# How does fed cutting federal fund rate affect student loan

If fed cuts rate, it means it's cutting federal fund rate right? then why do loans like credit card and stuend loan? those aren't like Mortgage rate which the fed cuts its rate by buying MBS

• The Fed doesn't cut mortgage rates by buying MBS. MBS didn't even exist until maybe a decade ago. The fed funds rates affects the rate at which banks can borrow from the fed, and hence the rate banks are willing to lend to people. Only in the case of – Mox Nov 4 '20 at 0:15

This affects among others also student loans (when they are provided by commercial banks - some places have government provided and subsidized $$0\%$$ interest student loans). However, of course if you already had a loan in a past it will only be affected if you took it at variable interest rate or if you are taking out a new loan, the fixed interest rate loans won't be changed retroactively.