Ascent Funding LIBOR to SOFR

What is LIBOR?

“LIBOR” stands for London Interbank Offered Rate. LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short term loans and is among the most common interest rate indices used to make adjustments to variable rate consumer loans.

LIBOR is being phased out and will eventually be unavailable for use with any consumer loan products. As a result, we’re working diligently to implement a replacement index.

New variable rate Ascent loans applied for on or after January 1, 2022, will use the Secured Overnight Financing Rate (SOFR) as the benchmark index, which will be reflected in your loan documents.

Existing variable rate Ascent loans that use LIBOR as the benchmark index will continue to use LIBOR until we convert these loans to a replacement index, likely SOFR, at some point in 2022. We will keep you updated with important information about this conversion.

What is SOFR?

“SOFR” stands for the Secured Overnight Financing Rate. SOFR is a benchmark rate that is published by the Federal Reserve Bank of New York (FRBNY), which is based on the overnight borrowing costs of banks.  The rate is determined based on the previous night’s activity on the U.S. Treasury repurchase (repo) market.

New variable rate Ascent loans applied for on or after January 1, 2022, will use the Secured Overnight Financing Rate (SOFR) as the benchmark index, which will be reflected in your loan documents.

Why transition from LIBOR?

Due to changes in global markets as well as concerns about the accuracy and reliability of LIBOR in today’s global economy, regulators are retiring LIBOR and requiring that financial institutions transition to a different index.

Why SOFR?

The use of SOFR as a benchmark rate is popular because it is based on very large volumes of transactions in the U.S. money markets, which, according to the Federal Reserve Bank of New York (FRBNY), “makes it a transparent rate that is representative of the market across a broad range of participants and protects it from attempts at manipulation”[1].

When will Ascent transition from LIBOR to SOFR?

For all applications submitted for variable rate loans from Ascent on or after January 1, 2022, the benchmark or index used to determine the interest rates for those loans will be based on SOFR.  For applications for variable rate loans submitted prior to that date, the benchmark rate used by Ascent is LIBOR.

Existing variable rate Ascent loans that use LIBOR as the benchmark index will continue to use LIBOR until we convert these loans to a replacement index, likely SOFR, at some point in 2022.  We will keep you updated with important information about this conversion.

Where can I find the current LIBOR rates?

You can find current LIBOR rates here: wsj.com/market-data/bonds.

For LIBOR-based loans through Ascent, the index is the 1-Month LIBOR rounded to the nearest 1/100^th percent as published on the 10^th day of the prior month[2] and resets at the beginning of each month.

Where can I find the current SOFR rates?

Current SOFR rates can be found here, through the FRBNY: newyorkfed.org/markets/reference-rates/sofr

For SOFR-based loans through Ascent, the index is the 30-Day SOFR Average rounded to the nearest 1/100^th percent as published by FRBNY on the 10^th day of the prior month[3] and resets at the beginning of each month.

How will this affect me?

As noted above, this only impacts variable rate loans that are currently only offered for Ascent College borrowers and does not impact Ascent Bootcamp’s current product offerings or any other fixed rate loans. For Ascent variable rate college loans, there are key differences in the LIBOR and SOFR rates used by Ascent that may result in differences in the interest rate of the loan, depending on whether the application is submitted before January 1, 2022.

[1]

newyorkfed.org/arrc/sofr-transition#aboutsofr

[2]

As published on the Wall Street Journal’s website (or any generally recognized successor method or means of publication).  If the 10^th day of the month is not a business day where the banks of both New York and London are open for the transaction of business then the previous business day will be used.

[3]

If the 10^th day of the month is a date upon which the FRBNY is closed and/or does not publish the 30-Day SOFR Average, then the previous business day will be used.