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Average interest rates on refinanced student loans are mixed across the board from two weeks ago, according to Credible. Rates on 5-year undergraduate loans and 10-year graduate loans are down, while rates on 5-year graduate loans and 10-year undergraduate loans are up.
The average 10-year fixed student loan rate for borrowers with credit scores below 680 is 7.75%. This is higher than the average rate of 6.78% for borrowers across all credit scores. Usually, the worse your credit score, the higher the rate you’ll have to pay.
College costs have gone up this year as the Federal Reserve has moved aggressively to slow inflation by upping base interest rates. Those higher rates increase borrowing costs for everything from student loans to mortgages and credit cards.
Federal student loan rates for the 2023-24 school year have risen by the widest margin in about two decades. While private student loan rates aren’t directly affected by federal rates, they may also go up because they don’t have to stay as low to remain competitive with federal ones.
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5-year variable student loan refinancing rates
Rates on 5-year variable undergraduate student loans are over 5% less than they were two weeks ago. Even with this downward trend, they are still significantly higher than they were one year ago.
Graduate rates are up slightly this week, raising by five basis points. Rates are up about 1% from 12 months ago.
10-year fixed student loan refinancing rates
Rates on 10-year undergraduate loans are up by 56 basis points from two weeks ago, while graduate rates have decreased by 27 basis points.
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From one year ago, undergraduate rates have increased by roughly 3%. Graduate rates are up about 2.5%.
Student loan interest rates by credit score
You’ll usually receive a better interest rate with a higher credit score — though that isn’t always the case. The table below shows the 10-year fixed student loan rates by credit score:
Frequently asked questions
While getting a lower interest rate is often a great reason for people to refinance, it doesn’t come without drawbacks for certain types of loans.
If you have federal student loans, be careful before choosing to refinance them. You will lose key protections that come with federal loans if you refinance. For instance, you won’t qualify for the COVID-19-related student loan payment pause, currently in place through the end of August 2023, and federal student loan relief programs like Public Service Loan Forgiveness.
You also won’t be eligible for specific repayment options like Income-Driven Repayment plans, which take your specific income and family size into account when determining monthly payments.
Your credit history is the most important factor in your refinancing approval chances. If you have a poor credit score, it’ll be harder for you to get approved for a new loan, but you may be able to add a cosigner to boost your likelihood of approval.
Unfortunately, no. Private student loans aren’t eligible for any federal forgiveness programs, including the widescale forgiveness currently being challenged in court.
Repaying your student loans during the repayment pause may help you save hundreds or even thousands on interest. This is because any payment you make on your student loans goes directly toward your balance. Usually when you make a payment, a portion of it goes toward paying down interest.
