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Our experts answer readers’ student loan questions and write unbiased product reviews (here’s how we assess student loans). In some cases, we receive a commission from our partners; however, our opinions are our own.
Student loans can help bridge the gap between the total cost of going to college and the amount of financial aid your school offers. There are two main types of student loans: federal loans with benefits and fixed rates that apply to all borrowers, and private ones with rates and terms that vary.
You’re almost always better off going with federal student loans because you’re likely to get a lower interest rate, and they come with special benefits and protections. However, you can only refinance student loans through private lenders.
See Insider’s picks for the best student loan refinance lenders >>
Student Loan Refinance Rates
While rates have held in a relatively tight range in recent weeks, the cost of refinancing student loans has been rising over the past year as Federal Reserve policy makers increased the federal funds rate to try to slow inflation. Although not directly linked to student loans, higher Fed rates ultimately influence borrowing costs for everything from college to real estate, credit cards, and automobiles.
The current average interest rates on most refinanced student loans rose from two weeks ago, according to data compiled by Credible.
Private Student Loan Interest Rates
5-Year Fixed Student Loan Rates
This past week, five-year fixed refinance rates for undergraduate loans increased 13 basis points, while rates for graduate loans climbed 25 basis points from the prior week. Rates for both categories of loan are each up more than half a percentage point from six months ago.
10-Year Fixed Student Loan Rates
Ten-year fixed refinance rates for undergraduate loans increased 18 basis points. The rates for graduate loans declined 33 basis points. Interest rates for undergraduate loans are up 86 basis points from six months ago, while graduate loan rates have climbed more than one percentage point during the same period.
Private Student Loan Rates vs. Federal Student Loan Rates
Be sure to exhaust all of your federal student loan options before turning to a private lender. Federal student loans almost always have lower interest rates than private loans. Private loans require a credit check, and many students either have no credit history or a low credit score. That means they’re likely to be offered a higher interest rate than they’d pay for a federal student loan.
See Insider’s picks for the best private student loans >>
Congress sets the interest rates for federal student loans, which are the same for all borrowers. There is no credit check required, and you don’t have to show proof of income or have a co-signer. Federal student loans also have some benefits such as the ability to sign up for an income-driven repayment plan, deferment, forbearance, or forgiveness, none of which are typically available with private loans.
Federal student loan rates have also been rising. The cost of borrowing across all Department of Education loans is going up again for the 2023-2024 school year after some rates saw the biggest increases in decades during the prior period. While the rates private lenders charge aren’t tied to federal loan rates, they’re likely to also rise when federal loan rates do because they don’t have to stay as low to remain competitive.
Federal Student Loan Rates for 2023-2024 School Year
Source: US Department of Education
Student Loan Rates Frequently Asked Questions
The cost of borrowing for college has increased along with interest rates on everything from credit cards, mortgages, and auto loans over the past year as the Federal Reserve has aggressively raised the federal funds rate. The higher base rates ultimately affect interest rates throughout the economy.
Whether or not you should refinance your student loan depends on your specific financial situation. You may want to consider alternatives such as a less expensive school, scholarships, or a side job to earn more money. Whatever your decision is, make sure you understand the terms of your new loan before making a choice.
Getting approved for a student loan without a co-signer usually includes factors outside of your credit score. Lenders may consider your grade point average, field of study, projected future earning potential, and more when making approval decisions.
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