Refinancing with Earnest
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As a nurse practitioner, Schauren Hinson made an excellent salary. Bringing in about $80,000 per year out of school, her income should have been enough to afford a comfortable lifestyle.
However, crippling student loan debt — to the tune of $140,000 — ate up huge portions of her paycheck.
“I tried using just savings to pay for school so I wouldn’t have to take on student loans,” Schauren says. “But when I tried to pay for school myself, just one semester emptied my savings. I was literally at zero.”
Out of money, she was forced to take out student loans to pay for her graduate program. Thanks to high interest rates, her loan balance ballooned in size by the time she graduated.
With a huge loan balance hanging over her, Schauren felt limited in what she could do. She started researching all of her options and came across Student Loan Hero. Thanks to the information and tools she found there, she was able to drop the interest rate on her student loans and pay off $75,000 of her debt in one year.
Getting into student debt
When it came time to get an advanced degree, Schauren says the choice was easy: Duke University was her first choice.
Although Duke was an attractive option, the university’s high cost of attendance — today a single semester costs around $38,000 — wiped out her savings. Despite her misgivings about student debt, Schauren was forced to take out loans to pay for her education.
“It’s a great school,” she says. “It’s worth the cost. But I just didn’t have the money to pay for it. And I’d have to borrow so much to pay for school.”
With her savings gone, she had a tough decision to face.
“I was working as a nurse at the hospital at the time,” she recalls. “Even with my income, a grant from the nursing school, and two scholarships, I still couldn’t pay for my degree. I was talking to a coworker about it, and she told me to just take the loan so I could complete my degree faster.”
Even though Schauren qualified for federal loans, the interest rates were still high. “I had eight different loans in total,” she says. “The interest on three of them was 8.50%. The others were 6.80%.”
By the time she graduated, her loan balance had grown to a whopping $140,000.
Tackling her student loans
After her loan grace period ended, the minimum monthly payment on her loans was nearly $1,800. Even with her high starting salary of $80,000, the minimum payment was difficult for Schauren to afford.
Although she tried to keep on the 10-year standard repayment plan, the monthly bill was too high. Schauren applied for an income-driven repayment (IDR) plan, which made her payments more affordable. But, there was a drawback: While the payments were easier for her, interest kept building.
“Every time I made a payment [under the IDR plan], I saw that my balance grew,” she says.
Her payment wasn’t enough to cover the interest charges, so the balance increased with time. She realized that it would take 20 to 25 years to eliminate her loans under the IDR plan.
Refinancing her student loans
With a sense of urgency to pay off her loans, she used Student Loan Hero’s tools to identify her repayment options.
She signed up for the weekly student loan newsletter for repayment tips and learned about refinancing. By refinancing her student loans, Schauren realized she could reduce her interest rates so more of her monthly payments would go toward the principal balance. With a lower rate, she could pay off her loans faster.
When you refinance a student loan, you take out a new loan to pay for some or all of your current student loans. The new loan can have a different interest rate, repayment term, and minimum payment.
Although it can help some people pay off their debt faster, refinancing does have its drawbacks, particularly if you have federal loans.
“It was a little scary,” Schauren says. “By [refinancing student loans], you lose all these federal benefits and protections. But I decided that the risk was worth it to get rid of them faster.”
She shopped around with several different lenders before deciding on Earnest. Not only did they offer her a great interest rate — about 3.00% — but she felt more comfortable with them as a company.
Other lenders had offered her a loan with very little information, which made her nervous about scams. Earnest required more information and documentation, which made her feel the company was legitimate.
“Their process was a little more rigorous, which was reassuring,” Schauren says.
With a lower rate, Schauren was motivated to pay off her debt as fast as possible. She took Student Loan Hero’s advice to heart and started working several side hustles so she could pay more toward her loan.
“I had three jobs at the time and I just put every extra dollar toward my loans,” she says. On top of her job as a nurse practitioner, she also worked on weekends at a local clinic and did home visits. Between her jobs, she was able to put an extra $4,000 per month toward her loans.
“It was a bit lonely,” Schauren says. “I’d work my job, then head straight to my home visit job for a few hours. And my weekends were spent at the clinic. There wasn’t time for much else.”
Although her schedule was grueling, her hard work paid off. In one year, she paid off nearly $70,000 in student loans.
What’s next after paying off her student loans
Schauren managed to pay off her loans in just six years, including the time she spent on an IDR plan. Even though she no longer has student loans, she hasn’t been able to convince herself to give up all of her side hustles yet.
“Not having $140,000 on my shoulders is amazing,” she says. “I feel much more freedom. But I’m still working weekends at the clinic so I can pay off my car sooner and save up an emergency fund.”
For others facing the burden of student loans, Schauren recommends facing it head on.
“I believe your debt is like a ‘your house is on fire’ emergency,” she says. “Don’t spend a dime on anything other than basics and put everything else toward your debt so it’s out of your life.”
If you’re ready to take charge of your debt like Schauren did, check out our ultimate guide to paying off your student loans faster.
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% 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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|