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Looking to refinance your student loans? These are the latest rates

MarketWatch logo MarketWatch 7/26/2022 Alisa Wolfson
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For 10-year fixed rate loans, the average student loan refinancing rate rose slightly to 5.42%, up from 5.35% the week prior, , according to the latest rates from personal finance company Credible of those who prequalified on their student loan marketplace for the week ending June 19. However, average rates on 5-year variable-rate loans decreased to 3.35%, down from 3.80% the week prior.

More than 40 million Americans are on the hook for student loan debt totaling more than$1.7 trillion dollars — so it’s likely no surprise that many people are looking to refinance their student loans. But it is not the right move for many of you.

If you have a private student loan already — and can get better rates and terms by refinancing — then refinancing is worth looking into (see the lowest rates you can get here). But if you have federal student loans, you might want to think twice before refinancing.

Indeed, when refinancing a federal student loan, the borrower is effectively taking out a new private loan to pay off their existing federal loan; when you do that, you lose any federal protections that accompanied the federal loans. Thus, the borrower may forfeit access to the current federal student loan forbearance that has all federal student loan payments paused through August 31, 2022, as well as government-issued loan forgiveness and income-driven repayment options. Even if a borrower isn’t currently making use of the programs and protections offered, it’s important to consider the potential for future need of repayment plans or loan forgiveness before doing away with the opportunity completely.

Private student loan borrowers don’t need to consider those same repercussions. If you have private student loans and your credit score has improved or your finances have changed and/or you’re able to get a more attractive interest rate or shorten your loan term, you’re likely to benefit from a refinance. 

Rates accurate at the time of publication.

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