This week’s student loan refinance rate: May 31, 2022

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According to Credible, average interest rates on refinanced student loans have risen significantly over the past two weeks. Five-year rates for undergraduate and graduate loans have increased. Ten-year rates for undergraduate loans rose slightly, while graduate loans saw their rates fall.

Federal student loan rates are expected to increase the most since the 2005-06 academic year. These new rates won’t have a direct impact on private student loan rates, but private rates may go up because they don’t have to stay so low to be competitive with federal loan rates.

Laurel Taylor, CEO and founder of student debt fintech, says that in the past 20 years, it has been rare for rates to increase so dramatically in such a short time. However, Taylor says borrowers shouldn’t worry too much about rising federal rates.

“The impact on monthly payments is relatively minor, totaling less than $5 per month and less than $400 over the standard 10-year repayment on a typical $5,500 annual loan for an undergraduate student,” said Taylor.

Variable 5-Year Student Loan Refinance Rates

5-year variable undergraduate student loan refinance rates are 4.63% on average last week, compared to 3.62% two weeks ago. Six months ago, this rate was around 3.15%.

5-year variable graduate loan refinance rates have soared from two weeks ago. Currently, the average rate is 4.66%, which is much higher than it was this time last year.

Fixed 10-Year Student Loan Refinance Rates

Last week, 10-year fixed undergraduate student loan refinance rates rose slightly from two weeks ago, with rates changing nine basis points. Graduate rates are down 26 basis points. Rates have increased significantly over the past six months.

Student loan interest rates by credit score

The rate you get when you refinance is heavily influenced by your

credit score

.. Usually, the better your credit score, the lower the rate you will receive. Below, we’ve listed the 10-year fixed student loan rates by credit score:

What is the advantage of refinancing a student loan?

Refinancing your student loan may qualify you for a better rate than you currently have. You also have the option of switching from a variable rate loan to a fixed rate loan or increasing the duration of your loan. By selecting a different term, you may be able to spread the payments over a longer period for smaller monthly payments, although you will pay more total interest.

How to refinance a student loan?

To get started with refinancing, check out different companies and check your terms with each lender. Review the details of each offer and determine the rate and term that works best for you. When you check your rates, lenders often do a soft credit check, which doesn’t hurt your credit score.

You will need to apply for refinancing through a private student lender because you cannot refinance a student loan through the federal government.

Once you choose a company, you complete their application and provide documents that verify your finances and identity. Once the lender gives you their final offer, you will need to agree to the terms and sign on the dotted line. Then your new lender will pay off your existing loan and you’ll be ready to take out a new loan.

How to choose between a loan over 5 years and over 10 years?

Both types of loans suit different types of borrowers.

If you want a lower interest rate and are able to pay off your loan faster, a 5-year loan could be a great choice. You’ll save money in interest and free up money to reach your other financial goals faster.

A 10-year loan term will cost you more overall, but you’ll make lower monthly payments. This can make it easier for you to repay your loan if your budget is tight.

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