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Things to know before refinancing student loans.
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Data from personal finance companies show that the average interest rate for the week ending September 12 for refinancing student loans to 10-year fixed-rate loans is 5.85%, while the average interest rate for 5-year variable-rate loans is 4.53%. Prequalified in the student loan market. For credit scores above 720, interest rates dropped to 5.55% for 10-year fixed loans and 4.53% for 5-year variable loans. Of course, the rate you pay will vary based on your credit score, finances, etc. You can find the lowest interest rates for eligible student loans here.
If you’re planning to refinance your private student loans because your credit score has improved or your financial situation has changed, you may be able to get a more attractive interest rate or shorten the term of your loan. may receive. But if you’re taking out federal student loans, the math goes beyond just better interest rates and terms.
Student loan refinancing requires borrowers to avail new private loans to pay off existing public loans. This means that the federal protections that come with federal student loans (such as income-based repayment plans, loan forgiveness, and current student loan suspension currently in effect through January 2023) will be lost when you refinance. means that
Even if borrowers do not take advantage of the programs and protections currently offered, they should consider whether they will need them in the future before eliminating options entirely. That said, if you have a steady income and don’t think you’ll need these protections, it may make sense to refinance to a federal loan if you get better interest rates and terms.
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