Refinancing with Earnest
Refinancing rates from 2.47% APR. Checking your rates won’t affect your credit score.
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When you graduate with your bachelor’s degree or advanced degree, refinancing your student loans can be an attractive option. You might qualify for a lower interest rate, plus an easier path to repayment.
But what if you didn’t graduate? You might not qualify for refinancing.
Although it’s one of the most common questions about student loan refinancing, it’s also easy to overlook. In fact, two of our readers recently messaged our support team to say they only learned about this requirement after dropping out.
One of our readers said he’d recently shopped around with multiple refinancing companies. He learned he was ineligible for refinancing despite having a steady income.
“I [chose] to leave [school] and don’t have much desire to go back, considering I secured a full-time job in one of my fields of interest,” he wrote. “But I’ve got $49,000 lurking over me because of leaving. [Is] there anything that’ll help me out?”
Not all refinancing companies require you to graduate
First, the bad news: Most student loan refinancing companies work exclusively with borrowers who earned their diplomas.
CommonBond, for example, says it accepts applicants who graduated from one of 2,000-plus selected universities and graduate programs. Another company, Earnest, allows applicants to refinance only if you’re one semester short of graduating.
Now the good news: There are a few refinancing companies that are willing to refinance the loans of college dropouts. Citizens Bank, for example, doesn’t require you to have a degree. But you do have to meet the following requirements:
- You’re no longer enrolled in school.
- You have at least $10,000 in federal or private student loans to refinance.
- You’ve made 12 full on-time payments before applying to refinance.
You must also satisfy traditional refinancing requirements, including having a Social Security number and proof of income. You’ll need a student loan cosigner if you’re not yet the age of majority in your state, which could be 18 or 21 depending on where you live.
So take the time to shop around and consider quotes from lenders that don’t require you to have a diploma hanging on your wall.
3 creative alternatives to student loan refinancing
There are plenty of reasons to consider refinancing your student loans. But if you’re ineligible without a degree, here are a few creative solutions for scoring similar repayment rewards.
1. Consolidate your federal student loans into one monthly payment
If you have multiple federal loans and are desperate for the simplicity of making one loan payment to one servicer, consider a Direct Consolidation Loan.
Your interest rate won’t decrease with this type of loan. It’ll be a rounded-up average of your existing rates. But you’ll have all your loans in one place.
By consolidating your federal student loans, you could lose out on benefits that were specific to your original loans. If you made qualifying payments toward Public Service Loan Forgiveness, for example, you’d have to start from scratch.
2. Switch to a repayment plan with a lower monthly payment
A Direct Consolidation Loan could lower your monthly payment by extending your repayment term. Alternatively, you could switch to an income-driven repayment plan for your federal loans.
Under an Income-Based Repayment (IBR) plan, for example, your monthly payment would be 10% or 15% of your discretionary income. You can use StudentLoans.gov’s Repayment Estimator to see which plan would decrease your monthly payment the most.
Remember: Lowering your monthly payment means you’re lengthening your repayment term. And the longer your term, the more interest you’ll pay over time.
Our IBR calculator tells the story. Say you have $35,000 in loans at an average interest rate of 5.70%. Switching from the 10-year Standard Repayment Plan to a 25-year IBR plan would shrink your first month’s payment from $383 to $86. But you would also pay $9,312 more in interest over time.
Although you can’t lower the monthly payments of private loans so easily, you could talk to your lender about deferment or forbearance. These measures allow you to pause your repayment if you lose a job or experience another economic hardship.
Even if you qualify for deferment or forbearance, remember that interest will continue to grow while you delay making payments.
3. Look for flexible cosigner release options
You might be drawn to refinancing your private loans to release a supportive cosigner. Be aware that you don’t have to refinance to accomplish the feat.
College Ave, for example, offers cosigner release on student loans. It requires you to make 24 on-time payments. Ask your lender about its criteria.
More than 40% of first-time students attending four-year schools fail to graduate within six years, according to the National Center for Education Statistics. So if you didn’t earn a diploma, you can bet that you’re not alone.
Examine your refinancing options with flexible private student loan companies. If you don’t find the loan terms you’re seeking, consider alternatives, such as altering the payment plan on your federal loans or pausing your monthly payments. You don’t need a degree to make the right decision.
If you have a student loan question you’ve been waiting for an answer to, contact our customer support team. Your question might end up in this column.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|