2021 Student Loan Interest Rates: Federal, Private and Refinancing Loans (2024)

Student loan interest rates have a large impact on student loan repayment.

According to a 2017 report by nonprofit organization New America, “The average interest rate across all student loans is 5.8 percent before refinancing, and drops to 4.2 percent if all eligible borrowers refinance.”

We’ve compiled current rates for federal loans, private loans, and refinancing.

Federal student loan interest rates

Federal student loan interest rates are generally set mid-year for the following academic year. Federal student loan rates are set by Congress, not the Department of Education, and rates generally change every year.

These are fixed rates that will not change for the life of the loan. Here are the current interest rates for the 2021-2022 school year:

The federal interest rates increased for the 2021-22 school year from the previous year. Federal interest rates have fluctuated in the past five years but are on an upward trend. Here are federal student loan interest rates for the past five years:

The federal student loan interest rates for the 2019-20 academic year have not been released yet.They typically are available in May after the Treasury note auction.

Private student loan interest rates

Private student loan interest rates vary greatly. Rates offered by private lenders depend on factors like:

• Lender
• Type of interest rate (fixed or variable)
• Credit score, credit history and borrower’s income
• Loan terms
• Market trends

Private student loansare often utilized after a borrower exhausts all federal loan options. These loans are also a popular option used by students going into medical school, dental school, MBA programs and postgraduate studies. Here are interest rates for several of the private lenders we partner with:

How to choose a private loan lender

Sometimes you need to take out a private student loan to fill the gaps that federal aid won’t cover. How do you go about picking the right private loan lender for you? There are many factors to consider when picking a lender, including:

• Interest rate
• Type of interest rate (fixed or variable)
• Lender reputation
• Repayment options
• Fees
• Cosigner release
• Deferment and forbearance options

There’s a lot to think about when it comes to private student loans. Most borrowers don’t have established credit and need a cosigner to be eligible for a private student loan. Private student loan interest rates can be fixed or variable.

Student loan refinancing interest rates

If you already have student loans, you can refinance your loans and potentially lower your interest rate. This could lead to huge savings in interest fees over the life of your student loan.

Keep in mind that if you refinance federal loans, you will lose access to federal protections like deferment, forbearance and federal loan forgiveness options. Here are interest rates for several private lenders that offer student loan refinancing:

How to choose a refinancing lender

Refinancing your student loanscould be theway for you to get out from your student loan debt. This can be done by securing a lower interest rate and negotiating better student loan terms. Looking for a private lender for student loan refinancing is similar to looking for a personal loan lender. Factors to consider when choosing a student loan refinancing lender include:

• Interest rate
• Lender reputation
• Repayment options
• Fees
• Cosigner release
• Loan deferment and forbearance options

In the end, the right lender will depend on what’s most important to you. One of the main reasons to refinance is to secure a lower interest rate. This could potentially save you thousands of dollars in interest payments over the life of your loan.

How to choose between federal and private student loans

As mentioned before, private student loans are often used after a borrower exhausts any federal student aid. This is especially true when completing an undergraduate degree program.

Federal student loans are the best choice if you want to pursue student loan forgiveness. This could be through Public Service Loan Forgiveness (PSLF)or income-driven repayment forgiveness. Federal student loans also offer better loan deferment and forbearance options than private student loans.

If you’re planning to continue your education past undergraduate studies, you may need to take out private student loans to pay for school.

How to get the best private student loan and refinancing interest rates

If you do choose to apply for a private student loan, there are things you can do to secure a lower interest rate. This is also true if you are applying to refinance an existing loan. What are some ways you can lower your interest rate?

1. Improve your credit score
2. Find a cosigner with excellent credit
3. Take advantage of interest rate discounts for setting up automatic monthly payments
4. Pay your bills on time
5. Try for shorter repayment terms

The best way to lower your student loan interest rate is to refinance. The lower your student loan interest rates are, the less your overall debt bill will be in the end.

You can also refinance your student loansmore than once. You can work to improve your credit score and refinance again, securing even lower interest rates.