Student Loan Refinancing Interest Rates
November 12, 2020Many individuals take out federal student loans, private student loans, or a combination of both when planning to finance their education. Student loans can have a variety of interest rates and repayment terms depending on the type of loan, but what they all have in common is that they will have a fixed or variable interest rate and monthly payments that last for a specific duration, also called your repayment term.
Student loan refinancing is the process of consolidating one or more loans and taking out a new loan with a private lender, often with a new interest rate and repayment term. One of the primary benefits of refinancing student loans is the ability to secure a lower interest rate to either reduce your monthly payments or reduce the amount you’ll pay in interest over the life of your loan. Student loan refinance rates are currently at historical lows, making now an opportune time for many to refinance.
Keep in mind that it’s best to refinance student loans if you can qualify for a lower interest rate, reduce your monthly payments, or save money over your loan term. If you can’t achieve one of these, you should consider whether refinancing is the right decision for you at the time.
How to Get The Best Student Loan Refinance Rate
Securing a lower Annual Percentage Rate (APR), often referred to as your interest rate, can potentially save you thousands over your loan term, depending on the state of your loans and your current financial status. When refinancing student loans, student loan refinancing lenders will look at a variety of factors to determine if you qualify and the interest rate you qualify for.
Having a good credit score, reliable income, and a good debt-to-income ratio will show lenders that you are a responsible borrower and will give you the best chance to qualify for a lower student loan interest rate. If you’re lacking in one or more of these areas, adding a cosigner who does meet the lender’s criteria may qualify you for a lower interest rate.
When looking to refinance your student loans, you should compare rates from multiple lenders to see who can provide the best student loan refinancing rate for you. You can also utilize a student loan refinancing calculator to estimate your savings before pre-qualifying. Education Loan Finance (ELFI) offers very competitive student loan refinancing interest rates and flexible terms that can be adjusted to your goals and budget.*
Current Student Loan Refinancing Interest Rates
 | Sofi | Earnest | Laurel Road | |
|---|---|---|---|---|
| Fixed Rates APR | 4.83% - 7.64% | 4.49% - 8.99% | 4.39% - 8.99% | 4.24% - 6.65% |
| Variable Rates APR | 3.99% - 7.24% | 4.99% - 8.99% | 4.09% - 8.29% | 3.74% - 6.55% |
| Loan Terms | 5, 7, 10, 15, or 20 years | 5, 7, 10, 15, or 20 years | 5 to 20 years | 5, 7, 10, 15, or 20 years |
| TrustPilot Score | 4.9 | 4.5 | 4.7 | 3.4 |
| NerdWallet Rating | 5.0 | 5.0 | 5.0 | 5.0 |
| US News Rating | 4.8 | 4.6 | 4.6 | 4.8 |
Rates and scores in this chart were obtained from lenders’ and aggregators’ websites on 1/27/2023. All information and rates are subject to change at any time. Please see each lender’s website for current information.
What Credit Score Do You Need to Refinance Student Loans?
When refinancing student loans, lenders will require a specific minimum credit score along with other eligibility requirements to qualify. The minimum credit score to refinance student loans can vary by lender. For ELFI, you must have a credit score of at least 680 to refinance. Learn more about the eligibility requirements to refinance student loans.
When Is the Best Time to Get The Lowest Student Loan Refinance Rate?
Similar to interest rates on mortgages, auto loans, and personal loans, student loan refinancing interest rates are largely influenced by the Federal Reserve and central banks. The fed funds rate is set by the Federal Reserve and is a target range that is maintained through open market operations for the purpose of managing inflation, promoting maximum employment, and keeping interest rates moderate, thus maintaining economic growth. When the Federal Reserve lowers rates, it is called expansionary monetary policy, and when they raise rates, it is call contractionary monetary policy.
In 2020, the Federal Reserve’s Federal Open Market Committee (FOMC) lowered the target for the fed funds rate twice in March in response to the COVID-19 pandemic, bringing interest rates to near historical lows, and it appears that the Federal Reserve plans to keep interest rates near zero for several years. This has brought interest rates for both student loans and student loan refinancing to historical lows as well.
Considering the current low interest rate environment, now may be a good time to take advantage of low student loan refinancing interest rates and save money on your student loans. However, those with federal student loans should weigh the federal benefits of Income-Driven Repayment Plans, Public Service Loan Forgiveness, and emergency enactments like the CARES Act forbearance on federal student loans, which they would lose access to when refinancing with a private lender.
Fixed or Variable Rate Student Loan Refinance
One factor to consider when refinancing student loans is whether you want a fixed interest rate or a variable interest rate loan. A fixed interest rate loan will keep the same interest rate throughout the loan term, where as a variable interest rate loan can change depending on the one-month London Interbank Offered Rate (LIBOR).
While many individuals opt for a fixed rate refinance, there are some situations in which a variable rate refinance can be beneficial. Learn about the difference between fixed or variable rate student loan refinance as well as the correlation between variable rate loans and LIBOR.
Pre-Qualify and Get Your Student Loan Refinance Rate With ELFI
If you’re interested in taking advantage of low student loan refinancing rates, ELFI has a quick application and approval process for refinancing your student loans. Best of all, you can pre-qualify to see your estimated rate in minutes, without affecting your credit score. Some benefits of student loan refinancing with ELFI* include:
- Competitive student loan refinance rates
- No application, prepayment, or origination fees
- Fixed & variable rate refinance options
- Personal Loan Advisors to guide you through each step of the process
Find out what student loan refinance rate you can qualify for by pre-qualifying with ELFI and submitting your application.*