Personal loan vs. student loan refinance: Why rates are different | Earnest
Personal loan vs. student loan refinance: Why rates are different
By Ashley Billing | Published on March 13, 2026
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If you’ve checked your student loan refinance rate and are now exploring a personal loan, you may notice something right away: Personal loan rates are often higher.
The Federal Reserve reports that the average APR on a typical 24-month personal loan at commercial banks was about 11.65% in late 2025. Meanwhile, federal student loan interest rates for 2025–2026 range from 6.39% to 8.94%, depending on loan type.
That difference can feel confusing. But it comes down to how each loan works, how lenders evaluate risk, and what the loan is used for.
Here’s what to know.
At a glance: Key differences
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Why personal loan rates are usually higher
1. The purpose is broader
A personal loan can be used for many things—from medical expenses to moving costs to consolidating debt.
Because the use is flexible, lenders price for a wider range of risk scenarios.
A student loan refinance is different. It replaces existing education debt. Lenders can see the original loan history, repayment patterns, and remaining balance structure.
That added clarity can reduce uncertainty—and may often result in lower rates.
2. There’s no underlying asset
Both personal loans and student loan refinance loans are typically unsecured.
But with student loan refinance, lenders are underwriting a borrower who has already qualified for and maintained student debt. There’s an established repayment history tied to education financing.
Personal loans don’t have that same educational context. Risk pricing may reflect that difference.
3. Term length affects APR
Personal loans usually have shorter repayment terms (often 2–7 years).
Shorter terms can mean higher monthly payments. Rates may also price differently based on that compressed timeline.
Student loan refinance loans often extend longer (sometimes up to 15–20 years), spreading payments over time.
4. Risk-based pricing varies more by credit score
Personal loan APRs tend to vary widely depending on credit score.
According to industry data (including analysis from sources like NerdWallet and Experian), average personal loan APRs may look roughly like this:
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Estimated APR ranges based on market analysis published by NerdWallet (2026). Actual rates vary by lender, term, and borrower credit profile.
Student loan refinance rates also vary by credit score—but typically within a narrower band. That’s one reason your refi rate may look meaningfully lower than a personal loan offer.
What goes into your personal loan rate?
If you’re comparing rates, it helps to know what lenders evaluate.
- Credit score: Higher scores typically qualify for lower APRs
- Income and employment stability: Lenders assess your ability to repay
- Debt-to-income ratio (DTI): Your existing debt obligations matter
- Loan amount: Smaller or larger loan sizes can price differently
- Repayment term: Longer terms may carry different APRs than shorter ones
- Economic conditions: Market rates and broader economic factors influence pricing
Each lender weighs these factors differently. That’s why two borrowers with similar profiles may still see different offers.
How to evaluate a personal loan offer
Instead of comparing it only to your refi rate, consider:
- How does it compare to average rates for your credit band?
- Is the APR fixed or variable?
- What’s the total cost over the life of the loan?
- Are there origination fees?
- Does the monthly payment fit comfortably into your budget?
Looking at the full picture helps you make a clearer decision.
See your rate—without affecting your credit score
If you’re exploring options, the most accurate way to compare is to check your personalized rate.
At Earnest, you can:
- Check your personal loan rate in minutes
- View your estimated APR and monthly payment
- Compare options with no impact to your credit score
Once you see your rate, you can evaluate it against market averages and decide what makes sense for your goals.
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About the Author
Ashley Billing
Ashely Billing writes about finance, work, and wellness, with a focus on practical strategies that can actually help. Drawing on years of experience in content marketing and digital storytelling, she crafts clear, actionable pieces designed to inform and empower readers.
Disclaimer
This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.