Student loan refinancing saves borrowers nearly $ 17,000, thanks to historically low rates
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Borrowers who refinanced student loan debt into a new loan on Credible saved thousands of dollars while reducing the term of the loan by getting a low fixed interest rate. Compare your repayment options to decide if refinancing is right for you. (iStock)
With student loan refinancing rates near record lows, many graduates are taking this opportunity to save money on their college debt.
According to a recent analysis by Credible, well-qualified borrowers who refinanced for a shorter-term loan were able to save almost $ 17,000 on total interest over the life of their loan. They also saved years on their debt repayment schedule because they lowered their interest rates.
If you’re wondering if refinancing is right for you, it’s easy to get a feel for your estimated interest rate. You can compare the rates of up to 12 student loan refinance lenders without affecting your credit score in Credible’s online market.
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How refinancing for a shorter loan term can save you almost $ 17,000
Student loan borrowers who refinanced to a shorter repayment term in the Credible Market between November 1, 2019 and December 1, 2020, saved an average of $ 16,943 on their college debt repayment.
Loan amounts averaged $ 67,142. Monthly payments increased slightly (by $ 100), but borrowers were able to reduce their repayment term by 41 months. This is in part thanks to the drop in interest rates: this sample of borrowers saw their interest rates drop by 2.29%, which made it possible to achieve significant savings in interest.
Use Credible’s student loan calculator to see how much refinancing at a lower interest rate can save you, all without a credit check.
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Current student loan refinancing rates remain close to historic lows
Student loan refinancing rates are near historic lows, Credible data shows. The rates on a 10-year fixed-rate loan were on average 3.65% for borrowers with a credit score of 720 or higher during the week of July 5. This is down from 4.32% last year. For a 5-year variable rate loan, the rates were on average 3.05%, which is among the lowest they have been in 2021 so far.
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Since lenders don’t charge any upfront fees like origination fees to refinance your student loans, the amount of money you can save when refinancing depends greatly on the interest rate you receive. If you do decide to refinance, be sure to compare student loan interest rates between multiple lenders to ensure you get a competitive deal.
Use the rate table below to see the actual interest rates offered by private lenders and fill out a simple form on Credible to find your rate in minutes. By shopping, you get the lowest possible rate for your situation.
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How to know if refinancing a student loan is right for you
Refinancing your student loans can save you thousands of dollars over time, but it’s not for everyone. For example, refinancing your federal student loans is not recommended as it will make you ineligible for certain federal benefits such as forbearance and deferral of hardship, income-based repayment, and even student loan cancellation. .
But if you have private student loan debt – and you may qualify for a lower rate – then it may be a good idea to refinance. You can even benefit from an additional automatic payment discount. This can help you pay off your loan faster, lower your payments, and save money on interest over the life of the loan.
Learn more about refinancing student loans at Credible. You can get in touch with a knowledgeable loan expert who can answer all of your questions about repayment plans and help you decide if student loan refinancing is right for you.
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Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.
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