Secured Overnight Financing Rate (SOFR)

The interest rates of the student loans offered by Prodigy Finance track various SOFR rates:

• Loan finalised prior to 1 August 2017: 30-day Average SOFR (from 8 October 2024)

• Loans finalised after 30 June 2023: 30-day Average SOFR (from 8 January 2024 - Loans finalised from 1 July 2023 to 7 January 2024 were switched to the 30-day Average SOFR benchmark on 8 January 2024).

• Loans finalised after 30 July 2017 and prior to 1 July 2023: 3-month CME Term SOFR*

If you have multiple loans with Prodigy Finance, your loans may track different base rates, depending on when they were finalised and the currency of the loan.

We adjust the variable interest rates of our loans quarterly on 8 January, 8 April, 8 July and 8 October tracking these benchmarks published at the end of the previous business day. If the base rate is less than zero percent, we will apply zero percent for purposes of calculating the interest rate.

What is SOFR?

SOFR is based on the rates that financial institutions pay one another for overnight loans or repos and is published daily by the Federal Reserve Bank of New York (Fed). In 2017, the Federal Reserve formed a group of large financial institutions known as the Alternative Reference Rate Committee (ARRC) to work on finding an alternative to LIBOR. They ultimately chose SOFR and this choice was endorsed by the UK Regulator, the Financial Conduct Authority.

30-day Average SOFR

The 30-day Average SOFR is the benchmark rate that we apply from 8 January 2024 to the interest rate of all loans finalised after 30 June 2023 and from 8 October 2024 to loans finalised prior to 1 August 2017.

30-day Average SOFR is a benchmark interest rate based on SOFR. The SOFR 30-day Average rate is calculated as the average of the SOFR rates observed over a 30 calendar day period. It is used as a benchmark for various financial instruments, including student loans.

Check out the 30-day Average SOFR rates published daily by the Federal Reserve Bank of New York. As a reminder, we adjust the variable interest rates of our loans quarterly on 8 January, 8 April, 8 July and 8 October tracking these benchmarks published at the end of the previous business day. For instance, we used the rate published on 5 January 2024, to review the benchmark on 8 January 2024.

Why the switch for loans finalised before 1 August 2017?

On 30 September 2024, synthetic 3-Month Term USD Libor was discontinued by the FCA and is no longer published by the administrator.

We've adopted the 30-Day Average SOFR rate for all loan finalised prior to 1 August 2017 as it’s the recommended benchmark by the Fed (based on the recommendations by ARRC) for student loans and is commonly applied by lenders in the credit industry.

Why is a credit adjustment value added to my Rate of Interest?

SOFR is calculated in a different way to USD LIBOR. Following industry consultations, it was decided that in order to make SOFRA a fair replacement for both lenders and borrowers, a small adjustment needs to be made to the interest rate to account for the difference in the way sterling LIBOR and SOFR are calculated. This is referred to as a ‘credit adjustment spread’. There is an industry standard methodology for calculating the credit adjustment spread, which is to take the median difference between the sterling LIBOR and SOFR rates over a five-year period. The median is the middle number of all the daily differences sorted from high to low.

How is the credit adjustment value calculated?

On 5 March 2021, the FCA announced the dates for the cessation of USD LIBOR. As a result of this, the credit adjustment spread was calculated between the USD LIBOR and SOFR rates by an industry body, the International Swaps and Derivatives Association (ISDA), using the industry standard methodology, based on the period from 6 March 2016 to 5 March 2021. You will have received communication from us notifying you of the credit adjustment spread applicable to your contract and you can also refer to your monthly statement for the new details of your Rate of Interest.

What is the impact on the Rate of Interest under your Agreement?

Prodigy Finance will apply the credit adjustment spread value from 8 October 2024 to your new benchmark rate (30-day Average SOFR) and the fixed margin, which is applicable to your Agreement. This will form the Rate of Interest applicable to your Agreement.

How your previous LIBOR linked rate was calculated
Synthetic 3-Month Term USD LIBOR + fixed margin applicable as stated in your loans agreement

How your new SOFR linked rate is calculated
30-day Average SOFR + credit spread adjustment + fixed margin applicable as stated in your loan agreement

*SOFR and SOFR AVERAGES data is sourced from newyorkfed.org and is subject to the Terms of Use posted at newyorkfed.org. The New York Fed is not responsible for the publication of the SOFR and SOFR AVERAGES data by Prodigy Finance Ltd, does not sanction or endorse any particular republication, and has no liability for use.

3-Month CME Term SOFR

3-Month CME Term SOFR is the benchmark rate that we use for loans finalised after 30 July 2017 until 30 June 2023**.

3-Month CME Term SOFR is an indicative, 3-month forward-looking measurement of SOFR, based on market expectations implied from leading derivatives markets.

Below are the rates for the current and previous quarterly period that we apply:

** Loans finalised from 1 July 2023 to 7 January 2024 were switched to the 30-Day Average SOFR benchmark on 8 January 2024.

*The market data is the property of Chicago Mercantile Exchange Inc. (CME) or its licensors as applicable. All rights reserved, or otherwise licensed by Chicago Mercantile Exchange Inc. CME GROUP MARKET DATA IS USED UNDER LICENSE AS A SOURCE OF INFORMATION FOR CERTAIN PRODIGY FINANCE LTD (“PRODIGY”) PRODUCTS. CME GROUP HAS NO OTHER CONNECTION TO PRODIGY PRODUCTS AND SERVICES AND DOES NOT SPONSOR, ENDORSE, RECOMMEND OR PROMOTE ANY PRODIGY PRODUCTS OR SERVICES. CME GROUP HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE PRODIGY PRODUCTS AND SERVICES. CME GROUP DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY MARKET DATA LICENSED TO PRODIGY AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN CME GROUP AND PRODIGY. Visit CME’s website to find out more on 3-Month Term SOFR.

Terms of Use: The SOFR rates on this page are made available solely to Prodigy customers as a reference for the benchmark rates used in the interest rates of their loans. When viewing these rates, no Prodigy customer nor any visitor to the Prodigy Finance website may sell, licence, rent, modify, print, collect, copy, reproduce, download, upload, transmit, disclose, distribute, disseminate, publicly display, publicly perform, publish, edit, adapt, electronically extract or scrub, compile or create derivative works from any content or materials (including, without limitation, through framing or systematic retrieval to create collections, compilations, databases or directories) or otherwise transfer any of the content on this page to any third person.