Refinancing with Earnest
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Now that I’m a mom, I want to give my children the best possible start in life. In fact, motherhood has motivated me to do better in every facet of life, including managing my money. However, the cost to raise a child often overlaps with student loan repayment.
Choosing (and paying for) what’s best for your kids can mean pushing back other money goals like student debt repayment.
So how can you balance your parent student loans with the financial demands of raising young kids? Well, you need to get creative with your student debt and look for smart solutions, such as refinancing your student loans.
3 reasons parents should refinance student loans
Here are the big reasons why student loan repayment is challenging when you have young kids – and how refinancing student loans can be a solution.
1. You have less earning potential
Earning more money and using those extra funds to repay debt is an effective payoff strategy. But for parents, it falls short.
Trying to increase income is tricky. And it’s trickier for parents juggling the demanding and expensive tasks of raising kids.
Young children are time-consuming; they require so much hands-on help that it’s almost impossible to find any spare time, let alone time to generate extra income. This puts a cap on a parent’s earning potential, one that non-parents don’t face.
What’s more, while parents may value flexibility in their work schedules, this can be at odd with employers’ expectations. A less-than-understanding boss might see a desire to work fewer hours in-office as a lack of commitment. And the boss might cut off a parent’s path to career growth and pay raises.
Women’s careers are even more affected by having kids. While fathers see a boost in performance and pay after having children, mothers see a parenthood penalty, reports The New York Times. Mothers are less likely to get hired and paid wages equal to male peers.
How student loan refinancing helps
When your income feels stretched as a parent, you simply can’t fall back on the tried-and-true strategy of working harder and earning more. Sometimes it’s due to the inability to progress as quickly in your career because you can’t work as many hours. Or maybe you no longer have time for side gigs.
Parents also face more serious tradeoffs when it comes to choosing how they spend their time. Even if they could, many parents won’t want to sacrifice time with children to chase yet another buck. Because of this, parents of young kids can’t work as hard on repaying student debt — so they need to work smarter.
Refinancing student loans is a strategic move that can get you a lower rate and decrease interest costs. Parents who refinance have more control over student loans. And they have a chance to adjust and align student loan payments with their new top priority: their kids.
2. You can only lower the cost to raise a child so far
Then there is another popular debt repayment tip: lower expenses, cut spending, and use the savings to pay off debt.
Of course, a borrower can only cut expenses so far before they reach the floor of a reasonable cost of living. But parents of young kids will reach that limit on the cost to raise a child much faster.
After all, you can only downsize your rental so far before you’re practically packed into an apartment like sardines. And the best-laid plans to cut back on grocery costs are quickly foiled by picky toddlers or food sensitivities.
There are also brand new costs that come with kids. The biggest of these is childcare, which is at its most expensive before a child can attend kindergarten. The cost of childcare for our two young children is easily our biggest monthly expense — even more than our mortgage.
How student loan refinancing helps
Most parents’ budgets are eaten up by necessities they can’t cut back, leaving them with less discretionary income. As a parent, you don’t have as much control over your costs as non-parents with fewer responsibilities.
You do have federal student loan options, such as income-driven repayment plans or deferment. These can lower your monthly payments and ease some pressure on your budget. Unfortunately, these short-term solutions can add to your total interest costs while delaying your payoff date.
On the other hand, refinancing student debt to lower interest rates can be a smart way to cut costs in both your monthly budget and long-term planning.
You can save if you qualify for lower interest rates. You can also choose a term with lower monthly payments. Unlike other options, refinancing student loans makes it possible to do both at the same time. Use the refinancing calculator below to see how.
Student Loan Refinancing Calculator
3. You want to start saving for your child’s future
It’s no secret that student loan payments often prevent parents from investing in their child’s future. Essentially, you can’t save for your child’s college education when you’re still paying off your own.
Among parents with student loans, financial coach Craig Dacy said the most common struggle they face is guilt.
“Many parents feel like they need to provide their children with all the things they want, and take them out to new and exciting places, all at the expense of their budget,” explained Dacy.
However, the answer isn’t to just put all your financial focus on your kids. It’s possible, and even necessary, to get creative by finding cheap or free ways to meet your children’s needs.
Ultimately, you need to create a strong financial foundation to build on — because what your kids need most is a financially secure living situation. And one way parents create that is by getting out of debt.
How student loan refinancing helps
If they can, parents should focus intently on actually getting rid of their student loans for good, rather than finding a short-term fix. When your goal is to pay off student loans as fast as possible, refinancing student loans can be a great solution.
Refinancing student loans to shorter repayment periods can get you some of the lowest interest rates. And it will hold you to your goal of quickly paying off student debt. You’ll finish repaying your student loans faster, freeing up your financial resources – which you can use to invest in your child’s future.
Refinance student loans to get back in control
The second you become a parent, your child becomes the top priority. By necessity, other goals like student debt repayment take a back seat. Your desires and focuses shift to center on your child, and your finances should, too.
But kids don’t have to set your student loan goals back — and your student debt doesn’t have to keep you from providing for your kids, either.
Be proactive about your student debt and explore options such as refinancing student loans. You have more control over your student loans than you think. Use that to get your educational debt in check with the realities of parenthood.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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 firstname.lastname@example.org, 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
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|