For 10-year fixed rate loans, the average student loan refinance rate rose to 5.40% from 5.14% the previous week, according to the latest rates from Credible. And average 5-year variable-rate loan rates rose to 3.80% from 3.30% the previous week. You can see the lowest fares you could qualify for here.
With over 40 million Americans struggling with student loan debt totaling over $1.7 trillion, it makes sense that many borrowers are looking to refinance their loans. But refinancing student loans is definitely not the right decision for everyone. Consider: When you refinance a federal student loan, you’re actually taking out a new private loan to pay off their existing public loan, and therefore, all of the federal protections that came with those federal loans are lost. This means the borrower waives any pandemic-related forbearance (such as current interest and payment pause), government loan forgiveness, and generous income-driven repayment options.
Even if a borrower is not currently using the programs and protections offered, it is important to consider the potential for future need for loan repayment or forgiveness plans before removing this opportunity altogether.
For private student borrowers, the calculations are different and you can see the lowest rates you could qualify for here. If you are considering refinancing a private student loan because your credit score has improved or your finances have changed and/or you are able to get a better interest rate or shorten the term of your loan, refinancing may be the best way to save money in the long run. Here’s how much money you could save by refinancing.