Student Loan Refinance Rates: November 29, 2021—Loan Rates Edge Down - Forbes

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Published: Nov 29, 2021, 3:23pm
Rates on refinanced student loans slipped last week. If you’re interested in refinancing your student loans, you can still get a relatively low rate.
According to Credible.com, from November 22 to November 26, the average fixed interest rate on a 10-year refinance loan was 3.35%. It was 2.41% on a five-year variable-rate loan. That’s for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace.
Related: Best Student Loan Refinance Lenders
The average fixed rate on 10-year refinance loans last week dropped by 0.09% to 3.35%. The week prior, the average stood at 3.44%.
At this time last year, the average fixed rate on a 10-year refinance loan was 3.95%, or 0.60% higher than today’s rate. That means that borrowers who refinance now have the chance to lock in a rate that’s considerably lower than they would have received at this time last year.
A borrower who refinances $20,000 in student loans to today’s average fixed rate would pay around $196 per month and approximately $3,564 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.
Average variable rates on five-year refinance loans moved down last week by 0.12%, falling to 2.41%.
In contrast to fixed rates, variable interest rates fluctuate over the course of a loan term according to market conditions and the index they’re tied to. Many refinance lenders recalculate rates monthly for borrowers with variable-rate loans, but they typically limit how high the rate can go—to 18%, for instance.
Let’s say you refinanced an existing $20,000 loan to a five-year loan with a variable interest rate of 2.41%. You’d pay about $354 on average per month. You’d pay approximately $1,249 in total interest over the life of the loan. Keep in mind that since the interest is variable, it could fluctuate up or down from month to month.
Related: Should You Refinance Student Loans?
One big goal of refinancing student loans, for many borrowers, is reducing the amount of interest paid. And that means getting the lowest possible interest rate.
Rates on variable loans may start out lower than rates on fixed-rate loans. Of course, because they’re variable, they’re subject to interest rate increases. You can limit the risk of interest rate increases with variable-rate loans by paying off your loan as quickly as possible. Still, if you like the reliability of a fixed payment, fixed-rate loans could be a better choice.
When considering your options, compare rates across multiple student loan refinancing lenders to ensure you’re not missing out on possible savings. Explore whether you qualify for additional interest rate discounts, potentially by choosing automatic payments or having an existing financial account with a lender.
Most lenders require borrowers to complete their degree before refinancing—though not all—so in most cases, wait to refinance until you’ve graduated. You’ll also need a good or excellent credit score and stable income in order to access the lowest interest rates.
If your credit is lacking or your income isn’t high enough to qualify, you have a couple of options. You can wait to refinance until you’ve built credit or you have enough income. Or, you can get a co-signer. Just make sure that the co-signer knows that they’ll be responsible if you can’t make student loan payments. The loan will appear on their credit report.
Before you choose to refinance, calculate your potential savings. It’s important to make sure you’ll save enough to justify refinancing. Shop at multiple lenders for rates and consider your credit score when shopping around. Keep in mind that those with the highest credit scores receive the lowest rates.
There are a few things to keep in mind when refinancing a federal student loan into a private student loan. To begin, you’ll lose access to some benefits that federal student loans offer. For instance, you’ll no longer have access to income-driven repayment plans or deferment and forbearance options.
If you’re thinking about refinancing federal student loans, first make sure you likely won’t need to use any of these programs. This may be the case if your income is stable and you plan to quickly pay off a refinance loan. You always have the option to refinance only your private loans, or only a portion of your federal loans. Since federal loans’ fixed interest rates are typically quite low, you may also decide refinancing wouldn’t lead to substantial savings.
Brianna McGurran is the Loans Analyst for Forbes Advisor. Most recently, she was a staff writer and spokesperson at NerdWallet, where she wrote “Ask Brianna,” a financial advice column syndicated by the Associated Press. As spokesperson, she also contributed her expertise to outlets including The New York Times, ABC World News Tonight and the Today Show.

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