Interest rates on refinanced student loans are steady.
The average fixed interest rate on a 10-year refinance loan remained at 6.44% during the week of November 11. That’s for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace. The average interest rate on a five-year variable-rate loan remained at 6.89% among the same population, according to Credible.com.
These rates are accurate as of November 11, 2024.
Related: Best Student Loan Refinance Lenders
Fixed-Rate Loans
The average rate on 10-year refinance loans didn’t move last week. It remained at 6.44%, the same as the week before.
Fixed interest rates don’t change throughout a borrower’s loan term. That means borrowers refinancing now will lock in a rate lower than one they would have received this time last year. At this time last year, the average fixed rate on a 10-year refinance loan was 7.65%, 1.21 percentage points higher than today’s rate.
Let’s say you refinanced $20,000 in student loans at today’s average fixed rate. You’d pay around $226 per month and approximately $7,178 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.
Variable-Rate Loans
Average variable rates on five-year refinance loans didn’t move last week, remaining at 6.89%, the same as the week before.
Variable interest rates fluctuate during a loan term according to the index they’re tied to and market conditions. Many refinance lenders recalculate rates monthly for borrowers with variable-rate loans, but they typically limit how high the rate can go—lenders may set a limit of 18%, for instance.
If you were to refinance an existing $20,000 loan to a five-year loan at a variable interest rate of 6.89%, you’d pay approximately $395 on average per month. In total interest over the life of the loan, you’d pay around $3,699. Of course, since the interest rate is variable, it could fluctuate up or down from month to month.
Related: Should You Refinance Student Loans?
When to Refinance Student Loans
Lenders generally require you to complete your degree before refinancing. Though it’s possible to find a lender without this requirement, in most cases, you’ll want to wait to refinance until after you’ve graduated.
Keep in mind that to get the lowest interest rates, you’ll need a good or excellent credit score.
If your credit is poor or your income isn’t high enough to qualify, you have a couple of options. You can wait to refinance until you’ve built credit or you have enough income. Or, you can ask a relative or friend to be a co-signer. Just make sure that the co-signer knows that if you can’t make student loan payments, they’ll be responsible. The loan will also appear on their credit report.
How To Get the Best Student Loan Refinance Rates
The best student loan refinance rates typically go to borrowers with strong credit. To get the best rate, take some time to improve your credit before you apply. Paying down debts, reducing your credit utilization ratio and disputing any errors on your credit report can boost your credit.
Another option is applying for student loan refinance with a co-signer. If you can add a creditworthy co-signer to your application, you might qualify for a better interest rate. However, remember that your co-signer will share responsibility for the loan.
Finally, compare offers from multiple lenders. Each lender sets its own rates and terms, so shopping around can help you find a student loan refinance offer with the best rate.
Refinancing Student Loans: What Else to Consider
A crucial caveat is that refinancing federal student loans to a private loan means you’ll lose many federal loan perks, like income-driven repayment plans and generous deferment and forbearance options.
If you’re thinking about refinancing federal student loans, first make sure you likely won’t need to use any of these programs. This may be the case if your income is stable and you plan to quickly pay off a refinance loan. You always have the option to refinance only your private loans, or only a portion of your federal loans. Since federal loans’ fixed interest rates are typically quite low, you may also decide refinancing wouldn’t lead to substantial savings.
More From Advisor
- Private Student Loan Rates: November 19, 2024—Loan Rates Rise
- Student Loan Refinance Rates: November 12, 2024—10-Year Loan Rates Don’t Move
- Private Student Loan Rates: November 5, 2024—Loan Rates Stay Put
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