College debt can drain your finances, especially when you’re trying to save for a down payment on a home or build your retirement nest egg. Student loan refinancing rates are near their all-time low, which may mean now is the time to refinance your student loans to save money on interest and pay off debt faster.
Student loan borrowers who refinanced to a shorter term loan on Credible reduced their interest rate by 2.29% and saved $ 16,943 over the term of their loans. But you need to think carefully before you refinance your federal student loans, as you may lose protections like forbearance and forgiveness.
Read on to find out how to calculate how much you could save on your private student loans by refinancing. If you want to refinance your college debt, visit Credible to compare rates from multiple lenders at once without hurting your credit score.
END OF FIXED-RATE STUDENT LOAN REFINANCING RATES COULD NEAR HISTORIC LOWS
Current student loan refinancing rates are at an all time high
The average student loan balance was $ 38,792 in 2020, up 9% from the previous year, according to data from the credit bureau Experian. These numbers are likely much higher if you factor in graduate student debt and medical school debt.
While student loan balances have inflated, student loan interest rates are much lower than they were years ago. Fixed interest rates on federal student loans, which are set by federal law, reached 6.8% in the 2006-08 school years, according to the US Department of Education. Refinancing your federal student loans means you will lose federal protections, so keep that in mind when making decisions about your university debt.
Student loan interest rates have come down from their peak, but if you attended college in the mid-2000s, you may be able to get a much lower interest rate on your college debt than you. currently pay. Borrowers with good credit who refinanced into 10-year fixed-rate private student loans on Credible saw interest rates averaging 3.56% during the week of May 17, 2021, setting a low record. The 5-year variable rate loan rates averaged 2.95% for the week of May 31, 2021.
The rate table below shows the actual student loan refinance rates offered, as low as 1.87%. Find out what types of rates you can claim on Credible.
THINKING OF REFINANCING YOUR STUDENT LOANS? WHAT THERE IS TO KNOW
How to Calculate Your Potential Student Loan Savings in 3 Steps
It’s easy to see how much you can save on your private student loan debt. Just follow these three steps:
- Find your current interest rate and your outstanding loan balance
- Shop around to see the student loan refinance rates you may be eligible for
- Enter your information into a student loan refinance calculator
1. Find your current interest rate and the outstanding loan balance
Obtain a copy of your most recent student loan billing statement to find out your remaining loan amount and the interest rate. If you cannot find the correct documents, contact your loan officer (or agents) for more information.
You can always request a free copy of your credit report from the three credit bureaus at www.AnnualCreditReport.com. You should be able to find a wealth of financial information related to your student loans, including your remaining balance and the interest rate you are paying, as well as your on-time or overdue student loan payments.
2. Shop around to see the student loan refinance rates you may qualify for.
Many private student lenders that offer refinance allow you to pre-qualify for a loan, which means you can check your eligibility and the estimated interest rate without negatively affecting your credit. You can do this by researching lenders and prequalifying yourself on their websites.
You can save time by using an online loan marketplace like Credible, which allows you to view student loan refinance rates from multiple lenders at once by filling out just one form.
If you are not happy with the interest rate offered or if you are not eligible for refinancing, consider taking some steps to improve your credit before you apply. For example, you can pay off credit card debt to reduce your credit utilization rate or check your credit report to dispute any errors.
3. Enter your information into a student loan refinance calculator
An online student loan calculator does all of the math for you. All you need to do is collect the above information and plug it into the appropriate box. A calculator can show you how much you’ll save over time, as well as your new monthly payment and monthly savings.
For example, a student borrower with $ 40,000 in private student debt and a 10-year term could save $ 5,418 over the life of their loan – and $ 45 per month – by reducing their interest rate by 6, 3% to 4%.
Credible offers a user-friendly, completely free student loan refinance calculator. Find out how much you can save and compare the offers of the best refinance lenders.
BIDEN’S BUDGET EXCLUDES STUDENT LOAN FORGIVENESS
Before You Refinance, Think About The Consequences Of Losing Federal Benefits
Refinancing your private student loans at a lower interest rate is usually a good idea, but it may not be the right decision if you have federal student loans. That’s because federal student loans come with more protections like income-tested repayment plans, forbearance from student loan payments, and potentially even college debt forgiveness.
Weigh the benefits and risks of refinancing student loans before making such a big financial decision. And if you want to discuss your options with a professional, visit Credible to get in touch with a loan officer who can answer all of your questions.
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