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According to Credible, average interest rates on refinanced student loans have increased across the board from two weeks ago. The interest rate on 5-year graduate refinancing showed the biggest change, rising 66 basis points. All rates are up more than 2% from a year ago.
Rates have largely risen since last year and there is reason to believe that they will continue to rise in the future. For the 2022-23 school year, federal student loans will increase at the highest amount since 2005-06. These new rates don’t directly affect private student loan rates, but private rates may rise because they don’t have to stay so low to align with federal loan rates.
5-Year Variable Student Loan Refinancing Rate
The refinancing rate on 5-year floating-rate undergraduate student loans rose 54 basis points last week and is up more than 2% from a year ago.
Refinancing rates on 5-year variable graduation loans increased by 66 basis points.
10-Year Fixed Student Loan Refinancing Rate
Rates for 10-year undergraduate student loan refinancing have risen slightly since last week. Graduate rates have increased by 12 basis points, while graduate rates have increased by 42 basis points. Rates on both loans are up more than 2% from a year ago.
Student Loan Interest Rates by Credit Score
Your credit score has a significant impact on your rate. You often get a lower rate the higher your credit score is. Below we have listed the 10-year fixed student loans by credit score:
How do I know if I will be allowed to refinance my student loan?
In general, the best barometer for approving loans is your credit score and history. Lenders like to see you have a track record of consistently repaying your loans on time, so the better your credit history, the more likely you are to qualify for a low rate. In addition, most lenders perform a soft credit check when you apply (which will not affect your credit score) so you can find out from an individual lender if you are approved without damage.
Fixed vs variable loan
A fixed-rate student loan has a fixed interest rate that stays the same throughout your loan. The rate you get when you take out your loan is the rate the lender charges you until you have fully repaid your loan.
A variable rate loan has an interest rate that the lender will change periodically over the life of your loan. Lenders usually tie this rate to specific market benchmarks that are often influenced by the federal fund rate. Variable rates can start lower than fixed rates, but can increase over the life of your loan.
What is the difference between a 5 year loan and a 10 year loan?
If you want a better interest rate and you are financially able to pay off your loan quickly, a 5-year loan term can be a good choice. You save money on interest and free up money to spend more quickly on your other financial goals.
A 10-year loan will generally cost you more, but you will pay smaller monthly payments. This can make it easier for you to repay your loan if you are on a tight budget.
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