Student loan refinancing rates for the week: May 31, 2022
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Average interest rates on refinanced student loans rose significantly two weeks ago, according to Credibility. Five-year undergraduate loan rates have increased, while graduate rates from a cliff have fallen. Ten-year interest rates on undergraduate and graduate loans have risen slightly.
Federal student loan rates are set to see the largest increase since the 2005-2006 school year. These new rates won’t directly affect private student loan rates, but private rates may rise as they don’t have to stay low to be competitive with federal loan rates.
Over the past 20 years, Laurel Taylor, CEO and founder of student debt firm FutureFuel.io, says it’s rare for prices to go up so dramatically in such a short period of time. However, Taylor says borrowers should not be overly concerned about an increase in Fed rates.
“The impact of a monthly repayment is relatively minor, adding up to as little as $5 a month and less than $400 over a standard 10-year repayment on a typical annual loan of $5,500 for a college student,” Taylor says.
5-Year Variable Student Loan Refinance Rates
Refinancing rates on 5-year variable college student loans are 3.62% On average last week, up from 3.40% two weeks ago. Six months ago, this rate was about 2.59%.
Refinancing rates on 5-year variable graduate loans are lower than they were two weeks ago. Currently, the average rate is 3.08%, which is still slightly higher than it was this time last year.
10-Year Fixed Student Loan Refinance Rates
Refinancing rates on 10-year undergraduate and graduate student loans have been slightly higher over the past week than they were two weeks ago, with rates changing by just six basis points. Rates have risen dramatically six months ago.
Student loan interest rates by credit score
The rate you get when you refinance is greatly influenced by an indicator
Usually, the better your credit score, the lower the rate you will get. Below, we have listed 10-year fixed student loan rates by credit score:
What is the benefit of refinancing a student loan?
Refinancing your student loan may qualify you for a better rate than what you currently have. You also have the ability to change from a variable rate loan to a fixed rate loan, or switch your tenure. By selecting a different term length, you may be able to spread the payments over a longer period for smaller monthly payments, even though you’ll pay more overall interest.
How do you refinance a student loan?
To start refinancing, look at the different companies and check your terms with each lender. Take a look at the details of each offer and find out the best price and duration 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 loan lender, as you cannot refinance a student loan through the federal government.
Once you choose a company, you will fill out its application and submit documents verifying your finances and identity. After the lender gives you its 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 are ready to take out a new one.
How do I choose a 5-10 year loan?
Both types of loans are suitable for different types of borrowers.
If you want a lower interest rate and are able to pay off your loan more quickly, a 5-year loan term might be a great option. You’ll save money with interest and save money to put it into your other financial goals faster.
A 10-year loan term will cost you more overall, but you’ll make smaller monthly payments. This may make it easier for you to pay off your loan if your budget is limited.