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According to Credible, average interest rates on refinanced student loans have been rising for every type of loan for the past two weeks. Five-year undergraduate loan rates rose the most, rising 1.5 percentage points.
The average 10-year fixed student loan rate for borrowers with a credit score below 680 is 6.58%. This rate is slightly higher than the average rate of 6.25% for borrowers across all credit ratings. Usually, the lower your credit score, the higher the rate you will have to pay.
The cost of borrowing for college has risen sharply this year amid aggressive moves by the Federal Reserve to curb inflation by raising base interest rates. These higher rates ultimately increase borrowing costs for everything from student loans to mortgages and credit cards.
Federal student loan rates for the 2023-2024 school year have risen the most in nearly two decades. Although private student loan rates aren’t directly affected by federal rates, they can go up because they don’t have to stay that low to stay competitive with federal rates.
Variable 5-Year Student Loan Refinance Rates
Five-year undergraduate variable loan rates are up more than 1.5% from two weeks ago. Rates are more than double what they were a year ago.
Graduation rates were up 50 basis points from two weeks ago and 53 basis points from six months ago.
Fixed 10-Year Student Loan Refinance Rates
Undergraduate and graduate rates are up slightly from two weeks ago. Graduate rates are 2.66% higher than 12 months ago, while undergraduate rates are up 2.5%.
Student loan interest rates by credit score
You’ll often get a better interest rate with a higher credit score, although that’s not always the case. The table below shows 10-year fixed student loan rates by credit score:
Frequently Asked Questions
While opting for a lower interest rate is often a good reason for people to refinance, there are downsides to certain types of loans.
If you have federal student loans, be careful before choosing to refinance them. You will lose the main protections that come with federal loans if you refinance. For example, you will not be eligible for the COVID-19-related student loan payment pause, currently in place until the end of August 2023, and federal student loan relief programs like public service.
You also won’t be eligible for specific repayment options such as income-contingent repayment plans, which take into account your specific income and family size when determining monthly payments.
Your credit history is the most important factor in your chances of refinancing approval. If you have a bad credit score, it will be more difficult for you to get the green light for a new loan, but you may be able to hire a co-signer to increase your chances of approval.
Unfortunately no. Private student loans are not eligible for any federal forgiveness program, including the large-scale forgiveness currently being challenged in court.
Paying off your student loans during the repayment break can help you save hundreds or even thousands in interest. This is because any payment you make on your student loans goes directly to your balance. Usually, when you make a payment, part of it goes to repay interest.
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