Student Loan Refinance Rates: August 8, 2022 – Loan Rates Increase – Forbes Advisor – Forbes | Vette Leader

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Last week, the average interest rate on refinanced student loans rose. Despite the rise, interest rates still remain relatively low, giving borrowers an opportunity to refinance at a lower interest rate.

The average fixed interest rate on a 10-year refinancing loan from August 1 to August 6 was 5.75%. This applies to borrowers with a credit score of 720 or higher who have pre-qualified on the Credible.com student loan marketplace. According to Credible.com, the average interest rate on a five-year variable rate loan in the same population was 2.79%.

Related: Best lenders for student loan refinance

Fixed rate loan

The average fixed rate on 10-year refinancing loans rose 0.32% to 5.75% last week. The week before, the average was 5.43%.

The fixed interest rates remain the same throughout the borrower’s loan term. This allows borrowers who refinance now to lock in a much lower interest rate than they would have received this time last year. At this time last year, the average fixed interest rate on a 10-year refinancing loan was 3.43%, 2.32% lower than today’s rate.

If you refinanced $20,000 in student loans at today’s average fixed rate, you would be paying about $220 per month and about $6,345 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Loans with a variable interest rate

Last week, the average interest rate on a five-year variable refinance student loan fell from 3.58% to an average of 2.79%.

Floating interest rates fluctuate over a loan period according to the index to which they are linked and market conditions. Many lenders recalculate interest rates for adjustable rate borrowers monthly, but they usually limit how high the interest rate can get — lenders may set an 18% limit, for example.

If you were to refinance an existing $20,000 loan into a five-year loan at a 2.79% floating rate, you would pay an average of about $358 per month. In total, you would pay around $1,451 in interest over the life of the loan. Since the interest rate is variable, it can of course fluctuate up or down from month to month.

Related: Should You Refinance Student Loans?

Comparison of student loan refinancing rates

A big goal for many borrowers when refinancing student loans is to reduce the interest they pay. And that means getting the lowest interest rate possible.

Interest rates on variable rate loans may be lower than rates on fixed rate loans. Since they are variable, they are of course subject to interest rate increases. You can limit the risk of interest rate increases on adjustable rate loans by paying off your loan as soon as possible. However, if you like the reliability of a fixed payment, fixed rate loans might be a better choice.

When considering your options, compare interest rates from multiple student loan refinance lenders to make sure you don’t miss out on potential savings. Check if you’re eligible for additional interest rebates, perhaps by opting for automatic payments or by having an existing financial account with a lender.

When should you refinance student loans?

Lenders generally require you to complete your degree before refinancing. Although it is possible to find a lender without this requirement, in most cases you should wait until you graduate to refinance.

Remember that you need good or excellent credit to get the lowest interest rates.

If your credit history is lacking or your income is not high enough to qualify, you have several options. You can wait until you have built up credit or have enough income to refinance. Or you can get a co-signer. Just make sure the co-signer knows they’re responsible if you can’t make student loan payments. The loan appears on their credit report.

Finally, make sure you can save enough money to justify a refinance. With today’s interest rates, most borrowers with good credit can benefit from refinancing. But those with less-than-great credit who don’t get the lowest fixed or variable interest rates may not. First, explore the interest rates you might pre-qualify for across multiple lenders, then calculate your potential savings.

Refinance of federal loans to personal loans

When converting a Bafög into a private Bafög, there are a few things to consider. Initially, you lose access to some of the benefits that federal student loans offer. For example, you no longer have access to income-related repayment plans or deferral and deferral options.

You may not need these programs if you have a stable income and plan to pay off your loan quickly. However, make sure you don’t need these programs if you’re considering federal student loan refinance.

If you need the benefits of these programs, you can refinance just your personal loans or just a portion of your federal loans.

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