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Is Student Loan Refinancing Right For You?
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The average student loan refinance rate for 10-year fixed-rate loans was 5.84 compared to the previous week, according to Credible’s latest rates for those who prequalified on the marketplace for the week ending Aug. 22. % rose slightly. Variable rate loans fell to 3.41% in 2019 from 3.99% in the previous week. Of course, the interest rate you personally earn depends on the lender, loan type, credit score, etc. (See the best student loan refinance rates you can get here.)
Things to know before refinancing student loans
With more than $1.7 trillion in student loan debt for Americans, it’s no surprise that many borrowers are interested in refinancing their student loans. It may seem obvious, but refinancing student loans isn’t always as easy as it sounds. To refinance student loans, borrowers take advantage of new private loans to pay off existing public loans. This means that the federal protections that come with federal loans are lost, thus borrowers are forced to take pandemic-related leniency or government-issued forgiveness that could act as a parachute at some point during the life of the loan. lose.
Since refinancing can result in significant losses, experts highlight the advantages of refinancing, especially if the borrower is using (or planning to use) an income-based repayment program for the loan. and cons are recommended. If a borrower is currently on Federal Student Loan Forbearance, which suspends all federal student loan payments through August 31, 2022, it makes sense to wait until the end of that period to refinance. It is fulfilled. Even if the borrower does not currently take advantage of the programs and protections offered, it is important to consider whether future repayment plans or loan forgiveness will be required before eliminating the option altogether.
Private student loan borrowers do not risk losing these protections, so refinancing with better interest rates and terms is not such a difficult decision. You are planning to refinance your private student loan because your credit score has improved, or your financial situation has changed and you are now able to get a more attractive interest rate or shorten the loan term If so, you may benefit from refinancing.
Rates are accurate at the time of posting.
Any advice, recommendations or rankings contained in this article are those of MarketWatch Picks and have not been reviewed or endorsed by our commercial partners.
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