Refinancing with Earnest
Refinancing rates from 2.27% APR. Checking your rates won’t affect your credit score.
When you get married, “yours and mine” becomes “ours” — for almost everything except student loan debt. But even here, it’s worth considering the move to combine or consolidate student loans with your spouse so that you can share repayment responsibilities and get out of debt faster.
Then again, although consolidating your private student loan debt with your spouse’s is sometimes possible, it can be tricky.
When you can consolidate student loans with your spouse
In 2005, Congress did away with the Department of Education’s so-called joint consolidation loans. So if you and your partner borrowed using the federal direct loan program, you can’t use a direct consolidation loan to merge your debt. You would only be able to consolidate your own loans, not your husband’s or wife’s.
To combine student loans with a spouse, you must now use a private refinancing company, like PenFed Credit Union.
Fortunately, PenFed can simplify the refinancing process. You could even take over your spouse’s debt as a sole borrower (with their permission, of course), although that would leave you on the hook by yourself.
But just because it’s possible to consolidate as a couple doesn’t mean it’s prudent.
Why you might consolidate student loans with your spouse
Consolidating student loans with your spouse can yield several advantages. The main potential benefits could include these:
Score a lower rate
To receive the kind of low fixed or variable rate advertised by top student loan refinance companies, you typically need an excellent credit score.
When looking to combine student loans with a spouse, however, only one of you needs a strong score, at least at PenFed. The credit union uses the higher credit score between you to determine the interest rate for the loan. This can mean additional savings for the spouse sporting the lower credit score.
Reduce your monthly payment amount
If lowering your rate isn’t a possibility or a priority, you and your partner could aim to reduce your monthly payment amount instead. You could achieve this by lengthening your loan repayment term from that 10-year term you were handed on your original federal loans.
Be advised that lengthening your term to reduce your monthly payment comes with the consequences of paying more interest over time. Consult a student loan refinancing calculator to gauge the potential costs.
Simplify your repayment
If you and your partner each have multiple loans, you might be making as many as a dozen payments to a handful of different loan servicers. Through refinancing, you could make one monthly payment to one servicer of your choice.
When you consolidate student loans with a spouse through a private refinancing company, you also leave some federal loan frustrations behind. You won’t have to worry about your tax filing status (single or joint) or annual recertification process for income-based repayment plans, for example.
Become better teammates
Finally, co-mingling your debts can help you avoid assigning blame to the person whose loan balance is higher because the debt now belongs to both of you.
Having the same rate as your spouse also means you will achieve debt freedom at the same time. This can foster a sense of teamwork and motivate both of you to pay off your debt as soon as possible. Then you can move on to other milestones you may want to achieve as a couple, such as buying a house or starting a family.
Why you shouldn’t consolidate student loans with your spouse
Despite the advantages, refinancing your student loan debt with your spouse’s is not always the best idea.
Losing federal loan protections
If one or both of you primarily borrowed using the federal direct loan program, then you should think long and hard about refinancing your student loan debt through a private lender.
This is because anytime you refinance direct loans with a private company, you agree to yield all the benefits associated with those federal loans. These benefits can include eligibility for deferment and forbearance, access to Income-Driven Repayment programs and pathways toward forgiveness and cancellation.
Additionally, if one or both of you work in public service and you would like to maintain eligibility for the Public Service Loan Forgiveness program, then keeping your loans federal — and therefore separate — may be the best choice.
Untangling your finances, if necessary
This isn’t always the best subject to bring up, but it’s worth remembering that joining your debt now could be the wrong decision if you break up later.
Before you elect to combine student loans with your spouse, ask potential lenders how they would handle your request to divide the debt upon divorce. Even if you feel a split isn’t a possibility for you and your significant other, it may not hurt to be aware of what would happen in a worst-case scenario.
Should you consolidate student loans with your spouse?
If you’ve decided to consolidate student loans with your spouse, then ensure you are both on the same page regarding all potential issues, including answers to questions like:
- How will the monthly payments be made?
- What are your goals with refinancing? Are you lowering your interest rate? Decreasing your monthly payment? Getting out of debt sooner?
- How will refinancing fit in with your other financial goals?
In the end, only you and your spouse can decide if refinancing your student loans with a private company is the decision that will work best for you. Don’t be afraid to be unconventional if that is what’s best for you, your spouse and your finances.
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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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 3.47% APR (with Auto Pay) to 7.59% APR (with Auto Pay). Variable rate loan rates range from 2.27% APR (with Auto Pay) to 6.89% 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 August 15, 2019, 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 08/15/2019. 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 our student 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 SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
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 2.37% effective July 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.27% – 6.89%1||Undergrad & Graduate|
|2.27% – 7.55%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.24% – 6.67%4||Undergrad & Graduate|
|2.37% – 7.95%5||Undergrad & Graduate|
|2.46% – 9.24%6||Undergrad & Graduate|