The latest student loan refinance rates
For 10-year fixed rate loans, the average student loan refinance rate continued its upward trajectory to 5.81% from 5.42% the previous week, according to Credible’s latest rates for the week ending May 27. June. However, average rates on 5-year variable rate loans fell to 3.29% from 3.37% 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’s no surprise that many people are looking to refinance their student loans. For Americans with private student loans, this can make a lot of sense. If you’re in this boat and your credit score has improved or your finances have changed or you just haven’t shopped in a while – and you’re able to get a rate of more attractive interest or shorten the term of your loan, you’re likely to benefit from a refinance. But those with federal loans may want to think twice. Here’s what you need to know.
Indeed, when refinancing a federal student loan, the borrower takes out a new private loan to pay off their existing federal loan. But in doing so, you lose the federal protections that came with your federal loans. These protections include any pandemic-related forbearance (currently, student loan payments are suspended until August 31, 2022), government-issued loan forgiveness, and more lenient repayment plans based on your income. Even if you don’t enjoy these benefits now, ask yourself if you could in the future.
If you decide to refinance your student loans, shop around to find the lender with the best rates and terms. Note that unlike federal loans, private loans can offer a variable rate, which often starts lower than a fixed rate loan. But they may start to increase over the life of the loan, which could increase the cost of that loan over time, and therefore your monthly payment could increase. “The only time I would recommend a borrower get a variable rate right now is if they are able to repay the loan and fully intend to do so before interest rates set. increase too much,” Mark Kantrowitz, student loan expert and founder of PrivateStudentsLoans. guru. recently said MarketWatch Picks.