the year 2020 in the sand

The Best Student Loan Refinance Rates for August 2020

Michael Lux Blog, Consolidation, Refinance 0 Comments

*Rate Tables Updated as of August 1st, 2020

The impact of Coronavirus continues to be felt in the world of student loan refinancing.

The chaos felt throughout the economy can certainly be observed when looking at refinance rates. Some lenders are now offering historic low interest rates. Other lenders that traditionally offered excellent rates are now showing rates considerably higher.

We have also seen dramatic shifts in borrower approval rates. Here again, some lenders continue to approve at a higher clip, while others appear to be suffering from limited financial resources and are rejecting borrowers more frequently.

The big takeaway for the average borrower is that it has never been more important to shop around. In the past, it was fairly easy to identify the lenders that were most likely to offer an approval at a low rate. Today, borrower outcomes can vary dramatically from one lender to the next. Rather than just checking rates with 2 or 3 lenders, we highly recommend that borrowers consider a rate check with 5-10 lenders if they are still interested in student loan refinancing. (Remember: Refinancing federal loans is probably a mistake for many borrowers at the present time.)

The economic uncertainty has also created some strange rate offerings at some lenders. In some cases, a fixed-rate loan is offered at the same rate or less than variable-rate option. Stranger yet, we have even seen some lenders offering lower rates to borrowers who opt for a longer repayment length. Here again, the borrowers who spend some time on each lender’s website will be in the best position to find the best deal for their current situation.

Those that are willing to spend thirty minutes to an hour may be able to significantly improve their private loans.

As usual, we have broken down the refinance rates according to loan type and length. If you are looking for a 20-year fixed-rate loan, the competition for the lowest 5-year variable-rate loan doesn’t matter.

The Current Lowest Student Loan Refinance Rates

RankLenderLowest RateSherpa Review
1Splash Financial1.93%Splash Financial Review
T-2SoFi1.99%SoFi Review
T-2Laurel Road1.99%Laurel Road Review
T-2Earnest1.99%Earnest Review

Student loan interest rates have been dropping the past few months. As is often the case, when one lender lowers their best-advertised rate, the competition follows.

It is important to note that even though Splash, Laurel Road, SoFi, and Earnest 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 August 2020

RankLenderLowest RateSherpa Review
1Splash Financial4.26%Splash Financial Review
2CommonBond4.45%CommonBond Review
3Citizen's Bank4.49%Citizen's Bank Review

On the other end of the spectrum, the best 20-year fixed-rate loan is currently offered by Splash Financial with CommonBond and Citizens 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.

The Lowest Fixed-Rate Student Loans Available

RankLenderLowest RateSherpa Review
1Splash Financial2.63%Splash Financial Review
2Earnest2.98%Earnest Review
3SoFi2.99%SoFi Review

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 current marketplace is that the interest rate gap between variable-rate loans and fixed-rate loans has grown considerably for short-term loans.

Other Noteworthy Interest Rate Changes

In the mid-length loans, specifically those at 7, 10, or 15 years in duration, Splash, Laurel Road and iHelp 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.