Companies are offering to refinance your student loans starting at 1.74% — could you actually qualify for those rates, and should you?

The other day, I saw student loan refinancing advertised with rates starting at just 1.74%. And I immediately thought: Can anyone really qualify for that low of a rate? So I turned to experts who said, yes, there are a number of under-2% rates out there that some borrowers can get. Here’s what you need to know about them.

There are two big factors that could lead a borrower to scoring a student loan refinancing APR below 2.00%: Shopping around smartly, and your financial qualifications. “Getting the best student loan refi rate is about how qualified you are, but it’s also about how well you shop around,” says Anna Helhoski, student loans expert at NerdWallet.

But first, there are a few things you should know. “Sub-2.00% APRs advertised by reputable lenders are really only available in the form of variable rates, which aren’t right for every borrower. Unlike fixed rates, variable rates usually start out lower but tend to rise over time, fluctuating according to market forces that the average borrower doesn’t control,” says Andrew Pentis, certified student loan counselor and education finance expert at Student Loan Hero. That means that variable rates can make sense for very short loan terms, while a fixed rate loan — thanks to the very low rates being offered now — makes sense if your repayment time frame is longer.  

What’s more, “sub-2.00% variable rates are really only available to the cream of the crop of creditworthy borrowers. If you have an excellent credit score, a debt-to-income ratio that’s especially favorable and have otherwise stable financial and career history, you have a chance at those extremely low APRs,” adds Pentis. That likely means a credit score of at least 760 and a debt-to-income ratio under 15%. Adds Helhoski: “If you don’t have an excellent credit score and a low debt-to-income ratio, or a co-signer who does, you’re not going to get the lowest rates out there.” 

What’s more typical is getting a single-digit student loan rate that’s a bit higher. Data from Credible shows that for borrowers with at least a 720 credit score, rates average 3.60% on 10-year, fixed rate loans, and on 5-year, variable loans to 2.96%. To get the best rate, you will want to compare APRs and promotional or loyalty discounts from multiple lenders, says Helhoski. Also consider shortening your loan term if you can afford to: “You can get the lowest interest rate with the shortest term—but the trade-off for paying less interest over the course of the loan is a higher monthly payment amount,” she adds.

As most typical student loan refinance rates are in the single digits, they can be a real opportunity for borrowers with high-interest federal or private loans to save considerably. Just remember that when refinancing your federal loan to a private loan you risk losing the built-in federal loan protections. “Refinancing is especially advantageous for private student loan borrowers who perhaps have double-digit APRs attached to their original, in-school loans. With at least a few years of positive credit history and perhaps a cosigner, they might reasonably expect to qualify for a single-digit APR that’s closer to the range of 7.00%,” says Pentis. He adds: “If you have a federal Parent PLUS Loan above 7.00% interest but have a creditworthy refi application you could conceivably be quoted a fixed rate of under 5.00% or even lower.” And that could save borrowers hundreds or even thousands of dollars of interest, depending on the loan amount and loan term. 

If refinancing seems to make sense for you now, the way to go about getting the best possible student loan rates, besides getting your credit in good shape, is to shop around, according to Rebecca Safier, certified student loan counselor and education finance expert at Student Loan Hero. “Many lenders let you pre-qualify online with no impact on your credit score. By shopping around, you can find the best refinancing offer. You might also check with your bank or credit union to see if it refinances student loans and offers any special interest rate discounts for banking customers,” says Safier.