The average interest rate on 5-year refinanced student loans rose last week, while 10-year rates fell, according to Credible. Student loan rates are still quite low overall, so you might want to consider refinancing your student loan today.
5-Year Student Loan Refinance Rates
The current 5-year undergraduate refinanced student loan rate is up nearly 1% from the week of March 28, at 4.16%. In October 2021, this rate was significantly lower, at 2.83%.
Five-year graduation rates have also increased since the week of March 28. Currently, the average rate is 3.30%, compared to 3.17% during the week of March 28.
10-Year Student Loan Refinance Rates
10-year undergraduate student loan refinance rates have fallen 0.03% since March 28 and increased 0.79% since October 2021. The average undergraduate student loan refinance rate over 10 years is 416%. This is 0.15% less than on March 28 and 0.80% more than six months ago.
Student loan interest rates by credit score
The refinanced student loan rate you will get from a lender is greatly influenced by your credit score. Usually, the better your credit score, the better the rate you will receive. Below, you’ll see 10-year student loan rates by credit score:
How to refinance a student loan
To start the process, look at different companies and check your terms with each lender. Evaluate the offers and determine the rate and term that suits you best. When you check your rates, lenders usually generate a soft credit check, which doesn’t hurt your credit score.
You will need to apply for refinancing through a private student lender; you are not able to refinance a student loan through the federal government.
Once you have chosen a company, you will complete their application and provide documents that verify your finances and identity. Once the lender gives you their final offer, you will need to sign the agreement and agree to the terms. Then your new lender will pay off your existing loan and you’ll be ready to take out a new loan.
Should you refinance your student loan?
Refinancing your student loans can help you lower your interest rate, switch from a variable rate loan to a fixed rate loan, or change your term length. By changing the length of your term, you may be able to spread out payments over a longer period for smaller monthly payments, even though you’ll cough up more total interest.
Be careful before deciding to refinance a federal student loan. You will lose the main protections that come with federal loans if you refinance them. For example, you will no longer be eligible for the COVID-19-related student loan payment pause, currently in place until August 31, 2022, and federal student loan relief programs like Public Service Loan Forgiveness. public.
You also won’t be eligible for specific repayment options such as income-contingent repayment plans, which take into account your specific income and family size when determining monthly payments.
What is the difference between a fixed rate loan and a variable rate loan?
A fixed rate student loan has a fixed interest rate that remains the same throughout your loan. The rate you get when you take out your loan is the rate the lender will charge you until you repay your loan in full.
A variable rate loan has an interest rate that the lender will change periodically during the term of your loan. Lenders typically tie this rate to specific market benchmarks which are often impacted by the federal funds rate. Variable rates can start lower than fixed rates, but can climb higher over the life of your loan.