Refinancing with Earnest
Refinancing rates from 2.43% APR. Checking your rates won’t affect your credit score.
Even though you want the best for your child, cosigning a refinanced student loan isn’t a decision to be made lightly. After all, cosigning debt means you become just as responsible for the loan as they are, and your credit is on the line if they can’t pay.
So before agreeing to cosign a student loan refinancing application for your child or other loved one, make sure to discuss some important issues first. By answering these five questions, you can ensure you and your child are on the same page before anyone signs on the dotted line.
1. Do you need a cosigner to refinance student loans?
The majority of borrowers refinance student loans after they’ve graduated college and have spent some time in the workforce. So your child might already have strong enough credit and income to refinance student loans on their own.
Before signing on to their application, find out if your child can qualify for student loan refinancing without your help. Even if their rates are slightly higher, this increase might not cost them much money overall.
Use a student loan refinancing calculator to compare terms between a loan with and without a cosigner. If the difference in savings is minimal, it might not be worth bringing your name (and your credit) into the equation.
And if they’re not able to qualify solo yet, discuss whether they can take steps to improve their credit and meet other qualifications. If the student can pay down debt, dispute credit-reporting errors or take any other steps to improve their credit fast, then doing so might be preferable to you cosigning the loan.
2. Who will be responsible for repayment?
If adding your name as a cosigner means significant savings for the primary borrower, you might be tempted to help out. But before agreeing to cosign, make sure to have a discussion about who’s responsible for repayment.
Go over the terms and conditions of the loan, including when repayment starts and how much the monthly payments will be. Discuss the advantage of setting up autopay so the primary borrower never misses a payment.
“Make sure the student understands that if he or she foresees the possibility of missing an on-time payment, he or she must absolutely let the parent know,” advised Todd Christensen, accredited financial counselor at MoneyFit.org. “Otherwise, late payments will also negatively affect the parent’s credit rating.”
Although you probably want to give your child the benefit of the doubt, it’s worth explicitly talking about who’s responsible for paying back the refinanced student loan from month to month.
3. Is refinancing the right choice for you?
Although refinancing student loans can lead to a better interest rate and major savings, it’s not the right choice for everyone. If you refinance federal student loans, you turn them private.
As a result, you lose the benefits associated with federal student loans, such as income-driven repayment plans and eligibility for Public Service Loan Forgiveness. While some private lenders offer perks like forbearance and deferment, this varies from lender to lender.
And many aren’t so flexible in the event a borrower loses their income or goes back to school. As a cosigner, you want to make sure your child keeps up with payments and knows that they’ll no longer be able to rely on federal protections.
So make sure your child has thought through the pros and cons of refinancing before submitting their application.
4. What’s the plan if you’re struggling to make payments?
Cosigning can be risky if your child can’t afford to pay back their loan. As a cosigner, you’re as responsible for the debt as they are. If the loan goes delinquent, debt collectors could start calling you for payment, and your credit could be destroyed if your child misses payments.
“I am very rarely a fan of a parent or grandparent cosigning a loan for anything, let alone a student loan,” said Christensen. “I have counseled too many parents and grandparents going through bankruptcy because their family member stopped making payments on a cosigned loan and, nine months later, the parent [or] grandparent gets hit with the entire bill, plus penalty fees.”
Although this is the worst-case scenario, it can happen, so make sure your child is aware of the consequences of falling behind on student loan payments. If they don’t seem to understand the seriousness of this situation, or if they expect you to step in and pay when that’s not your intention, think twice before cosigning.
5. Does your lender offer cosigner release?
Some refinancing providers, such as CommonBond, offer cosigner release after a certain period of missed payments. With this perk, your name could be removed from the refinanced student loan entirely after a year or two of on-time payments.
Thanks to cosigner release, you could help your child get a good rate on a refinanced student loan without having to share the debt forever. If this benefit is important to you, consider asking your son or daughter to look for a refinancing provider that offers cosigner release.
Talk everything out before sharing debt
Cosigning a refinanced student loan is a big deal, and it’s important to clarify expectations before agreeing to this request. If you’re concerned your child isn’t taking debt repayment seriously, cosigning might not be the right move.
Delinquent debt could damage your credit, not to mention strain your relationship. Plus, adding debt to your credit report could make it more difficult for you to qualify for a mortgage or line of credit, since cosigning will increase your debt-to-income ratio.
If you’re not worried, though, cosigning the loan could help your child save money on interest. Just make sure to keep the lines of communication open, so everyone involved remains updated on the progress being made toward repaying this debt.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|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 3.50% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.43% APR (with Auto Pay) to 7.21% 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 April 17, 2019, 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 04/17/2019. 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 firstname.lastname@example.org, or call 888-601-2801 for more information on our student 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
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
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 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.43% – 7.21%1||Undergrad & Graduate|
|2.43% – 6.65%2||Undergrad & Graduate|
|2.43% – 6.59%3||Undergrad & Graduate|
|2.44% – 6.87%4||Undergrad & Graduate|
|2.46% – 7.08%5||Undergrad & Graduate|
|2.93% – 9.67%6||Undergrad & Graduate|