Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
If you have federal student loans, you may be making payments to FedLoan Servicing. The loan servicer operates MyFedLoan and is one of a small number of organizations approved by the Department of Education to administer loans, process payments, and handle borrower issues.
But just because FedLoan Servicing manages your debt doesn’t mean you’re stuck with them.
You have options to get a new lender through loan consolidation and refinancing. While both allow you to get a new loan to repay your debt, they work differently. Here’s what you need to know.
Should you consolidate or refinance FedLoan Servicing?
You may choose to consolidate or refinance student loans to simplify loan repayment or get more favorable terms. Consolidating, for example, can reduce the number of loan servicers you’re making payments to each month. Refinancing could lead to a lower interest rate.
But maybe you’re just unhappy with FedLoan Servicing. You could consolidate or refinance to move to a new loan servicer.
Consolidating vs. refinancing FedLoan Servicing debt
When you consolidate student loans, you take out a new loan with the federal government to combine eligible education debt. Doing so may allow you to make one monthly payment on your student debt instead of multiple payments.
Consolidation can also lower your monthly payments by extending your repayment term. But while you can stretch out payments over 30 years, doing so would mean that you’d pay more in interest by being in debt longer.
Consolidation doesn’t lower your interest rate. Instead, your new rate would be the weighted average of your existing loans rounded up to the nearest one-eighth of a percent.
Refinancing, on the other hand, is done through a private lender. You’d take out a new loan to pay off your existing debt. If you refinanced federal debt, you’d lose access to federal borrower protections such as income-driven repayment (IDR).
The biggest difference between consolidating and refinancing your loans is that you may qualify for a lower interest rate by refinancing.
Your monthly payments and the total cost of your loan may be lower because of this reduced rate with the same loan term as the original loan. If you extend your repayment term, you could lower your payments in exchange for remaining in debt longer.
Pros and cons of consolidating
Applying for a Direct Consolidation Loan comes with its ups and downs. While you may be able to combine multiple federal loans to simplify repayment, you lose any progress you made toward loan forgiveness on an IDR plan or Public Service Loan Forgiveness (PSLF).
Consolidating loans serviced by FedLoan Servicing benefits you by:
- Allowing you to switch from FedLoan Servicing to a different lender
- Simplifying repayment, if you had multiple loans
- Making federal loans eligible for certain IDR plans and PSLF if they weren’t before
- Providing more flexibility in repayment, including a longer repayment term
But the downsides to consolidating include:
- Being unable to lower your interest rate
- Losing credit for payments made on IDR or PSLF
- Potentially paying more over time if you stretch out your loan repayment
Pros and cons of refinancing
Refinancing can be a tantalizing option. After all, you may be able to land a lower interest rate, reducing the cost of your student debt. But by refinancing, you lose access to federal borrower protections. So weigh the pros and cons of this option carefully.
Refinancing FedLoan Servicing debt provides important benefits, including:
- Switching to a different loan servicer
- Simplifying repayment by having only one loan instead of many
- Depending on your loans, switching from a variable rate to a fixed rate, or vice versa
- Potentially reducing your interest rate, which could lower your monthly dues and the total amount you repay over the life of the loan
But refinancing comes with its own downsides, such as:
- Losing access to federal borrower protections
- Having to find a cosigner if your credit isn’t strong enough to qualify
How to consolidate loans serviced by FedLoan Servicing
Although FedLoan Servicing has information about consolidating on its website, you’ll go through the Department of Education to complete the process.
You can find an online application for a Direct Consolidation Loan on the department’s website. You’ll need to create an account if you don’t have one. The entire consolidation process must be completed in a single session, which typically takes less than 30 minutes.
Once you’ve applied, FedLoan Servicing will confirm the interest rate and payoff amounts on your current loans. You’ll receive a loan summary statement to review so that you can ensure all the loans you want to consolidate are included.
You’ll have 10 business days to review the statement, request changes, or cancel your request to consolidate. After these 10 days, your existing loans will be paid off and you’ll receive information about your new Direct Consolidation Loan. You’ll start making payments on your new loan, with the first one due within 60 days.
How to refinance loans serviced by FedLoan Servicing
If you decide to refinance, you’ll work with a private lender. To do that, you’ll need to shop lenders offering student loan refinancing. Banks, credit unions, and lenders offer this service.
As you consider lenders, compare interest rates, term lengths, and other loan features. If you’d like to apply for refinancing, you’ll need to submit an application to see if you qualify.
If you don’t have proof of income or a good credit score, you may need a cosigner.
If you’re approved for student loan refinancing, the lender will determine what you owe FedLoan Servicing and will pay off your existing debt. You’ll then make payments to your new lender according to the terms in your loan agreement.
Should you consolidate or refinance?
Choosing to consolidate or refinance loans serviced by FedLoan Servicing is a big decision. If you’re considering a Direct Consolidation Loan, think about whether you’ll be giving up borrower protections or losing credit for payments you’ve made toward loan forgiveness.
If you’re thinking of refinancing, see if you can qualify for a loan with better terms than on your current debt. You may be able to save money by refinancing, but not every borrower has the income and credit score needed to qualify.
Looking into both options is worth the effort. You should be aware of the ways you could repay your student loans faster or better manage your debt. But be sure to weigh the pros and cons of each option before you act.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|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 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
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|