Refinancing with Earnest
Refinancing rates from 2.54% APR. Checking your rates won’t affect your credit score.
When we talk about your student “loans” — plural — we mean this literally. The average student juggles seven loans with two to three different loan servicers. So the typical graduate needs to track a bevy of payment due dates, and might even be paying higher interest rates than necessary.
Making so many different monthly loan payments is complicated, too, leaving many borrowers searching for an easier solution. But there’s more to consolidation than just simplifying repayment.
Aside from dealing with many loans across multiple servicers, consolidating and refinancing student loans can save money on interest and lower monthly payments. This is typically achieved through refinancing at a lower interest rate than your current loans.
However, lots of lenders are eager to roll your loans into their portfolio, and it’s often hard to know which bank to choose. The answer, though, depends on what you value most. Time? Money? Convenience? Support?
We can’t make that decision for you. But we can help you compare student loan consolidation rates and other variables that will affect your loan repayment.
First, determine your goals for refinancing
There are several reasons to refinance your student loans. Borrowers’ goals may vary, so it’s good to know exactly what you’re looking for before researching and selecting a student loan refinancing lender.
Here are some goals you may have when refinancing:
1. Save on interest
Chances are lenders view you as a lower-risk borrower now that you’re out of school than when you were a freshman. Lenders reward lower-risk customers with lower interest rates, allowing you to compare student loan consolidation rates. Lower interest rates mean you’ll pay smaller monthly bills, and spend less money on interest over the life of the loan.
How much less? Let’s imagine you have $20,000 in student loans, at a 5% interest rate, which you’re repaying over 120 months (10 years). Using a student loan refinancing calculator, you’ll see your monthly payment is $212, and over the life of the loan you’d pay $5,455 in interest.
But if you could lower your interest rate to only 4% and keep the 10-year term, your monthly payment would drop to $202 and you’d pay $4,298 in interest over the life of the loan — a savings of $1,157.
2. Lower monthly payments
Private and federal student loans usually have a 10-year repayment term. But there are additional term options and flexible loan repayment terms, with some stretching as far as 25 years.
Longer repayment terms mean lower monthly payments. But you’ll pay more in interest over the long run. Lower payments often are a good choice when you’re starting out and cash is tight.
If you’ve got a little extra cash at the end of the month (if only!), you can always increase your payments or make an extra payment, which will reduce the time of your loan and the amount paid toward interest.
3. Remove Co-Signers
If you’re trying to become an independent adult, you don’t need the stress of having co-signers breathing down your neck about paying your student loans. Refinancing, especially if you’ve got a good job, can remove Mom and Dad from your student loans and the financial part of your life.
There may be other reasons you wish to refinance and consolidate, too, including switching student loan servicers, the need to make only one payment, and paying off student loans faster. No matter what your reasons, keep them in mind as you move on to the next step.
Look for a refinancing offer that accomplishes your goals
There are plenty of lenders willing to consolidate private loans, and it’s sometimes hard to know which one to select.
First, read eligibility requirements, which differ with each lender. Most — not all — will refinance student loans only if you’ve graduated from college or a graduate program, have good credit, a steady job, and a favorable debt-to-income ratio.
If you qualify for refinancing, select a lender that offers terms that best suit your needs. The following is a list of loan features you should consider when making your decision:
Loan consolidation rates are all over the map, currently ranging from 1.95% to 10.47%, depending on your credit. Of course, you should compare student loan consolidation rates and choose a lender that will give you the lowest rate. But unless you’ve got a great job and a high credit score — unusual for people just out of school — you’ll have to accept whatever rate you can get.
2. Loan Rate Types
Lenders typically offer fixed and variable rate loans. Fixed rates are usually higher than variable rates; but variable rates can start low and end up high by the end of the loan, although they have a cap. Whichever you select will depend on the monthly payment you can afford now, and how much risk you can tolerate regarding future rates.
Lenders offer loans you must repay over 5 to 20 years; some lenders will only go out 15 years. The longer the repayment time, the lower the monthly payment, but the more you will ultimately pay in interest over the loan’s lifetime.
4. Eligible Degrees
Most lenders will let you consolidate private and federal loans for both undergraduate and graduate schools. However, most lenders want to see a degree before refinancing your loans. And some lenders only accept degrees from certain schools, so you’ll want to check lenders’ lists of eligible institutions first.
5. Unemployment Protection
Many lenders understand that newcomers to the job market often switch jobs frequently during their first few years as a working adult. And the data backs this up. A U.S. Bureau of Labor Statistics study of baby boomers found that people born from 1957 to 1964 held an average of 11.7 jobs from ages 18 to 48, holding an average of 2 to 3 jobs during later periods of their lives.
Lenders understand that job-hopping is a function of youth, and some will pause payments up to 18 months while you’re looking for work. However, take into account the conditions when you can request deferment as it varies for each lender.
6. Loan Discounts
Most lenders will give you a .25% discount if you allow them to automatically deduct monthly payments from your bank account. Some lenders will give you another small discount if you maintain a bank account at their institution.
7. Co-Signer Release
Lenders know that neither you nor your parents want to be linked by debt forever. Some lenders will release co-signers if you make timely payments for 36 consecutive months.
Which Bank Should You Choose?
Which of these qualities are most important? Would you be willing to pay a slightly higher interest rate in exchange for unemployment protection or a co-signer release? Are you more interested in lowering your monthly payments or improving your loan terms?
We can’t answer these questions for you. Your answer will depend on factors like your job prospects, income, family situation, and other personal considerations. Talk to a multitude of banks that are willing to refinance your loans and decide which one fits you best.
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 SoFi.
2 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 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 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 0318/2019. 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 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.
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.
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 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|