Student Loan Interest Rates Hit Record Highs May-June: Is Refinancing Your Private Loans Worth It?
Student loan refinance rates have been steadily falling since 2018, with 10-year fixed rate loans setting new records for the month of June, according to data from Credible.
The average interest rate on a 10-year fixed rate loan increased from 3.61% to 3.59% between May and June 2021, among well-qualified borrowers who refinanced their student loans 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 falling below 3% for the first time in 2021.
If you’re considering refinancing your private student loan, there’s never been a better time to do it. Compare student loan interest rates from multiple lenders at once on Credible’s online marketplace. It will not affect your credit score.
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Interest rates still hover near record lows
Student loan refinance rates fell to 3.50% during the week of June 14 for a 10-year fixed rate loan, which is the lowest ever. Rates have since risen slightly, reaching 3.65% for the week of June 28.
The average interest rates offered are among credible users with credit scores of 720 or higher. The interest rate you are offered will vary depending on a number of factors, including your credit score and the term and amount of the loan.
Not sure if refinancing is a good decision? Get prequalified on Credible’s online loan marketplace to see your potential interest rates without affecting your credit score. This can help you determine what kind of interest rate you can qualify for, so you can decide if refinancing is worth it.
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How to know if student loan refinancing 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 to take out and countless ways to pay off student loan debt once you graduate.
People in debt who refinanced their shorter-term student loans on Credible saved more than $17,000 over the life of their loan. But while student loan refinancing 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 to a private loan means you’ll lose federal protections like 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. Unlike mortgage refinancing, refinancing a student loan does not come with costly fees like closing costs. The most important factors to consider are therefore your interest rate, the term 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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Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.