Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
Do you feel overwhelmed by your student loan payments?
It can be time-consuming and tedious to keep track of all of them. Not to mention expensive to pay interest on several different loans each month.
This is where student loan refinancing comes in. Refinancing modifies your existing student loans to save you money, get you out of debt faster, and eliminate a bunch of headaches in the process.
Here are some of the best reasons to refinance your student loans:
1. Lock in a lower interest rate
When you refinance your student loans, you combine all your federal and private loans into one new loan with a private lender. This private lender could be a bank, credit union, or an online lender like SoFi or CommonBond.
Before giving you offers, the lender reviews your income and credit score. If you have a steady job and strong credit, you could qualify for excellent interest rates since these factors show the lender you’re not a risky candidate for a loan.
Most lenders look for a credit score of 650 or higher. If your score falls below that mark, applying with a cosigner could net you a better interest rate. Adding a cosigner to your application can be another way to reduce risk in the eyes of the lender.
The lender will offer you a variety of loan terms with both fixed and variable interest rates. Variable rates tend to be lower than fixed rates at the beginning, but they could go up or down over time. Whatever you choose, lowering your interest rate could save you lots of money over the life of your loan.
Let’s say you have $50,000 in student loan debt with an average interest rate of 6.80%. Through refinancing, you lock in a new fixed interest rate of just 4.99%. After 10 years of repayment, you would save over $5,400 on interest.
2. Lower your monthly payments
Refinancing your student loans may mean a lower interest rate, but it can also change your repayment terms if you qualify.
Most federal and private loans come with a 10-year repayment term. Although student loan refinancing options vary by bank, most repayment options range from five- to 20-year terms.
If your current loan has a 10-year repayment term and you refinance to a 20-year term, your monthly payments will drop significantly. This can help increase cash flow in your monthly budget.
Let’s reconsider that example of $50,000 in debt at a 4.99% interest rate. On a 10-year term, you’d pay $530 per month. But if you lengthened your repayment term to 20 years, you’d pay just $330 every month. That monthly savings of $200 could be just what you need to make rent or buy groceries.
The federal government also offers some income-driven repayment plans, such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR), but they only apply to federal student loans. Plus, you might not qualify if you don’t meet the income requirement.
Student loan refinancing helps grads who don’t qualify for income-based repayment, but also don’t make enough money yet to manage their student loan payments comfortably.
Keep in mind, though, that a longer payment term can mean more interest paid over time, even though the rate is lower. So pay attention to the total cost of the loan and consider paying it off early when your finances improve. There’s often no penalty for prepaying your loans before the term is up (but check with your lender to be sure).
3. Take advantage of a flexible repayment plan
Banks and other private lenders aren’t usually known for their flexibility, but some do offer helpful repayment options if you go back to school or run into financial hardship.
SoFi, for instance, lets you defer your monthly payments if you go back to school on a half- or full-time basis. CommonBond offers temporary forbearance in the case of economic hardship.
Some private lenders, like SoFi and Laurel Road, also honor an existing six-month grace period. If you refinance as a student or right after graduation, you may not have to start paying until your grace period is up.
That being said, refinancing your student loans with a private lender means you lose access to federal repayment plans. Some of these plans include Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR).
Plus, you won’t have access to federal loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF). So before refinancing, make sure you don’t need these federal programs.
If you run into financial difficulty after refinancing, speak with your lender about a flexible repayment plan.
4. Release a cosigner from your student loan
If your parents are cosigners on your current student loans, you already know the stress this adds to your relationships. What’s more, your loan impacts your cosigner’s credit and their ability to borrow additional funds.
When you refinance with a private lender, you could be eligible to release your cosigner. Some lenders remove your cosigner from the loan after you make on-time payments for a certain number of months. Two banks that currently offer cosigner release are LendKey and Citizens Bank.
Once released, your cosigner can improve their credit score. As a result, they’ll gain access to new lines of financial capital to buy big-ticket items like a home or car.
If you’re looking to release a parent or other cosigner from your student loans, find out which lenders will work with you. If you have good credit and steady income, it will be a lot easier to release your cosigner.
5. Switch to a bank that cares about you
Many borrowers find themselves unhappy with their student loan lender. Student loan refinancing gives you the opportunity to switch to a new bank with better customer service.
There are tons of online reviews to help you decide between lenders. Because there are so many options these days, lenders must compete for your business.
Many new lenders in the refinancing space offer extensive online and phone-based customer service. Plus, they help you throughout the application process.
Research your options before making a move. You might find it easier to work with another lender with more transparent service and educational resources. Plus, if you can get a lower interest rate on top of better service, that’s a win-win.
6. Combine multiple student loans for easier management
Did you know the average Student Loan Hero user has seven loans with two or three different student loan servicers?
On top of that, student loan servicers buy and sell loans. That means you could end up sending your payments to new places every few years. This becomes confusing and hard to manage after a while.
Student loan refinancing allows you to combine multiple student loans into one debt. And one loan is easier to organize, track, and repay.
Rather than keeping track of multiple payments and interest rates each month, you only have to worry about making one payment — with one lower interest rate.
If you’re tired of dealing with multiple student loans with various terms, research your student loan refinancing options. You could save money, time, and a whole lot of hassle.
Still wondering if refinancing is a good idea for you? Answer a few questions below, and we’ll help you find the right solution.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|