The average interest rate on 5-year refinanced student loans increased last week, while 10-year rates went down, according to Credible. Student loan rates are still pretty low overall, so you may consider refinancing your student loan today.
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5-year student loan refinancing rates
The current rate for 5-year undergraduate refinanced student loans is up almost 1% from the week of March 28, sitting at 4.16%. In October 2021, this rate was significantly lower, at 2.83%.
Five-year graduate rates also ticked up since the week of March 28. Currently, the average rate is 3.30%, up from 3.17% during the week of March 28.
10-year student loan refinancing rates
Rates on 10-year undergraduate student loan refinances have dropped 0.03% since March 28 and have increased by 0.79% since October 2021. The average rate for a 10-year graduate student loan refinance is 416%. This is 0.15% less than March 28 and 0.80% higher than six months ago.
Student loan interest rates by credit score
The refinanced student loan rate you’ll get from a lender is substantially impacted by your credit score. Usually, the better your credit score, the better rate you’ll receive. Below, you’ll see 10-year student loan rates by credit score:
How to refinance a student loan
To start the process, look into different companies and check your terms with each lender. Evaluate the offers and determine which rate and term length is best for you. When you check your rates, lenders will usually generate a soft credit check, which doesn’t hurt your credit score.
You’ll need to apply to refinance through a private student loan lender; you aren’t able to refinance a student loan through the federal government.
Once you’ve chosen a company, you’ll fill out its application and provide documents that verify your finances and identity. After the lender gives you its final offer, you’ll need to sign the agreement and accept the terms. Then, your new lender will pay off your existing loan and you’ll be set to go with a new loan.
Should you refinance your student loan?
Refinancing your student loans may help to lower your interest rate, switch from a variable-rate loan to a fixed-rate loan, or change your term length. By changing your term length, you may be able to spread out payments over a longer period for smaller monthly payments, though you’ll cough up more in total interest.
Watch out before deciding to refinance a federal student loan. You will lose key protections that come with federal loans if you refinance them. For example, you’ll no longer qualify for the COVID-19 related student loan payment pause, currently in place through August 31, 2022, and federal student loan relief programs like Public Service Loan Forgiveness.
You also won’t be eligible for specific repayment options like Income-Driven Repayment plans, which take your specific income and family size into account when determining monthly payments.
What’s the difference between a fixed-rate and variable-rate loan?
A fixed-rate student loan has set 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 pay back your loan in full.
A variable-rate loan has an interest rate that the lender will change periodically during your loan’s term. Lenders usually tie this rate to specific market benchmarks that are often impacted by the federal funds rate. Variable rates may start lower than fixed rates, but could climb higher over the life of your loan.