This Week’s Student Loan Refinancing Rates: May 24, 2022

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Average interest rates on refinanced student loans have fluctuated since two weeks ago, according to Credible. Five-year rates on undergraduate loans have increased, while graduate rates have plummeted. Ten-year rates on both undergraduate and graduate loans have inched up just slightly.

The US Department of the Treasury has announced that federal student loan rates are rising for the upcoming academic year† These new rates won’t directly impact private student loan rates, but it’s possible that private lenders will increase their rates now that their rates don’t have to be as low to compete with federal loans. You might see rates on refinanced student loans go up in coming months.

5-year variable student loan refinancing rates

Refinance rates on 5-year variable undergraduate student loans are at 3.62% on average this past week. That’s an increase of 22 basis points since two weeks ago. Six months ago, this rate hovered around 2.59††

The refinance rates on 5-year variable graduate loans have dropped compared to two weeks ago. Currently, the average rate is 3.08%, which is still a little higher than it was this time last year.

10-year fixed student loan refinancing rates

Refinance rates on 10-year undergraduate and graduate fixed student loans this past week are slightly higher than they were two weeks ago, with rates changing by just six basis points. Rates have increased more significantly since six months ago.

Student loan interest rates by credit score

The rate you get when you refinance is significantly impacted by your

credit score

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

How to refinance a student loan

Check different companies and see your terms with each lender. Look over the offers and figure out which rate and term length is best for you. When you look at your rates, lenders will usually perform a soft credit check, which doesn’t impact your credit score.

You have to refinance through a private student loan lender, as you can’t refinance a student loan through the federal government.

Once you’ve chosen a company, fill out its application and verify your finances and identity. After the lender makes its final offer, you’ll need to sign the agreement and accept the terms. Then, your new lender will pay off your existing loan and you’ll be set to go with a new loan.

Should you refinance your student loan?

Refinancing your student loans may just you a better your interest rate, help you switch from a variable-rate loan to a fixed-rate loan, or change your term length. By switching up your term length, you might be able to spread out payments over a longer period for smaller monthly payments, though you’ll cough up more in total interest.

Be careful before choosing to refinance a federal student loan† you will lose key protections that come with federal loans if you refinance them. For example, you’ll no longer be eligible for the COVID-19 related student loan payment pause, currently in place through August 31, 2022, and federal student loan relief programs like Public Service Loan Forgiveness†

You also won’t qualify for specific repayment options like Income-Driven Repayment planswhich take your specific income and family size into account when determining monthly payments.

Fixed rate vs. variable rate loan

The interest rate on a fixed-rate student loan never changes. The rate you get when you take out your loan is the rate the lender you get until you pay back your loan in full.

A variable-rate loan has an interest rate that the lender will alter periodically during your loan’s term. Lenders usually tie this rate to specific market benchmarks impacted by the federal funds rate† Variable rates may start lower than fixed rates, but could increase significantly over the life of your loan.