Do you want to refinance your student loans? Rates have fallen for those with high credit scores

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The question of whether or not to refi your student loans is not always easy.

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To refinance your student loan into a 10-year fixed-rate loan, average rates are 5.84% for the week ending October 18, down from 5.81% the week before, while variable-rate loans on 5-years saw rates at 4.17%, up from 3.41% the previous week, according to data from personal finance firm Credible of those who prequalified in their student loan market. For those with credit scores of 720 and above, rates have fallen to 5.71% for 10-year fixed loans and 2.92% for 5-year variable loans. Check out some of the best student loan refi rates you can get here.

The question of whether or not to refi your student loans is not always easy. If you are considering refinancing a private student loan because your credit score has improved or your finances have changed and/or you are able to get a better interest rate or shorten the term of your loan, you will likely benefit from a refinance.

But for those with federal student loans, the question of whether or not to defer is more complicated. For one, a student loan repayment pause remains in effect until January 2023, so if you take advantage of it, you might not want to refi until the end. Also, when you refinance, you’re actually taking out a new private loan to pay off an existing public loan, but that means all of the federal protections that come with federal loans are lost. So the borrower forgoes things like government-issued loan forgiveness and income-based repayment plans that might act as a parachute at some point during the life of the loan.

So before refinancing, experts recommend weighing the pros and cons of a refi, especially if the borrower has federal loans and uses (or plans to use) one of the repayment or rebate programs based on loan income. Even if a borrower is not currently taking advantage of the programs and protections offered, it is important to determine whether or not they will need repayment or loan forgiveness plans in the future, before completely rejecting the option. If you decide to refinance, be sure to shop around for the best rates and terms.

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