Student Loan Refinance Rates: August 17, 2022 – Loan Rate Slip – Forbes Advisor – Forbes | Vette Leader

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Rates on refinanced student loans fell last week. Despite the increase, if you’re interested in refinancing your student loans, you can still get a relatively low interest rate.

According to Credible.com, the average fixed rate on a 10-year refinance loan from Aug. 8-13 was 5.46%. For a variable-rate loan with a five-year term, it was 3.99%. This applies to borrowers with a credit score of 720 or higher who have prequalified on the Credible.com student loan marketplace.

Related: Best Lenders for Student Loan Refinance

Fixed rate loan

Last week, the average fixed rate on 10-year refinancing loans fell 0.29% to 5.46%. The week before, the average was 5.75%.

Fixed interest rates do not fluctuate over a borrower’s loan life. This allows borrowers who refinance now to lock in a much lower interest rate than they would have received this time last year. This time last year, the average fixed interest rate on a 10-year refinancing loan was 3.46%, 2.00% lower than today’s rate.

Let’s say you refinanced $20,000 in student loans at today’s average fixed rate. According to Forbes Advisor’s student loan calculator, you’ll pay about $217 a month and about $5,999 in total interest over 10 years.

Loans with a variable interest rate

Last week, interest rates on student loans with five-year variable refinancing rose to 3.99% from 2.79% the previous week.

Unlike fixed rates, variable rates fluctuate over the life of a loan according to market conditions and the index to which they are tied. Many refinancers recalculate interest rates monthly for adjustable rate borrowers, but they usually limit how high the interest rate can be — say, 18%.

Refinancing an existing $20,000 loan into a five-year loan with an interest rate of 3.99% would yield a monthly payment of approximately $368. A borrower would pay a total of $2,094 in interest over the life of the loan. But the rate in this example is variable and could move up or down each month.

Related: Should You Refinance Student Loans?

Comparison of student loan refinancing rates

Refinancing a student loan at the lowest possible interest rate is one of the best ways to reduce the interest you have to pay over the life of the loan.

You may find that variable rate loans start lower than fixed rate loans. But because they are variable, they have the potential to increase in the future.

Fortunately, you can reduce your risk by paying off your new refinance loan quickly, or at least as soon as possible. Start by choosing a short loan term but with a manageable payment. Then pay extra whenever you can. This can hedge your risk against potential rate hikes.

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.

Using a co-signer is an option for those who are not strong enough to qualify for a refinance loan. Alternatively, you could wait until your credit score and income are stronger. If you choose to have a co-signer, make sure they are aware that they will be responsible for making payments if for any reason you are unable to do so. The loan also appears on their credit report.

It’s important to make sure you’re saving enough money when you refinance. While many borrowers with solid credit ratings could benefit from refinancing at today’s rates, those with poorer credit ratings are not getting the lowest rates available.

Calculate whether the refinancing will benefit your situation. Shop around for rates, then calculate what you could save.

Refinancing Student Loans: What Else to Consider

One thing to remember when refinancing federal student loans into private student loans is that you lose many federal loan benefits, such as: B. Income-based repayment plans and generous deferral and forbearance 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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