Student loan refinance rates have fallen from a week prior. For 10-year fixed-rate loans, the average rate was 4.98% (down slightly from 4.99%), and for 5-year variable-rate loans, it was 3.53% (down from 3.92% a week prior), according to the most recent data from personal finance marketplace Credible. Of course, these are just averages, and it’s important to note that those with excellent credit may be able to get lower rates, while those with so-so credit may pay more. You can see the lowest rates you may qualify for here.
Even though rates to refinance student loans are still relatively low, experts urge exercising caution before proceeding with a student loan refi, especially if you have federal student loans. Indeed, when refinancing a federal student loan, you’re effectively taking out a new loan to pay off the old loan, and in this process, your federal loan is converted to a private loan. Private loans do not have the protections that federal loans do, such as income-driven repayment plans, loan forgiveness and the current payment and interest pause that’s currently in effect as a result of the pandemic.
If, however, you’re considering refinancing a private student loan and your finances have improved and/or you’re being offered more appealing loan rates and terms, refinancing can be a wise move. You can see the lowest rates you may qualify for here, and be sure to read this MarketWatch Picks guide to help you get the lowest rates when refinancing your student loans.