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Published: Mar 09, 2020 8 min read
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Francesco Ciccolella for Money

If you have student loans, you’ve seen the ads in your mailbox, on social media, on TV commercials. Refinance your student loans, they shout, and you could save thousands.

While the ads are a constant, their pitch is especially compelling right now. After the Federal Reserve cut interest rates three times in 2019 and then again unexpectedly last week, rates for student loan refinancing are among the most competitive they’ve been in years. The average fixed rate for a 10-year refinanced loan in February was 4.80%, up slightly from December’s low of 4.76%, according to data from lending marketplace Credible.

Competition for borrowers has also likely helped drive down rates. In the early days of refinancing, a handful of startup lenders had the space to themselves. Today there are several fin-tech companies and traditional banks that offer refinancing, and borrowers have multiple online tools to shop for rates among them.

As of the end of 2019, four major lenders had $26 billion in securitized refinanced loans, according to credit rating agency DBRS Morningstar. There was a surge in refinance originations at the end of last year due to dropping rates, says Jon Riber, senior vice president of structured finance at DBRS. There's no official number on the size of the whole refinance market, but Riber estimates it's around $40 billion in refinanced loans. (That's a fraction of the country's more than $1.5 trillion in student loan debt.)

With lower interest rates and more lenders to choose from, is now a good time to refinance your student loans? Here’s a guide to help you decide.