Higher credit quality lowers student loan refinancing rates

For student loans refinanced to 10-year fixed-rate loans, the average rate for the week ending October 25 was 5.88%, up slightly from 5.86% the week before, while the 5-year variable-rate loan rate was 3.61%. is declining to , down from 4.17% a week earlier, according to data from Credible, a personal finance company that prequalifies in the student loan market. For credit scores above 720, interest rates dropped to 5.69% for 10-year fixed loans and 3.19% for 5-year variable loans. Check here for the best eligible rates.

If you’re currently taking out private student loans, the decision to refinance will be easier than if you’re taking out federal student loans. In fact, those who have private student loans that can be refinanced to better interest rates and/or terms may benefit from refinancing. So if your credit score improves, your financial situation changes, or you haven’t checked interest rates in a while, you may be able to get a more attractive interest rate or benefit from a shorter loan term. Might be worth looking into to see if it’s possible. Refinance. Check here for the best eligible rates.

However, if you have a federal loan, the question of whether to refinance is more complicated. When you refinance your student loans, you’re taking a new private loan to pay off your existing public loan, which means you lose the federal protections that come with federal loans. These protections include income-based repayment options, loan forgiveness, and a moratorium on current student loans effective through January 2023.

Therefore, before refinancing, experts recommend weighing the pros and cons of refinancing. If a borrower is currently on federal student loan moratoria where all federal student loan payments are suspended until January 2023, it makes sense to wait until that period ends before refinancing. It is fulfilled. And even if the borrower doesn’t currently take advantage of the programs and protections offered, it’s important to consider whether they plan to take advantage of future repayment plans or loan forgiveness before dismissing options outright. .

Accurate rate at time of posting.