The Best Student Loan Refinance Rates for January 2021

Michael Lux Refinance, Student Loan Blog 0 Comments

The student loan refinance rates offered in January 2021 are near record lows.

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, but the federal student loan relief is likely to continue further into 2021. Thus, only private loan borrowers should be refinancing at this time.

The other group of borrowers that can take advantage of the current rates would be borrowers who have previously refinanced. Current rates may provide a great opportunity for borrowers looking for a second or third refi.

To compile the best refinance rates for January 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

RankLenderLowest RateSherpa Review
T-1Splash Financial1.89%Splash Financial Review
T-1Laurel Road1.89%Laurel Road Review
3CommonBond1.99%CommonBond 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, CommonBond, and LendKey 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 January 2021

RankLenderLowest RateSherpa Review
1Splash Financial3.93%Splash Financial Review
2CommonBond3.99%CommonBond Review
3Citizen's Bank4.08%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 Financial2.38%Splash Financial Review
2ELFI2.79%ELFI Review
3Laurel Road2.80%Laurel Road 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 January student loan refinance rates 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.

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