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Average interest rates on 5-year refinanced student loans have risen since two weeks ago, and rates on 5-year student loans have fallen, according to Credible. 10-year lending rates are just 10 basis points below where they were two weeks ago.
Interest rates have risen for most of the last year and there is reason to believe they will continue to rise in the future. For the 2022-23 school year, federal student loan rates will increase by the highest amount since 2005-06. These new interest rates will not directly affect rates on private student loans, but private interest rates may increase because they do not need to stay low enough to be comparable to federal loan rates.
5-year variable refinance rates for student loans
Refinance rates on 5-year adjustable-rate student loans are down 45 basis points over the past week but are up about 1% year-on-year.
Refinance rates on 5-year variable rate graduate loans are up 71 basis points.
10-year fixed refinance rates for student loans
10-year fixed-term student loan refinance rates are up slightly compared to two weeks ago. Undergraduate rates are up eight basis points, while graduate rates are down four basis points. Student loan rates are up almost 2% year over year.
Student Loan Interest Based on Credit Rating
Your credit rating is an important factor in the installments you receive. Generally, the better your credit score, the lower the interest rate you get. Below we have listed the 10-year fixed student loan rates by credit rating:
Should you refinance your student loan?
Refinancing your student loans can help lower your interest rate, switch from an adjustable rate loan to a fixed rate loan, or change your term. By changing your term, you may be able to spread payments for smaller monthly payments over a longer period of time while spending more interest overall.
Before you decide to refinance a federal student loan, be sure to do this. You lose important protections that come with federal loans when you refinance them. For example, you will no longer qualify for the COVID-19 student loan payment pause, which currently expires on August 31, 2022, and government student loan assistance programs such as government loan forgiveness.
You are also not eligible for certain repayment options such as income-based repayment plans that take your specific income and family size into account when determining monthly payments.
What is the difference between a fixed rate loan and an adjustable rate loan?
A fixed rate student loan has a fixed interest rate that stays the same throughout the loan. The rate you get when you take out your loan is the rate the lender will charge you until you pay off your loan in full.
An adjustable rate loan has an interest rate that the lender changes periodically throughout the life of your loan. Lenders typically peg this rate to specific market benchmarks, which are often influenced by the federal funds rate. Variable interest rates can start out lower than fixed interest rates, but rise higher over the life of your loan.
How do I know if I’ll be eligible to refinance my student loan?
In general, the best barometer of credit approval is your credit score and history. Lenders like to see that you have a proven record of repaying your loans reliably and on time. The better your credit score, the more likely it is that you will also qualify for a low interest rate. Additionally, most lenders perform a gentle credit check (which doesn’t affect your credit score) when you apply, so you can find out from a single lender if you’ll be approved without harm to you.
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