Digging up a mountain of student debt could be much faster now, thanks to cheaper rates for a money-saving refinance.

Student loan refinancing rates have dropped dramatically for both five-year and ten-year loans, according to new figures from a major credit market. And some refi rates have hit new all-time lows.

Currently, 45.3 million borrowers have student loan debt, according to the research website EducationData.org. And half of borrowers are still paying back their loans 20 years after starting school.

Taking advantage of today’s lower interest rates on a refi can save a typical borrower thousands of dollars – and help get that debt down faster.

5-year floating rate loan

For borrowers looking to pay off student loans faster, five-year variable refinance loans fell to an average of 2.48% in the week of October 18, according to figures released this week. That’s a new record low for refi rates tracked by the Credible marketplace.

The previous all-time low was 2.53% at the end of August. Interest rates fell last week from the previous week’s average of 2.59%. A year earlier, the typical rate was 3.20%.

The average interest rate is specific to borrowers with a good credit score of 720 or more. Even better interest rates are possible for those with an exceptional credit score of 780 or higher.

Borrowers with mediocre credit scores (between 640 and 679) end up with an average of 4.59% harder interest rates.

Since variable interest rates fluctuate depending on market conditions, borrowers could find themselves even more as the loan term progresses.

10 year fixed rate loan

For borrowers looking to get a good deal, the data shows that 10-year fixed rate loans averaged 3.39% over the past week. That was a 3.46% decrease the previous week.

Interest rates are now close to the all-time low of 3.36% set in September.

Better credit scores mean better interest rates. However, borrowers with only “fair” values ​​between 640 and 679 receive less favorable interest rates averaging 4.77%.

The story goes on

A 10-year loan offers cheaper payments than a five-year loan because you have more time to pay back the money but spend a lot more money on interest due to the longer term of the loan.

How to Get the Best Refinance Rate

If you have a government student loan, make sure you know what you are giving up before switching to a refi.

If you switch from a government loan to a private loan, you will not be eligible for the government support that some borrowers enjoyed during the pandemic, including payment freezes, interest waivers, and even loan waivers.

If you already have a personal loan or don’t mind the tradeoffs, refinancing your college debt can make a big difference in your budget.

Here are some tips to help you get the best possible price.

• Increase Your Credit Score. Lenders take your creditworthiness into account to decide whether you are at good risk for a refinance loan. Check your credit score for free and look for ways to improve it. You can get tips by using a free credit monitoring service that can show you how to get rid of other debts faster.

• Set up automatic payment. Many lenders will discount a small percentage off your interest rate once you have signed up for automatic payment. It ensures they are paid on time every month.

• Consider a co-signer. If your credit rating is too low to qualify for a better interest rate, you can ask a friend or family member with good credit to sign your loan. But be careful because your co-signer will not be able to make your loan payments if you cannot afford them

• Compare your options. The world of student loans is huge, and the only way to make sure you are getting the best deal is to shop around. Always get quotes from multiple lenders, as different lenders will weight factors differently in your application. Compare the terms of each offer before clicking “Apply”.

This article is for information only and is not intended as advice. It is provided without any guarantee.