Refinancing with Earnest
Refinancing rates from 2.46% APR. Checking your rates won’t affect your credit score.
Earning an advanced degree can set you on the road to a fulfilling — and often high-paying — career.
But before you start earning a respectable salary in your new profession, you may need to struggle with a far lower income as a student. With little to no money coming in, you might need to postpone payments on your student loans through deferment.
Fortunately, you can qualify for student loan deferment if you’re attending graduate school at least halftime, are enrolled in a fellowship program or meet other criteria. But that said, having your student loans deferred while in grad school isn’t always the best option.
Read on to learn how to defer student loans while in grad school, as well as some alternative ways to manage your student debt.
How does student loan deferment work?
When you put your student loans into deferment, you postpone making payments for a certain period of time. Normally, if you walked away from your student loan bills, your loans would go into default. But if you defer loans, you can stop paying without penalty.
The Federal Student Aid office offers deferment on federal student loans, such as federal direct loans and PLUS loans. In this case, you can request deferment through your loan servicer. You’re eligible if you’re a graduate or professional student, or if you’re taking part in an approved graduate fellowship program.
Besides going back to school, there are other ways to qualify for student loan deferment. But one constant requirement, at least for federal loans, is that you have direct loans, PLUS loans, FFEL loans or Perkins loans.
As for private student loans, your options will vary from lender to lender. Some private lenders do offer deferment, but many don’t. If you have private debt, speak with your lender or servicer about what possibilities are open to you.
Pros of having your student loans deferred while in grad school
Putting your student loans into deferment can be a big relief when you’re in grad school and aren’t making much money. Since you won’t have to worry about student loan payments, you’ll have more room in your budget for other living and school expenses.
Likewise, you won’t have to be concerned about defaulting on your student loans. Default comes with a host of bad consequences, including damage to your credit score and possibly wage garnishment. But by pausing payments through deferment, you won’t be at risk of defaulting through nonpayment.
Finally, deferment is especially useful if you have subsidized direct loans, which are given to students with financial need. Interest does not accrue on subsidized loans when they’re in deferment, so your debt balance won’t grow while you’re in school.
Cons of deferring student loan repayment
Although having your student loans deferred while in grad school can offer financial relief, it also has a potential downside: If you defer unsubsidized student loans, interest will keep accruing on your balance.
As a result, your debt will grow, and when repayment resumes, you’ll owe more than you did when you started.
What’s more, taking your student loans out of deferment is considered a capitalization event. In a capitalization event, any interest that has accrued is added on to your principal balance. Then you start paying back this bigger balance at your same rate. In effect, you end up paying interest on your unpaid interest.
So while it’s tempting to forget about your student loans while in grad school, you could be facing a larger debt than you expected after you graduate.
How to defer federal student loans while in grad school
If you decide it’s right for you, you can ask for deferment from your student loan servicer. You can make your request over the phone or by logging into your online account.
You’ll provide basic personal information, such as your name, address and Social Security number. You’ll also need to indicate that you understand how deferment works, so make sure to read over the fine print and get answers to any questions you have.
And don’t stop making payments on your student loans until you get the green light from your loan servicer. You wouldn’t want to assume you’re in deferment before the paperwork has gone through, or your loans could end up in delinquency or worse, default.
For private student loans, ask your lender about your options
Most of the information above applies to federal student loans, such as direct loans, PLUS loans or FFEL loans. But if you have private student loans, your options will be different.
Private lenders set their own rules for repayment, and only some offer deferment or forbearance when you return to school. Sallie Mae, for instance, offers deferment for up to 48 months when you return to school or start an internship, clerkship or fellowship.
Note that if you defer private student loans, interest will likely continue to accrue during this period of paused payments.
Alternative ways to reduce payments on your federal student loans
All of these plans adjust your monthly payment, so you have the opportunity to pay significantly less than what you would on the standard 10-year plan. If you’re working a part-time job during grad school, you might be able to swing these lower payments.
Alternatively, you could defer your student loans but continue to make interest-only payments. That way, your unsubsidized or PLUS loans won’t accumulate a ton of interest during your student years.
Whatever payments you can make while in grad school could mean a more manageable balance after you graduate.
Should you defer student loans while you’re in grad school?
If you’re wondering, “Can I defer student loans while in grad school?” the answer is most likely yes, as long as you enroll in a recognized program or fellowship. But perhaps an even better question would be, “Should I defer student loans while in grad school?” — to which the answer is: it depends.
If postponing payments is the only way you’ll avoid default, then deferment likely makes a lot of sense for your situation. But if you can make small payments each month, you might protect yourself from even more debt in the future by continuing repayment.
Before making any changes to your student loans, use our student loan repayment calculator to estimate your monthly payments and interest. By crunching the numbers, you’ll have a clear sense of how your debt will grow if you reduce or eliminate monthly payments through deferment.
Then you can focus your energy on graduate school, confident that you made the most financially wise choice with your student loans.
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 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 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
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|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.05% – 6.47%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|