Interest Rate & Payment Change

Interest Rate & Payment Change Questions

When will I receive notice of my annual interest rate change?
The new interest rate for your MOP loan is calculated approximately fifteen days before the interest rate change - which is forty five days before any payment change will take effect. A letter detailing the change will be mailed to you after the calculation is completed.
How is my new interest rate determined?
All MOP loans are tied to the most recently available four-quarter average rate of return earned by the University of California's Short-Term Investment Pool plus an administrative fee component of .25%. The annual maximum adjustment, upward or downward, is capped at 1% and is adjusted on the anniversary date of the loan. The anniversary date is the date upon which the twelfth payment is due and occurs on the same calendar month and day each year. For example, if the first payment on your loan was made on July 1, 1995, the anniversary date of your loan will be June 1st of each succeeding year. Loan rates for this program generally fluctuate less than most indices used by other institutional lenders (see the Historical Rate Index and chart).
How is my new payment determined?
The outstanding loan balance is amortized over the remaining term based on the new interest rate. As interest is paid in arrears, the payment change will occur one month after the interest rate changes.