Student loan interest rates hit record highs between May and June: is refinancing your private loans worth it?
Student loan refinancing rates have been falling steadily since 2018, with 10-year fixed-rate loans setting new records for June, according to data from Credible.
The average interest rate on a 10-year fixed-rate loan fell from 3.61% to 3.59% between May and June 2021, among well-qualified borrowers who refinanced their student loan on Credible. These are the lowest interest rates since Credible began collecting data. For 5-year variable rate loans, the average interest rate was 2.92%, down from 3.05% in May and below 3% for the first time in 2021.
If you’re thinking about refinancing your private student loan debt, there’s never been a better time to do it. Compare student loan interest rates from several lenders at once in Credible’s online marketplace. It will not affect your credit score.
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Interest rates still hover near record lows
Student loan refinancing rates fell to 3.50% during the week of June 14 for a 10-year fixed-rate loan, the lowest on record. Rates have since increased slightly, reaching 3.65% for the week of June 28.
Average interest rates offered are for credible users with credit scores of 720 or higher. The interest rate offered to you will vary depending on a number of factors, including your credit rating and the length and amount of the loan.
Unsure if refinancing is a good thing? Get prequalified on Credible’s online loan market to see your potential interest rates without affecting your credit score. This can help you determine what kind of interest rate you may qualify for, so you can decide if refinancing is worth it.
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How to know if refinancing a student loan is right for you
A college education is an investment in your earning potential, but paying for college is a challenge in itself. There are many types of loans you can take out and countless ways to pay off student debt after you graduate.
People in debt who refinanced their shorter term student loans on Credible saved over $ 17,000 over the life of their loan. But while refinancing a student loan can save you thousands of dollars, it’s not for everyone.
You shouldn’t refinance your student loans if … You have federal student loans. Refinancing federal student loans into a private loan means you will lose federal protections such as an income-based repayment plan, student loan forgiveness programs, and hardship forbearance.
You should refinance your student loan if … You may qualify for a lower rate than what you are currently paying on your private student loan debt. Unlike mortgage refinancing, refinancing a student loan does not come with high fees like closing costs. The most important factors to consider are therefore your interest rate, the length of the loan and the monthly payments.
Use Credible’s Student Loan Refinance Calculator to determine your overall savings and see if refinancing is right for your financial situation.
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