Student loan refinancing rates for the week: June 7, 2022
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Average interest rates on refinanced five-year variable student loans fell two weeks ago, according to Credibility. Five-year loan rates fell on undergraduate loans, while five-year graduate rates fell slightly. Interest rates on a 10-year fixed loan have increased in the past two weeks
This upcoming school year, federal student loan rates will increase by the largest amount since the 2005-06 year. These new rates won’t directly affect private student loan rates, but private rates may increase as they don’t have to stay low to be competitive with federal loan rates.
Over the past two decades, says Laurel Taylor, CEO and founder of student debt firm FutureFuel.io, it has been uncommon for rates to rise so dramatically over such a short period of time. However, Taylor says borrowers shouldn’t be too concerned about an increase in federal rates.
“The impact of the monthly payment is relatively minor, adding up to less than $5 per month and less than $400 over the standard 10-year repayment on a typical annual borrowing 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 have fallen sharply over the past week, dropping 1.56% from the previous two weeks to settle at 3.07%.
Refinancing rates on 5-year variable graduate loans are also lower than they were two weeks ago. Currently the average rate is 3.56%.
10-Year Fixed Student Loan Refinance Rates
Refinancing rates on 10-year fixed student loans have increased in the past week compared to the previous two weeks. Bachelor’s rates are up 22 basis points, while graduate rates are up 14 basis points. Rates have gone up a lot six months ago.
Student loan interest rates by credit score
Your credit score greatly affects the rates you receive. You will often get a better rate the higher your credit score. Below, we have listed 10-year fixed student loan rates by credit score:
Why refinance a student loan?
You may qualify for a better rate when you refinance your student loans. You’ll also be able to change from a fixed rate loan to a variable rate loan, or switch your tenure. By choosing a different term length, you may be able to spread the costs over an extended period for smaller monthly payments, even though you’ll be paying more overall benefits.
How to refinance a student loan
Start the refinancing process by checking your terms with different lenders. Check out the offers and find out which price and length of time is best for you. When you look at your rates, lenders usually 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 makes its final offer, you will need to sign the agreement and accept the terms. Then your new lender will pay off your existing loan and you’re ready to work with a new one.
5 year loan vs 10 year loan
Each type of student loan is suitable for different borrowers.
If you want a better interest rate and can pay off your loan more quickly, a 5-year loan term may be an excellent 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 in total, but you’ll make smaller monthly payments. This may make it easier for you to pay off your loan if your budget is limited.
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