The latest rates for those looking to refinance their student loans

Is a student loan refi right for you?

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Average student loan refinance rates for 10-year fixed-rate loans rose slightly to 5.84% from the previous week, according to Credible’s latest rates for those who prequalified in its marketplace for the week. ending August 22. Average rates on 5- variable rate loans fell to 3.41% from 3.99% the previous week. Of course, the rates you’ll personally get depend on the lender, type of loan, your credit score and more. (See the best student loan refinance rates you can get here.)

What to know before refinancing your student loans

As Americans rack up over $1.7 trillion in student loan debt, it’s no surprise that many borrowers want to refinance their student loans. Although it may seem obvious, refinancing a student loan is not necessarily as easy as it seems. To refinance a student loan, a borrower takes out a new private loan to pay off their existing public loan. This means that all federal protections that came with federal loans are lost, and the borrower therefore waives any pandemic-related tolerances or government-issued discounts that might act as a parachute at some point in the life of the loan. .

Because there is a risk of significant loss as a result of refinancing, experts recommend weighing the pros and cons of refinancing, particularly if the borrower uses (or plans to use) the one of the repayment programs based on the income of the loan. If the borrower is currently taking advantage of the Federal Student Loan Forbearance which suspends all federal student loan payments until August 31, 2022, it makes sense to wait until that period is over before refinancing. Even if a borrower is not currently taking advantage of the programs and protections offered, it is important to determine whether the need for repayment or loan forgiveness plans will arise in the future, before removing the option altogether.

Private student borrowers aren’t at risk of losing these protections, so refinancing — assuming better rates and terms — is a less difficult decision. If you are considering refinancing a private student loan because your credit score has improved or your finances have changed and you are able to obtain a more attractive interest rate or shorten the term of your loan, you will likely benefit from refinancing.

Prices correct at time of publication.

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About Judith J. George

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