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Fixed student loan refinancing rates set a new record during the week of December 13, meaning borrowers have the ability to lower their monthly payments, pay off loans faster, and save more money. on their university debt. (iStock)
Fixed rates for refinancing student loans have fallen to a low new low record, giving borrowers the opportunity to save more money on their student debt than ever before.
Interest rates on 10-year fixed-rate refinancing loans were on average 3.33% for the week of December 13. according to Credible. These are the lowest fixed student loan rates since Credible started collecting this data in June 2020.
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The variable interest rates for the 5-year refinance term increased significantly in the same week, to 2.82%. However, the variable rate is much lower than it was at the same period last year, when it was 3.20% on average.
With student loan refinancing rates at historically low levels, student loan borrowers have the opportunity to reduce their monthly payments, pay off debt faster, and save money on total borrowing costs over the life of the loan.
Read on to learn more about refinancing a private student loan. Browse the student loan refinance rates from private lenders in the table below and visit Credible for see tailor-made refinancing offers to you without affecting your credit score.
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How To Qualify For Student Loan Refinance
Refinancing a student loan involves taking out a new loan to pay off your current student debt on better terms, such as a lower interest rate. There is a lot of private student loan lenders that offer refinancing, and the process can be done entirely online.
When you refinance your student loan debt, your loan amount will stay the same, but your other terms will likely change. It may also be possible to transfer all of your loans in one monthly payment with the student loan consolidation. You can choose a shorter loan term for pay off your student debt faster, or you can opt for a longer term loan to lower your monthly payments.
Private student lenders determine your interest rate based on a number of eligibility criteria, including:
- Responsible financial history. Borrowers with good credit and a low debt-to-income ratio will have the best chance of qualifying for a student loan refinance at a low interest rate. Borrowers with bad credit might consider using a creditworthy co-signer to qualify for student loan refinancing.
- Loan repayment terms. Larger loans may have higher interest rates. Plus, you will pay more interest over time because it is assessed on a higher amount. Shorter loans will generally offer lower interest rates, while longer loan terms will cost more to borrow over time.
- Type of interest rate. Fixed rate loans tend to have higher rates because borrowers can lock in their rate for the duration of the loan. Variable rate loans tend to offer lower rates, which can go up or down over the life of the loan depending on market conditions.
You can compare student loan rates on Credible for free with soft credit, then use a student loan calculator to determine how much you can save through refinancing.
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Should You Refinance Federal Student Loans?
Refinancing can help some borrowers get a lower rate on their college debt, but there are some things federal student loan borrowers need to know before going for a private loan.
Interest rates are set differently. Federal student loan rates are set for all borrowers based on when the loan was taken out, while private student loan interest rates vary by lender depending on the creditworthiness of the borrower. More, private lenders tend to offer rate discounts, such as an interest rate reduction for setting up automatic payments (sometimes referred to as an Autopay discount).
Borrowers with a high credit score and low debt-to-income ratio may qualify for a lower interest rate through a private lender, but this depends on the fixed rate of the federal student loan at the time the loan is due. been disbursed. here are the current federal student loan interest rates for loans disbursed between July 1, 2021 and June 30, 2022:
- Direct Undergraduate Loans: 3.73%
- Direct loans to graduates: 5.28%
- Direct PLUS loans for parents and graduates: 6.28%
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Private student loan lenders do not charge refinancing fees. When you borrowed your federal loan, you probably had to pay a one-time loan fee that was part of the total loan amount. Federal direct loans disbursed on or after October 1, 2020 were charged a loan fee of 1.057%. Direct PLUS loans disbursed during the same period have a loan fee of 4.228%
Private student loans are not eligible for federal benefits. By refinancing to a private student loan, federal student loan borrowers forgo several federal loan protections such as income-based repayment plans, administrative forbearance and certain student loan forgiveness programs. Federal student loan repayments are currently suspended until May 1, 2022, which means that refinancing your federal loans to a private loan would mean that you would have to resume monthly payments after approval.
Nonetheless, it might be wise to lock in a private student loan refinance rate when rates are at record highs. Visit Credible at see your student loan refinancing offers, so you can determine if it’s worth refinancing your federal student loan debt.
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Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.
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