
Always the same |
Can change over time |
|
Risk of rate increase |
None |
Rates can go up |
|
Initial rate |
Can be higher |
Usually lower |
|
Good for |
Long-term planning and stability |
Short-term loans or high-risk takers |
|
Bad for |
Taking advantage of market drops |
Budgeting or tight cash flow |
How MPOWER Financing helps Nepali students choose international student loans wisely
MPOWER Financing offers fixed interest rate loans to eligible Nepali students pursuing degrees in the U.S. or Canada. That means your loan terms stay the same from start to finish, no matter what happens with global interest rates.
With MPOWER, there’s:
- No collateral or cosigner required
- Transparent fixed interest rates
- No hidden fees or payment penalties
- Support for students at over 500 U.S. and Canadian universities
- Extra resources through Path2Success, including visa, budgeting and job search support
MPOWER loans are designed to help you plan confidently while focusing on your degree and long-term career. If you’re comparing master’s degree funding options and want to avoid financial uncertainty, a fixed-rate MPOWER loan can offer the stability you need.
Why student loan interest rates matter more for Nepali students
Many Nepali families are converting savings from rupees to U.S. or Canadian dollars to support their children’s education. A small increase in interest rates can create real financial stress, especially when that increase is combined with exchange rate fluctuations or unexpected job search delays.
Additionally, students on OPT or PGWP may not find high-paying jobs right away. Fixed-rate loans help remove one layer of uncertainty during that transition period. They also make it easier to plan remittances or repay family support without worrying about your loan suddenly becoming more expensive.
For many Nepali students, fixed-rate loans offer more peace of mind, even if the rate starts out slightly higher.
