Refinancing with Earnest
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When you get married, “yours and mine” becomes “ours” — for almost everything except student loan debt. If one or both of you borrowed to fund your education, you may be interested in consolidating your debt together so that you can share repayment responsibilities and get out of debt faster.
However, if you borrowed using the Federal Direct Loan program, you cannot use federal consolidation to merge your debt with your spouse’s. Instead, you must use a private refinancing company like PenFed. Consolidating your private student loan debt with your spouse’s can also be tricky. Fortunately, PenFed can simplify the refinancing process for spouses who would like to combine their private student loan debt as well.
What are the advantages of consolidating student loans with spouse?
Consolidating student loans with spouse can yield several advantages. For example, if one of you has a significantly higher credit score than the other, then PenFed can use the higher credit score to determine the interest rate for the loan. This can mean significant savings for a spouse with a low credit score.
If there is an income disparity between spouses, then this can be an obstacle when it comes to your tax filing status. This can also potentially make it difficult to qualify for income-based repayment programs, especially if one or both of you are currently using a federal repayment plan like Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE).
Consolidating student loans with spouse through a private refinancing company means you won’t have to worry about your tax filing status or annual recertification process for income-based repayment each year.
Merging your debts can also come with the benefits typically associated with refinancing, including lowering your interest rate, lowering your monthly payments, adjusting the length of your repayment term, and decreasing the number of monthly payments and student loan servicers that you have to deal with.
Additionally, co-mingling your debts can help you avoid assigning blame to the person whose debts are higher, because the debt is now truly “yours.” Having the same rate as your spouse also means you will achieve repayment 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.
When is it a bad idea to refinance my student loan debt with my spouse’s?
Despite the advantages outlined above, refinancing your student loan debt with your spouse’s is not always the best idea.
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 any private company. Even if you intend on consolidating student loans with spouse, it may not be the best decision.
This is because anytime you refinance Federal Direct Loans with a private company, you are agreeing to give up all the benefits associated with those loans. These benefits can include eligibility for deferment and forbearance, access to income-based repayment programs, and eligibility for forgiveness.
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 (PSLF), then keeping your loans Federal — and therefore separate — may be the best choice.
Although PenFed can work with you down the road to separate your student loans again if necessary, doing so can be complicated for variety of reasons. It is better to feel sure that both of you are truly in it for the long haul.
If you’ve decided to move forward with consolidating student loans with spouse, then make sure you are both on the same page regarding all potential issues, including:
- 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 is best for you, your spouse, and your finances.
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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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
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
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|