The federal student loan interest and payment freeze continues to impact the refinance marketplace. Because of the freeze borrowers are advised not to refinance federal loans at this time. As a result, the only people refinancing are private student loan borrowers.
With more lender competition for fewer customers, rates have dropped. Federal borrowers who plan on eventually refinancing may want to consider refinancing just before the federal interest freeze ends. The Department of Education says that no further extensions will happen after the relief ends on January 31, 2022. Thus, only private loan borrowers should be refinancing at this time.
One change we are seeing in September is that rates with some lenders have started to climb from last month. The movement is slight, but it could point to larger increases once the federal interest freeze ends. It may also be the first sign that inflation is starting to impact student loan refinance rates.
Important Note: To compile the best refinance rates for Septemeber 2021, nearly two dozen national student loan lenders were compared. The lenders listed below were the ones with the lowest verified rates.
The Current Lowest Student Loan Refinance Rates
The headline interest rates are still under 2%. However, fewer lenders offer loans with an interest rate under 2%.
It is important to note that even though Laurel Road, Earnest, and Splash have the lowest possible interest rates, they do not necessarily get the top spot in our student loan consolidation and refinance rankings. Borrowers are still best served by applying with 4-5 lenders as each lender has a different formula for evaluating applications. The best-advertised rates do not always equal the best rate offered, but they do provide a useful starting point.
The Best 20-Year Refinance Rate for September 2021
On the other end of the spectrum, the best 20-year fixed-rate loan is currently offered by ELFI with CommonBond close behind. The lenders at the top of this list look a lot different than the lenders at the top of the 5-year lists. Borrowers should consider whether they want a longer loan prior to putting together an application strategy.
Borrowers who are looking for the lowest possible payment when they refinance usually opt for a 20-year loan. The advantage is an easy monthly payment, but the downside is that it comes with a somewhat higher interest rate.
However, it is worth noting that the gap between the 5-year variable loans and the 20-year fixed-rate loans has never been smaller. Locking in a fixed-rate loan at just over 3% for 20 years is arguably the best deal available.
The Lowest Fixed-Rate Student Loans Available
For borrowers looking for the stability of a fixed-rate loan, but still in search of an ultra-low interest rate, the 5-year fixed-rate loan is usually the best bet.
One of the oddities of the September student loan refinance rates is that the interest rate gap between 5-year and 20-year loans has shrunk. Borrowers who select a longer loan have the option of paying extra to eliminate the debt quicker, but they have the protection of smaller minimum monthly payments.
Other Noteworthy Interest Rate Changes
In the mid-length loans, specifically those at 7, 10, or 15 years in duration, Splash, ELFI and CommonBond perform strongly.
For our overall rankings and lender reviews, be sure to check out our Student Loan Rankings page. For a complete breakdown by loan type for all loan lengths, head over to our student loan refinance rates table.