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Average interest rates on refinanced undergraduate student loans are at new yearly highs, according to Credible Student Loans. Graduate loans are down a little.
Rates are up substantially since last year, and they’re likely to keep going up. Federal student loan rates for 2022-23 will increase by the most in 17 years. These new rates won’t have a direct impact on private student loan rates, but private rates may rise as they don’t have to remain as low to be on par with federal loan rates.
Note: While you can refinance your federal loan into a private one, private loans often have higher interest rates and don’t come with benefits like the current repayment pause, meaning federal loans are almost always the better option.
5-year variable student loan refinancing rates
Undergraduate rates have hit the highest point in the past year, settling at 7.78%. They’re almost 5% higher than they were last year — an astronomical increase.
The rates on graduate loans have dropped by 38 basis points in the past week and are now at 3.03%.
UndergraduateGraduateThis past week7.78%3.03%2 weeks ago6.62%3.41%6 months ago3.21%3.08%1 year ago3.04%2.63%
10-year fixed student loan refinancing rates
Rates on 10-year fixed undergraduate loans have gone up 6.19%, also a high mark over the past year. Graduate rates have dropped by 16 basis points.
Example: Say you are taking out a $20,000 undergraduate loan over a 10-year term with the interest rates listed below. If you borrowed at this past week’s rate of 6.19%, the overall lifetime cost of your student loan would be $26,874. Using the rate of 3.69% from 12 months ago, the same loan would cost $23,947, or $2,927 less.
UndergraduateGraduateThis past week6.19%5.33%2 weeks ago5.91%5.49%6 months ago4.55%4.32%1 year ago3.69%3.32%
Student loan interest rates by credit score
Your interest rate will often improve with a better credit score — we show this in the table below. We’re giving you the 10-year fixed student loan rates by credit score:
Below 680680-719720-779780+Average RateThis past week8.95%6.78%5.97%5.09%6.00%2 weeks ago6.94%6.47%5.73%4.94%5.77%
Frequently asked questions
What happens to my loan forgiveness if I refinance my federal student loans?
If you refinance your federal student loans, you won’t qualify for forgiveness. President Joe Biden in August said the government will forgive up to $10,000 in student debt for borrowers making less than $125,000 per year, and as much as $20,000 for Pell Grant recipients. Married couples or heads of households who make less than $250,000 will also qualify for forgiveness.
All types of federal loans will be eligible for forgiveness, but private student loans won’t be.
While refinancing federal student loans might seem like a good idea if you’re getting a better interest rate, it disqualify you from loan forgiveness — both widescale and through programs like Public Service Loan Forgiveness.
What benefits do you get from refinancing a student loan?
Refinancing your student loans may net you a lower rate. You can also change from a fixed-rate to a variable-rate loan, or change your term length. Picking a new term length can allow you to distribute costs over an extended period for smaller monthly payments, though you’ll pay more in total interest.
What’s the difference between a 5-year and 10-year loan?
A five-year loan term could be a great choice if you want a better interest rate and you’re able to pay off your loan that fast. You’ll save money in interest and will free up money to put toward your other financial goals more quickly.
A 10-year loan term will cost you more overall, but you’ll make smaller monthly payments. This may make it easier for you to repay your loan if you’re on a tight budget.