All week, we're giving you everything you need to know about paying back your student loans. Today it's all about interest rates and refinancing. An interest rate is basically the fee a lender charges for borrowing money. It is usually expressed as a percentage of the total principle amount owed. When refinancing, a borrower will swap their original loan for a new one, usually at a lower interest rate. Joining us now to discuss is Andrew Pentis, he's Bankrate consumer lending analyst and a certified student loan counselor. So Andrew, if you're just starting this process, what's the easiest way for borrowers to first check their current student loan interest rates? So they know the baseline of where they're starting.

Yeah, it really depends on what your type of loan is. So if you have a federal student loan, the best way to check your current student loan interest rate is to log into your account at studentaid.gov. You can also talk to your federal student loan servicer, though that's easier said than done with long wait times and a diminished Department of Education. But in terms of your private student loans, yeah, check your statements. If you receive a paper bill in the mail, or contact your lender directly or log into their online portal if you can, but it should be fairly easy to collect those rates.

So what would you consider a quote unquote good rate for a student loan right now, and what should borrowers aim for if they're shopping around or thinking about refinancing?

Yeah, a good rate is lower than the rate you currently have and the lowest possible rate that you can qualify for. That's the short answer. Uh, but for context, federal student loan interest rates have been in the single digits for a long time. It was recently announced that rates for next school year will actually descend a bit. We're in a higher rate environment for those private student loan rates and refinancing rates, but still there are single digits single digit rates out there. So if you do have good credit or a creditworthy cosigner, you can lower your interest rate through refinancing, it can be really wise.

When does it actually make sense to refinance and when should borrowers avoid it, especially if they do have some of those federal loans?

The slam dunk situation for refinancing your student loans is if you already have a private student loan with a high interest rate. And that's because if you refinance it to a lower rate, you're not giving anything up. You might even switch to a better lender. But the more complicated situation is if you have federal student loans and you're considering refinancing those or lumping those into a refinance application with your private loans. And the reason it's complicated is that federal loans contain a lot of safety nets and protections, like access to income driven repayment plans that cap your dues at a percentage of your monthly income, as well as pathways to loan forgiveness. So refinancing those loans will strip those benefits away and turn the federal loans into a private loan permanently. So you really want to tread cautiously about refinancing those government exclusive loans.

You mentioned better lenders. So if someone does decide to refinance, what types of lenders should they be considering?

All types, there are credit unions, banks, online lenders and marketplaces like Bankrate as well as state guaranteed and state funded agencies that offer student loan refinancing. So just like with any other consumer financial product, it really helps to survey the landscape, check in with different types of lenders, and that way you hopefully get very various offers that you can compare and get the best deal possible for your situation.

And given the current economic uncertainty, what are some guidelines that borrowers should keep in mind before refinancing or locking in that new rate?

Yeah, the thing to harp on here really is that if you have that federal student loan and you're considering refinancing it, you know, as you mentioned, given these uncertain economic times, you really should should be hesitant to refinance those federal student loans, at least until the dust settles. And the reason for that again is that if you keep your federal student loan and something happens, you know, maybe you lose your employment or lose some of your income, you have access to some relief through that federal student loan. So whether it be a deferment or forbearance that pauses your monthly dues, or that income driven repayment plan that caps your monthly payment, those are really important protections to have when, you know, you might not be sure, for example, that you're holding onto your job. So definitely that's the best advice for now.

We've been talking a lot about the Federal Reserve, how they could potentially lower interest rates sooner than expected. If you're considering refinancing now, can you refinance multiple times, or should you wait and try and slow play it?

Absolutely. This is not a situation where you have to feel like you need to time the market, because if you can get a lower interest rate right now, say by refinancing a private student loan, it could save you lots of money and interest. And then yes, say that rates descend in 2026 or later and you want to refinance again, you can absolutely do that, assuming that your credit has maintained and you've built up a positive payment history on your existing refinance loan.

Andrew, some smart tips for those borrowers. Thank you so much. Appreciate it.

Thanks for having me.