Your student loan refinance rates have dropped. Should you consider a refi?

Thinking of refinancing your student loans? Here’s what to know first.

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To refinance your student loan into a 10-year fixed-rate loan, average rates are 5.68% for the week ending October 4, down from 6.00% the week before, while variable-rate loans on 5-year bonds saw their rates settle at 3.38%, down. down 4.61% the previous week, according to data from personal finance firm Credible of those who prequalified in their student loan marketplace. For those with credit scores of 720 and above, rates have fallen to 5.53% for 10-year fixed loans and 3.38% for 5-year variable loans. Discover here the best rates you can claim.

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. But, refinancing student loans, especially if you have a federal loan, isn’t always as easy as it seems.

Refinancing a student loan means taking out a new private loan to pay off an existing public loan. If you have a federal student loan and do so, you will lose all federal protections that come with federal loans. In other words, you would lose the current student loan payment suspension in effect until January 2023, government-issued loan forgiveness, and income-contingent repayment options.

Therefore, experts recommend weighing the pros and cons of a refi, especially if the borrower uses (or plans to use) one of these advantages. And if the borrower is currently taking advantage of the Federal Student Loan Forbearance which suspended all federal student loan payments until January 2023, it makes sense to wait until that period is over before refinancing.

Those with private student loans probably don’t have benefits like those, so the decision is much more about how much money you can save and what better terms you can get. Be sure to shop around for the best rates and terms, say the pros.

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About Judith J. George

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