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Average interest rates on refinanced student loans are up on 10-year loans from two weeks ago, according to Credible Student Loans. At the same time, 5-year loans have seen rates decrease.
The average 10-year fixed student loan rate for borrowers with credit scores below 680 is 8.93%. This is much higher than the average rate of 6.38% 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 20 years. 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.
Important: The Biden administration extended the repayment pause on federal loans through the end of August 2023. You won’t qualify for this pause if you refinance your federal loans into private ones. You may also pay higher interest rates with private loans, making federal loans the best choice in most cases.
5-year variable student loan refinancing rates
Rates on 5-year variable undergraduate student loans are down by 45 basis points over the past week. Even with this downward trend, they are still significantly higher than they were one year ago.
Graduate rates are also down this week, falling by 28 basis points. Rates are up about 1% from 12 months ago.
UndergraduateGraduateThis past week6.11%3.78%2 weeks ago6.56%4.06%6 months ago4.13%2.73%1 year ago3.33%2.77%
10-year fixed student loan refinancing rates
While 5-year rates have decreased over the past week, 10-year rates have gone up. Undergraduate rates are up by 16 basis points, while graduate rates have increased by 14 basis points.
From 12 months ago, both undergraduate and graduate rates have increased by roughly 3%.
UndergraduateGraduateThis past week6.48%6.09%2 weeks ago6.32%5.95%6 months ago5.60%5.08%1 year ago3.71%3.28%
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:
Below 680680-719720-779780+Average rateThis past week8.93%7.53%6.25%5.48%6.38%2 weeks ago6.58%6.54%6.29%5.75%6.23%
Example: Suppose you’re repaying $20,000 undergraduate loan over a 10 years with the interest rates listed below. If you are a borrower with a score below 680, the lifetime cost of your loan would be $30,311 with this past week’s rate of 8.93%. For borrowers with a score over 780, paying an average rate of 5.48%, the same loan would have cost $26,023, or $4,288 less.
Frequently asked questions
What are the cons of refinancing student loans?
While nabbing a lower interest rate is often an excellent 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.
Is it hard to get student loan refinancing?
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.
Can my private student loans be forgiven?
Unfortunately, no. Private student loans aren’t eligible for any federal forgiveness programs, including the widescale forgiveness currently being challenged in court.
Should I continue to pay my student loan during the repayment pause?
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.