Don't ignore low student loan rates — why you should refinance today

Student loan refinancing rates are near record lows. Here's why you should consider refinancing now.

Coronavirus has resulted in an unprecedented opportunity for student loan refinancing at record low rates. In an effort to bolster the economy, the Federal Reserve has set its benchmark interest rate between 0% and 0.25%.

To be clear, this isn't the rate borrowers pay. It's the overnight rate at which banks can borrow. However, when credit becomes so much less costly, savings are passed on to consumers.

Borrowers shouldn't pass up this chance to substantially reduce their student loan costs by potentially becoming able to repay their education loans at one of the lowest interest rates in history. If you have private student loan debt, you should visit Credible to compare refinancing rates from multiple lenders at once so you can see if a refi will save you.

Are student loan interest rates going down?

The reduction in student loan interest rates has been dramatic in recent months, with loan rates falling near record lows.

In 2018, for example, according to Credible, the interest rate on a variable rate student loan with a 5-year repayment period averaged 6.17% for borrowers with a cosigner while a borrower taking out a 10-year fixed-rate loan faced an average interest rate of 7.64%.

Now, Credible's rates table reveals many lenders offering variable-rate student loan refinance loans with starting interest rates as low as 1.99% and fixed rates as low as 2.79%.

These rates are extremely competitive and present what may be a once-in-a-lifetime opportunity to reduce the costs of your debt. See what up to 10 refinancing lenders are offering now.


Learn how much you could potentially reduce your monthly payments and total interest charges by securing a new student loan refinance loan. Find out what rates you qualify for instantly.

Should I refinance student loans now?

Federal student loans come with important protections for borrowers, along with relatively affordable fixed interest rates. While you may be able to reduce the interest rate on federal student loan debt, it likely isn't the right move to refinance federal loans into private ones unless you're 100% certain you will not use important benefits such as flexible options for deferment and forbearance, loan forgiveness, and income-driven payment options.

Private student loans don't offer these unique benefits of federal student loans, so you do not lose anything by refinancing private loans with a new lender. In fact, there's much to gain if you can reduce the interest rate on your loan. Get started with a student loan refi today.


You can use an online student loan refinancing calculator to get a sense of how much you can save, but it will likely total in the thousands depending how much you owe and how much you can drop your rate.

If you currently owe $20,000 at a rate of 6.8% with a monthly payment of $248 and a remaining payment time of nine years and you refinance to a new 10-year loan at a rate of 3.00%, your new monthly payment will drop to $193 and your lifetime savings will total $3,621.

How to refinance your student loans

The best way to refinance your loans is to determine which loans you want to include in your refinance, then shop around and get quotes from several lenders in order to see which one offers you the best interest rate and lowest overall repayment costs.

You should obtain quotes from multiple student loan refinance lenders as both qualifying requirements and loan terms can vary. You may also wish to compare what your rates might be with a cosigner versus if you qualify on your own — especially if your income isn't very high or you don't have a great credit score.

You'll need to decide on a fixed- versus variable-rate loan, with variable rate loans generally offering lower starting rates but coming with a measure of unpredictability as your rate is tied to a financial index and both the rate and payment could change during the repayment process. You'll also need to consider how long you want the repayment timeline on your new loan to be, as a longer timeline could raise total payment costs even if you reduce your rate since you'll pay interest for a longer period.

Once you know what type of loan you want and you've compared terms, you can choose a lender that's right for you and complete the full application process. This can be done online and involves providing some simple financial information. After approval, you'll use the proceeds from the refinance loan to repay your existing student loan lenders and can get to work on paying off your new loan at your new favorable rate.

You owe it to yourself to take the opportunity to visit Credible, compare rates and terms, and see how much you can save. You may never get such a good chance to reduce the rate on your student loans as you'll have now with rates so low due to COVID-19.