Student loan refinance rates have fallen. What to consider before refinancing

Should you refinance your student loans?

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Student loan refinance rates fell slightly: For 10-year fixed rate loans, the average student loan refinance rate is 3.99%, down from 4% the previous week, according to Credible’s latest rates for the week ending March 21, 2022. Meanwhile, 5-year floating rate loan rates are averaging 3.47%, down from 3.62% the previous week. That said, the rate you qualify for will depend on things like your credit score (the higher the better) and your debt-to-equity ratio (to figure it out, divide your total monthly payments and your obligations by your gross income), which lenders like to see below 50%. Check here for the lowest student loan refinance rates you could qualify for.

What does it mean to refinance a student loan?

By refinancing a student loan, a borrower takes out a new loan to pay off their existing loan, likely to take advantage of a lower interest rate or a more favorable repayment schedule to save money.

Note that some people save thousands of dollars when they refinance student loans, but before you take the plunge, you might want to ask yourself these 5 questions to make sure refinancing is right for you.

Should I refinance my federal student loans?

Although refinancing a federal student loan may mean cashing in on a lower interest rate — which may sound appealing — experts advise caution when federal borrowers refinance their loans into private loans. Indeed, once a federal loan goes private (which happens when you refinance), most protections — including potential loan cancellation, loan release, and income-based repayment plans — are no longer valid, nor can these loans become federal. never again loans.

However, if you have a high interest loan and you qualify for a lower interest rate, refinancing can save you money. And in the long run, lowering your interest rate and reducing your repayment term can save you a lot of money, even if it can increase your monthly payment. So if you expect to have stable finances and be able to meet monthly payments, refinancing may be a good idea. If however, you like to know that you have income-based repayment options, the possibility of Public Service Loan Forgiveness (PSLF), or if you have those COVID-related forbearance protections – the refinance n may not be the answer.

Should I refinance private student loans?

The question here is easier to answer because your loans are already private. If you can find a lender with more favorable rates and terms, a refi could make sense and potentially save you thousands of dollars over the life of the loan.

Editor’s Note: Pricing correct at time of publication.

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