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Average interest rates on most refinanced student loans are little changed from two weeks ago, with the biggest move seen in five-year variable rates for undergraduates, which declined more than half a percentage point, according to data compiled by Credible.
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While rates have held in a relatively tight range in recent weeks, the cost of borrowing for college has risen over the past year, in tandem with the Federal Reserve’s increases in the federal funds rate in an effort to slow down inflation. While not directly linked to student loans, those moves ultimately affect the borrowing costs associated with everything from student loans, to real estate, credit cards, and home buying.
Federal student loan rates have also been on the rise. For the 2023-24 school year, they’ve seen the biggest increase in about two decades. While the rates private borrowers charge aren’t tied to federal student loan rates, they’re likely to also increase because they don’t have to stay as low to remain competitive with federal ones.
5-Year Variable Student Loan Rates
Variable refinance rates on undergraduate loans rose 60 basis points, while rates for graduate loans were unchanged from the prior week. Rates for both categories of loan are up 2.1 percentage points and 1.68 basis points, respectively, from the same period last year.
10-Year Fixed Student Loan Rates
Fixed refinance rates were unchanged for both undergraduate loans from the prior week. The cost of borrowing for either type of degree is up about 3 percentage points compared with a year ago.
Student Loan Rates Frequently Asked Questions
The cost of borrowing for college has increased along with interest rates on everything from credit cards, mortgages, and auto loans over the past year as the Federal Reserve has aggressively raised the federal funds rate. The higher base rates ultimately affect interest rates throughout the economy.
Your decision to refinance or not is contingent upon on your unique financial situation. You might want to look at alternatives such as a less expensive school, scholarships, or a side job to earn more money. Whatever your decision is, make sure you understand the terms of your new loan before making a choice.
Getting approved without a cosigner usually includes factors outside of your credit score. Lenders may take into account your grade point average, field of study, projected future earning potential, and more when making approval decisions.
No, private student loans won’t qualify for any federal forgiveness programs, including the widescale forgiveness currently being challenged in court.
You might be able to save a lot on interest if you repay your student loans during the repayment pause, set to continue through August 2023. This is because any payments you make on your student loans goes directly toward your balance. When you make a payment traditionally, a portion of it goes toward paying down interest.