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Average interest rates on refinanced student loans have risen across the board since two weeks ago, according to Credible. 5-year graduate refinance rates saw the biggest change, rising 66 basis points. All rates are up more than 2% from a year ago.
Rates have mostly increased since last year, and there is reason to believe they will continue to rise in the future. For the 2022-23 school year, federal student loan rates increase in the highest amount since 2005-06. These new rates won’t have a direct impact on private student loan rates, but private rates may increase since they don’t have to stay as low to keep up with federal loan rates.
5-Year Variable Student Loan Refinance Rates
Refinancing rates on 5-year variable-rate undergraduate student loans rose 54 basis points last week and were up more than 2% from a year earlier.
Refinance rates on 5-year variable graded loans have increased 66 basis points.
Fixed 10 Year Student Loan Refinance Rates
10-year fixed college loan refinance rates have risen a bit since last week. Undergraduate rates have increased 12 basis points, while graduate rates have increased 42 basis points. Rates on both loans increased more than 2% from a year earlier.
Student loan interest rates by credit score
Your credit score significantly affects your rate. You will often get a lower rate the higher your credit score. Here’s a list of 10-year student loan fixed rates by credit score:
How do I know if I will be approved to refinance my student loan?
Generally, the best barometer of loan approval is your credit history and credit score. Lenders like to see that you have a history of consistently paying your loans on time, so the better your credit history, the more likely you are to qualify for a low rate. Plus, most lenders will run a soft credit check when you apply (which doesn’t affect your credit score), so you can find out from an individual lender if you’ll get approved without harm to yourself.
Fixed loan vs. variable
A fixed-rate student loan has a fixed interest rate that stays the same throughout the loan. The rate you get when you get your loan is the rate the lender will charge you until you pay off your loan in full.
A variable rate loan has an interest rate that the lender will change periodically during the term of your loan. Lenders typically link this rate to specific market benchmarks that are often affected by the fed funds rate. Variable rates can start out lower than fixed rates, but can go higher over the life of your loan.
What is the difference between a 5 and 10 year loan?
If you want a better interest rate and can financially pay off your loan quickly, a 5-year loan term might be a great option. You’ll save money on interest and free up money for your other financial goals more quickly.
A 10-year loan term will cost you more overall, but will make smaller monthly payments. This can make it easier for you to pay off your loan if you’re on a tight budget.