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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.

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.

Undergraduate Loans

Here’s the current average rate for new undergraduate variable student loans:

Graduate Loans

Here’s the current average rate for new graduate variable student loans:

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.

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 Refinance Frequently Asked Questions