If you have student loan debt and have been thinking about refinancing, this may be a good time.
The Federal Reserve’s attempts to protect the economy during the coronavirus pandemic have pushed average rates for qualified borrowers refinancing student loans to new lows this summer.
According to an analysis of more than 17,000 student loan refinancings facilitated by the Credible marketplace over the last four years, during June:
- Rates on 10-year fixed-rate loans averaged 4.48%, down 26% from a July 2018 peak of 6.05%
- Rates on 5-year variable-rate loans averaged 2.95%, down 37% from a September 2018 high of 4.68%.
We estimate that a borrower repaying the average graduate school debt of $84,300 over 10 years at 6.22% interest — the average student loan interest rate for grad school loans in recent years — could save:
- $22,656 by refinancing into a 5-year variable-rate loan
- $8,686 by refinancing into a 10-year fixed-rate loan
Those are huge savings! But it’s worth highlighting the phrase “qualified borrowers”. Meaning, not everyone would qualify for the lower rates. With having a son set for his first year semester of college as a freshman in the fall, I’ve been trying to get as much info as I can on the best student loans and rates.
