Interest rates on all types of loans dropped significantly in 2021. In keeping with this trend, the average student loan refinance rates have also dropped. Rates have been rising and falling all year. After a rise in August, student loan refinance rates dropped marginally again in September. The rates for 10 year fixed-rate loans are right now at a record low for 2021.

Average Student Loan Refinance Rates During September 2021

According to Forbes, during the 3^rd week of September 2021, the average rate on 10 year fixed rate loans was 3.41%. This is considerably lower than the 4.12% rate for the same term one year ago. 3.41% is the lowest rate on record for 10 year fixed rate loans.

During the same period, the average rate on 5 year variable rate loans was 2.93%. This is considerably lower than the 3.11% rate for the same term one year ago. 2.53% is the lowest rate on record for 5 year variable rate loans.

These numbers reflect average interest rates for the year. But not everyone will get these rates. Lenders calculate personalized interest rates for borrowers based on their financial credentials.

Credit Scores Determine Actual Student Loan Refinance Rates  

Credit scores have the biggest impact on the interest rate borrowers pay when refinancing student loans. These are the current average student loan refinancing rates by credit score according to Credible:

For 10 year fixed rate loans:

Average refinance rate by credit scores:

• 640 to 679: 4.77%
• 680 – 719: 4.33%
• 720 – 779: 3.78%
• 780+: 3.44%

For 5 year variable rate loans:

Average refinance rate by credit scores:

• 640 – 679: 4.59%
• 680 – 719: 4.02%
• 720 – 779: 3.20%
• 780+: 2.67%

One important takeaway from these numbers is that working towards building good credit is definitely worth it. The higher your credit score the lower the refinance rate. Those seemingly small rate drops can save you thousands of dollars over the life of your student loan.

Student Loan Refinance Rates Vary Among Lenders Too

Every lender uses their own method for calculating refinancing rates for borrowers. Moreover, some lenders lower their interest rates but add on other fees and costs to compensate for the low rates. This means the cost of refinancing could vary significantly from one lender to another. Before signing a loan agreement with any lender, it’s advisable to first get student loan refinance rates from multiple lenders. This will help you compare rates and terms so you can make an informed decision about which is the best option for you.