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Average interest rates on refinanced undergraduate student loans dropped substantially from last week, according to Credible Student Loans. Graduate loans are relatively flat.
Even though rates are down this week, they are up substantially since last year, and they’re likely to continue rising. Federal student loan rates for 2022-23 will increase by the most in almost two decades. 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 saw a major reversal this week, dropping all the way to 3.80%., about half what they were last week.
The rates on graduate loans have dropped by 28 basis points in the past week and are now at 2.75%.
UndergraduateGraduateThis past week3.80%2.75%2 weeks ago7.78%3.03%6 months ago4.13%3.46%1 year ago2.83%2.62%
10-year fixed student loan refinancing rates
Rates on 10-year fixed undergraduate loans have gone down to 5.82%, dropping down from last week’s high mark over the past year.
Graduate rates are largely flat, only moving by four 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 5.82%, the overall lifetime cost of your student loan would be $26,428. Using the rate of 3.70% from 12 months ago, the same loan would cost $23,958, or $2,470 less.
UndergraduateGraduateThis past week5.82%5.33%2 weeks ago6.17%5.37%6 months ago4.55%4.19%1 year ago3.70%3.36%
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 week6.30%6.53%5.70%5.28%5.68%2 weeks ago8.95%6.95%5.94%5.09%6.00%
Frequently asked questions
If I refinance my federal student loans, will I still get loan forgiveness?
If you refinance your federal student loans, you won’t qualify for forgiveness. President Joe Biden said in August 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.
Every type 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.
Why should you refinance 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.
5-year vs. 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.