Note that the offerings from many student loan lenders and servicers have changed due to the impact of the coronavirus outbreak. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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In recent years, some well-known lenders that once offered student loans, such as Bank of America, have gotten out of the educational lending business. That means if you already have student loans from Bank of America, want new Bank of America student loans or are interested in using Bank of America to refinance your student loans, you’ll need to consider other options and cast a wider net.
So instead of a Bank of America student loans review, here’s what you need to know if you’re applying for a new private student loan or looking to do a Bank of America student loans refinance.
Bank of America student loans used to be an option, but not anymore. Based on assets, Bank of America is the second-largest bank in the United States (only J.P. Morgan Chase is bigger). It once serviced both private student loans and federal student loans, including Stafford Loans, PLUS Loans and other loans under the Federal Family Education Loan Program (FFELP).
However, applying for a new Bank of America student loan is no longer possible. In 2009, the bank exited the student loan business, joining Capital One among well-known banks that have stopped providing private and federal student loans. Fortunately, there are plenty of other student aid options out there to consider.
Before you explore other private student loan lenders, it’s important to complete a few key financial aid steps:
- Fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA will determine the federal financial aid you’re eligible for, such as grants, work-study and federal loans. The online application is free for students seeking aid for college or graduate school.
- Identify your financial needs. After you receive your financial aid package, determine if you need additional funds. If you do, private student loans, which can be awarded by a bank, credit union or online lender, might be an option.
Eligibility for private student loans is determined by the lender and based on factors such as income and credit score, which may require a cosigner. Unlike federal loans, where the terms and conditions are governed by federal law, private loan terms are determined by the lending institution. That means that interest rates can be higher than those for federal loans, or they could be variable (unlike federal loans, whose rates are fixed), which can be more costly to the borrower.
- Find the right private lender. If taking out private loans makes the most sense for you, be sure to do your research and find the best lender for your circumstances. Interest rates can vary based on your qualifications and could be higher or lower than federal loans.
Of course, finding the right private lender can be easier said than done. To help you jumpstart your search, here are a couple of examples of current private student loan options:
- Citizens Bank: With private student loans ranging from $1,000 to $350,000, Citizens Bank gives borrowers the option to pay immediately, pay interest only or defer payment. Loan terms are five, 10 or 15 years. APRs start at 1.16%.
- CommonBond: Borrowers do not pay application fees, origination fees or prepayment penalties with CommonBond. As an added perk, they can receive financial planning and decision-making assistance from a “Money Mentor” advisor. Undergraduate loans are available for five, 10 or 15 years. APRs start at 3.80%.
For more options, check out our private student loan marketplace.
If you had a student loan originally issued by Bank of America, you may wonder who is in charge of your loan now. The institution that manages your student loan is called the servicer, and Bank of America sold its student loans to other servicers.
For federal loans previously managed by Bank of America, you can check the loan’s status and retrieve your loan information by logging into the Federal Student Aid website with your FSA ID. For private student loans originally owned by Bank of America, you can glean your new loan handler’s information by accessing your annual free credit report.
Once you know your current student loan status and servicer, you can continue making loan payments through your servicer or look into student loan refinancing options.
Refinancing Bank of America student loans
Regardless of your original lender, when you refinance your loans, a new lender will pay off the amount owed and issue you a new loan with new terms, including a new interest rate, repayment term and monthly payment amount. This process might help you get a lower interest rate or monthly payments (note, though, that lower monthly payments may result in paying more in interest over the life of the loan).
Loan servicers have different eligibility requirements, interest rates and terms, which is why it’s important to shop around and compare your options. If you took out student loans with Bank of America before they ceased lending in 2009, you can investigate refinancing through another lender, including:
- SoFi: Flexible terms offered by SoFi range from five, seven, 10, 15 and 20 years, and rates start at 2.25%. SoFi offers borrowers perks such as unemployment protection, where payments can be temporarily paused, as well as career support and wealth advisors.
- Laurel Road: Owned by KeyBank, Laurel Road offers refinancing for both graduates and parents who took out loans on behalf of their kids. With interest rates starting at 1.89%, loan terms range from five to 20 years. Full or partial forbearance may be available for up to 12 months.
- PenFed: Credit unions like PenFed offer another option for refinancing. With terms from five to 15 years, PenFed offers interest rates from 2.13%. PenFed even allows married couples to consolidate two loans into one. To qualify, you’ll need to become a member of the credit union.
While Bank of America is no longer providing student loans, it’s among the best banks for college students, providing services that are designed to help you manage your credit and budgeting.
Whether you had a Bank of America student loan or were considering getting one, there are plenty of options for funding your education or adjusting your repayment plan. Investigate your options and be sure to select the new loan or refinancing option that best fits your situation.
Andrew Pentis and Alli Romano contributed to this report.