Student loan interest rates sank to record lows between May, June: Is refinancing your private loans worth it?
It's a good time to refinance student loans, since interest rates fell month-over-month between May and June 2021. See if you can qualify for a lower interest rate to save money on interest and lower your monthly payments. (iStock)
Student loan refinance rates have been steadily falling since 2018, with 10-year fixed-rate loans setting new records for the month of June, according to data from Credible.
The average interest rate on a 10-year fixed-rate loan fell from 3.61% to 3.59% between May and June 2021, among well-qualified borrowers who refinanced their student loans on Credible. This is the lowest interest rates have been since Credible started collecting data. For 5-year variable-rate loans, the average interest rate was 2.92%, down from 3.05% in May and falling below 3% for the first time in 2021.
If you're thinking about refinancing your private student loan debt, there's never been a better time to do so. Compare student loan interest rates across multiple lenders at once on Credible's online marketplace. Doing so will not affect your credit score.
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Interest rates are still hovering near record lows
Student loan refinance rates fell to 3.50% during the week of June 14 for a 10-year fixed-rate loan, which is the lowest they've ever been. Rates have slightly increased since then, reaching 3.65% for the week of June 28.
Average offered interest rates are among Credible users with credit scores of 720 or higher. The interest rate you're offered will vary based on a number of factors, including your credit score as well as the loan length and amount.
Not sure if refinancing is a good move? Get prequalified on Credible's online loan marketplace to see your potential interest rates without affecting your credit score. This can help you determine what kind of interest rate you can qualify for, so you can decide if refinancing is worth it.
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How to know if student loan refinancing is right for you
A college education is an investment in your earning potential, but paying for college is a challenge of its own. There are many different types of loans to take out, and endless ways to pay off student loan debt once you graduate.
People with college debt who refinanced their student loans to a shorter term on Credible saved more than $17,000 over the life of their loan. But while student loan refinancing may be able to save you thousands of dollars, but it's not right for everyone.
You shouldn't refinance your student loans if… You have federal student loans. Refinancing federal student loans to a private loan means you'll lose federal protections like an income-driven repayment plan, student loan forgiveness programs and hardship forbearance.
You should refinance your student loan if… You can qualify for a lower rate than what you're currently paying on your private student loan debt. Unlike mortgage refinancing, student loan refinancing doesn't come with expensive fees like closing costs, so the most important factors to consider are your interest rate, loan length and monthly payments.
Use Credible's student loan refinance calculator to determine your overall savings and see if refinancing is right for your financial situation.
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