Households can save $ 5,000 by refinancing student loans as interest rates hit record highs

STUDENT loan debt can be crippling, but with interest rates hitting record highs, now is your chance to save up to $ 5,000.

There are many benefits to refinancing student loans, depending on the type of loan and how many you have.

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Student loan refinancing rates hit record highs in NovemberCredit: Getty Images

Student loan refinancing rates hit a new high last month.

During the week of November 22, an average fixed interest rate for a 10-year loan was only 3.35%, while a variable interest rate on a five-year loan was than 2.41%.

In the United States, the average student loan debt is $ 37,693, with borrowers paying an interest rate of 5.8% on average, according to the Education Data Initiative.

On that balance, by refinancing a 10-year loan at a fixed interest rate of 3.40% over the same period, you could potentially reduce your monthly payments and save over $ 5,200 over the life of the loan.

Although these rates have since increased, it is still a great time to choose to refinance your student loans.

Why refinance my student loans?

When you choose to refinance your student loans, you are combining all of your existing loans into one larger loan.

So instead of paying off loans at different interest rates and making multiple payments each month, you will only have one interest rate and one payment.

However, it depends on the type of loans you have.

Federal and private loans generally have very different terms and conditions, including interest rates and repayment terms.

In many cases, federal loans come with benefits including lower payments and interest, forbearances, grace periods, income-based repayment options, and more.

Not all private loans have the same benefits.

It is important to consider your loans and your specific situation before deciding to refinance.

Are all student loan payments suspended?

Due to the passage of the CARES Act in March 2020, some federal student loan payments were suspended until January 2022.

This applies to loans held by the US Department of Education.

During the break, the applicable loans have:

  • 0% interest
  • No payment required
  • No collection on overdue loans

Payments are expected to resume after January 31, 2022.

We explain everything you need to know about repaying student loans.

We also explain whether private student loans will be canceled under President Joe Biden.

I am a substitute teacher and these are the worst students I have ever dealt with – classes are completely wild I had to REFUSE the extra money

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