Author Topic: Refinance fixed rate student loan to variable rate?  (Read 1513 times)


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Refinance fixed rate student loan to variable rate?
« on: March 16, 2015, 08:40:24 PM »
Currently have the following student loans:

Balance          Rate           Payment
 8,837.70    4.99%    180.00
 1,727.81    6.80%    87.56
 3,723.29    5.60%    59.87
 44,679.19    5.75%    398.27
 27,041.61    4.50%    135.00

Making payments around $2500-$3000+, depending on expenses vs income as my income is somewhat variable. Priority has been to the 3 lowest balance loans going highest interest to lowest interest. The $8837 is on a credit card at a fixed rate, will not increase.

I am considering refinancing with Citizens Banks but they have upped their rates a bit an variable seems the only way to get significantly lower than my current rates. They offer 2.37%-2.57% variable or 4.74%-5.19% fixed depending on 5-20 yr term. I'm considering refinancing the $44k with them, and maybe the $27k as well. Should be paid off in about 3 years and stands to save me $1700-$3000 of interest if I refinance to a variable rate and rates do not go up. I view the savings as somewhat trivial in the scheme of things but since I got serious about this debt I have been trying to optimize wherever I can since I'm past the big easy spending cuts or simple refinance decisions (much of this was around 15% previously, from an original balance around $140k, IIRC).

What do you guys think about refinancing these fixed rate loans to variable? My concern is obviously the interest rates getting jacked up. Previous lender increased rates a couple percent years ago when the prime rate was going down and offered no explanation except that the prime rate was increasing (one of many outright lies). Not sure if it's worth refinancing again or if I should just ride it out as is. I am risk averse and prefer to have low monthly min payments in case I'm out of work or some major emergency arises. Let me know your thoughts.