The latest student loan refinance rates – and what to consider before refi

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Is a student loan refi right for you?

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For 10-year fixed-rate loans, the average student loan refinance rate fell to 4.38%, although average 5-year variable-rate loan rates rose slightly to 3.82%, according to latest data from Credible, which looked at the accepted borrower rate from lenders on its platform, for the week ending April 8. That said, for those with credit scores of 780 and above, average 10-year fixed rates are just 3.93% and 2.50% for 5-year variable loans. You can see the lowest student loan refinance rates you could qualify for here.

When you refinance a student loan, you are essentially taking out a new private loan, ideally with better rates and terms, and using it to pay off an existing student loan.

While this sounds like a good option, those with federal loans should be wary of refinancing their loans for a variety of reasons. When you refinance a federal loan, you convert it to a private loan, and in doing so, you lose federal protections such as income-contingent repayment tools and forgiveness rights. And, right now, those with federal loans have payments suspended until August. So even if you save a small amount each month by refinancing, you’ll want to make sure you’re not planning to fall back on the forgiveness aspect of a federal loan or the national forbearance currently in effect. This is because once you have refinanced a federal loan to a private loan, there is no turning back – you can never reverse a private loan to a federal loan.

Refinancing private loans is often an easier decision because you’re not giving up special protections. So if you have high interest private student loans and there has been a change in your finances or you qualify for a lower interest rate, refinancing could result in significant savings. Experts also point out that refinancing offers the ability to adjust the terms of a loan, so if you’re looking to pay the lowest amount over the life of the loan, you may want to consider a shorter repayment term. which will increase your monthly payments, but decrease the time in which you repay them, resulting in less interest paid in total. You can see the lowest student loan refinance rates you could qualify for here.

Before you sign on the dotted line, Marketwatch Picks has put together a guide with 5 questions you should ask yourself during the refinance process. While it’s possible to save thousands of dollars when refinancing student loans, it’s important to remember that waiving certain federal protections may prove far more complicated than its value for some borrowers.

*Prices correct at time of publication.

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