Student Loan Refi Rates Now Start Higher on Variable Than Fixed. Take the Fixed, or Don't Refi at All.

If a student loan refinance offer hit your inbox this fall, put the two starting rates side by side. At both lenders we checked, the fixed one starts lower.

That’s backwards. A variable rate is supposed to be the cheap option you take in exchange for the risk. Right now you’d take the risk and pay extra for the privilege.

Here’s what the lenders are showing. Splash Financial’s refinance page, with rates dated September 17, lists fixed APRs from 4.29% to 11.37% and variable APRs from 4.74% to 11.37%. LendKey’s page, pulled October 11, shows 3.98% to 9.24% fixed and 4.20% to 9.25% variable, both with a 0.25% auto pay discount baked in.

Why would a lender charge more to float? The plain answer: it expects rates to climb, and a variable loan lets it collect when they do.

Splash’s fine print says its variable rate is a margin stacked on the 30-day average SOFR, an overnight lending benchmark the New York Fed publishes every business day. That average was 3.65% on September 17. By October 9 it was 3.82%. The Fed raised its target range to 3.75% to 4% on September 16, and the minutes released October 7 say “most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.”

Translation: the index under a SOFR-based variable loan is already up, and the people who move it are telling you they probably aren’t done.

Now the math on whether to refinance at all. Say you have $30,000 in Parent PLUS loans from this year at 9.07%, the fixed rate the Education Department published September 10. Over 10 years that’s $381 a month and $15,740 in interest. Turn on federal auto pay and the rate drops a full point to 8.07% through June 30, 2028, about $365 a month while it lasts. If a lender approves you at 6% fixed, the payment falls to $333 and total interest to about $9,967.

Real money. Here’s the catch.

That 4.29% floor goes to the borrowers lenders love most. The top of Splash’s range is 11.37%, higher than any federal rate set for this school year. And refinancing a federal loan is a one-way door. Splash’s own page warns that you “could lose access to potential benefits like one-time forgiveness, waiver of interest or public service forgiveness.” The interest waiver is the heart of the Repayment Assistance Plan. Public Service Loan Forgiveness is gone the day the private loan funds.

So here’s the verdict. If you’re working toward PSLF, leaning on RAP, or your income could wobble, refinancing federal loans is dumb math whatever the rate says. If your income is steady and high and you’re carrying Parent PLUS or grad loans at 8% or 9%, it’s your call, and the case is real. Either way, take the fixed rate. Not optional.

Do this in order. Turn on federal auto pay first. It’s free, it’s worth a full point, and the enrollment deadline is December 31. Then pull prequalified rates from at least three lenders on the same day. Splash says checking rates is a soft pull that won’t touch your score. Compare each fixed offer against your federal rate minus that 1-point cut, not against the sticker rate, and run both through our loan calculator. If the gap doesn’t pay you enough to give up the federal safety net, walk away.

For context, this year’s federal rates are 6.52% for undergraduates, 8.07% for graduate Direct Unsubsidized loans and 9.07% for PLUS, all fixed for life, per the Federal Register notice. An undergrad loan on auto pay sits at 5.52% until mid-2028, which leaves very little room for a private offer to win. Our education hub covers which federal repayment plan fits if you decide to stay put.

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