This week's student loan refinancing rates: June 7, 2022 | 5-year undergraduate rates plummet

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Average interest rates on refinanced five-year variable student loans have dropped since two weeks ago, according to Credible. Five-year rates on undergraduate loans have cratered, while five-year graduate rates have only fallen slightly. Rates on 10-year fixed loan have risen over the past two weeks

This upcoming school year, federal student loan rates will increase by the largest amount since the 2005-06 year. These new rates won't directly impact private student loan rates, but private rates may increase as they don't have to remain as low to be competitive with federal loan rates.

Laurel Taylor, CEO and founder of student debt fintech company FutureFuel.io, says that over the last two decades, it has been uncommon for rates to rise so significantly over such a short period of time. However, Taylor says borrowers shouldn't be too concerned about the increase in federal rates. 

"The monthly payment impact is relatively minor, adding up to less than $5 per month and less than $400 over the standard 10-year repayment on a typical annual borrowing of $5,500 for an undergraduate," Taylor says.

Note: It's important to understand that federal loans are almost always a better option than private loans. They come with set interest rates that are often lower than private lenders and don't depend on your credit score . Additionally, they have many protections that private lenders don't offer, including the current repayment pause.

5-year variable student loan refinancing rates

Refinance rates on 5-year variable undergraduate student loans have plummeted this past week, dropping by 1.56% from two weeks ago to settle at 3.07%. 

The refinance rates on 5-year variable graduate loans are also down compared to two weeks ago. Currently, the average rate is 3.56%.

10-year fixed student loan refinancing rates

Refinance rates on 10-year fixed student loans this past week have ticked up from two weeks ago. Undergraduate rates are up by 22 basis points, while graduate rates have risen by 14 basis points. Rates have gone up a lot since six months ago.

Student loan interest rates by credit score

Your credit score impacts the rates you receive significantly. You'll often get a better rate the higher your credit score. Below, we've listed the 10-year fixed student loan rates by credit score:

Why refinance a student loan?

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 a a 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.  

How to refinance a student loan

Start the refinancing process by checking your terms with different lenders. Check out the offers and figure out which rate and term length is best for you. When you look at your rates, lenders will usually perform a soft credit check, which doesn't hurt your credit score. 

You'll need to apply to refinance through a private student loan lender, as you're unable to refinance a student loan through the federal government. 

Once you've picked a company, you'll fill out its application and give documents that verify your finances and identity. After the lender makes its final offer, you'll need to sign the agreement and accept the terms. Then, your new lender will pay off your existing loan and you'll be off and running with a new loan. 

5-year vs. 10-year loan

Each type of student loan is right for different borrowers. 

If you want a better interest rate and you can pay off your loan more quickly, a 5-year loan term could be an excellent choice. You'll save money in interest and will free up money to put toward your other financial goals faster.

A 10-year loan term will cost you more in total, but you'll make smaller monthly payments. This may make it easier for you to repay your loan if you're on a tight budget.