This Week’s Student Loan Refinancing Rates: October 18, 2022

Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.

Average interest rates on five-year variable undergraduate refinanced student loans have skyrocketed from last week and are at the highest level they’ve been in the past 12 months, according to Credible. The rates on 10-year loans are pretty much flat, and the rates on five-year variable graduate loans are down.

The trends on five-year undergraduate student loan rates are indicative of a large-scale rate increase across the board. Federal student loan rates for 2022-23 will increase by the most in almost two decades. These new rates won’t have a direct impact on private student loan rates, but private rates may rise as they don’t have to remain as low to align with federal loan rates.

5-year variable student loan refinancing rates

Borrowers looking to refinance a 5-year undergraduate loan this past week faced much higher rates than the week before. Rates ballooned by over 4.5% and are at their highest point in the past year. This significantly increases the loan costs for these borrowers.

On the brighter side, graduate rates are down by about 89 basis points from two weeks ago, and are also lower than they were six months ago.

10-year fixed student loan refinancing rates

While rates on 5-year undergraduate loans swung significantly, rates on 10-year undergraduate loans have remained flat, not budging over the past week. Rates on graduate loans have wiggled only slightly, ticking up by two basis points.

Student loan interest rates by credit score

Your interest rate will usually improve with a better credit score. The table below shows the 10-year fixed student loan rates by credit score:

Frequently asked questions

You might qualify for a better rate when you refinance your student loans. You will also be able to change from a fixed-rate to aa variable-rate loan, or switch up your term length. By choosing a different term length, you might be able to distribute costs over an extended period for smaller monthly payments, though you’ll pay more in total interest.

In the short term, yes. When you apply for a new loan, lenders will conduct a hard inquiry to check your credit history, which will ding your credit score a bit.

Additionally, when you refinance, your original loan is closed and a new one is opened. As part of your credit score is based on your payment history, your credit score may take a hit as your work to establish a new track record of reliable payments.

Your credit history is the biggest factor in your refinancing approval chances. If you have a poor credit score, it’ll be harder for you to get the green light for a new loan, but you may be able to enlist a cosigner to boost your likelihood of approval.

Leave a Comment

Your email address will not be published.