Refinancing with Earnest
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In 2012, 71 percent of college graduates left school with student loan debt, according to the Institute for College Access & Success (TICAS). Unfortunately, due to rising tuition costs, many students are forced to turn to private student loans.
But private student loans have high interest rates and lack the same protections and repayment programs of federal loans. This can make it difficult to know how to get rid of private student loans.
However, while you may not be eligible for Public Service Loan Forgiveness or income-driven repayment plans, you can still get help with private student loans.
The problem with private student loans
Private loans can be an essential tool in completing your education. If you’ve run out of federal loans, grants, and savings, taking out a private student loan can help fill the gap and keep you in school.
But private loans are typically more expensive than federal loans. While federal student loans can have interest rates as low as 4.45%, private lenders can charge more than 11% interest. Such a high rate can cause your balance to balloon over time, adding thousands to your loans.
In addition, if you have a variable-rate loan, your payments can fluctuate along with your interest charges. That can make it difficult to budget accordingly each month.
How to get rid of private student loans
If you’re struggling with your loans, there are options available to you to make your payments more manageable or to discharge your loans altogether. Here are seven ways to get private student loan debt relief:
1. Forgiveness programs
Only federal loans are eligible for the government’s Public Service Loan Forgiveness program. However, depending on your location and profession, you may be eligible for assistance from your state government or private organizations.
For example, if you are a licensed medical, dental, or mental health provider, you may be eligible for up to $50,000 to repay your student loans through the National Health Services Corps Loan Repayment Program. To qualify, you must commit to working full-time for two years in an underserved area.
Student Loan Hero has identified more than 120 repayment assistance or forgiveness programs. You can use the program search tool to look for programs in your area or profession.
2. Interest-only payments
If you cannot make your full minimum payment, some lenders will allow you to make interest-only payments on your loans. Instead of a payment that goes to the principal and interest, you’ll pay only the interest that accrues each month. LendKey is one of the lenders that allows borrowers to enter into an interest-only plan for up to two years.
This approach can significantly reduce how much you owe each month, but keep in mind that you’ll pay more on your loan over time.
To get on an interest-only plan, contact your lender’s customer service department. Your private loan lender may offer this payment option.
If you’re facing a financial hardship, such as unemployment or a medical emergency, some lenders, including College Ave, allow you to enter your loans into forbearance. That means you postpone making payments without going into default or delinquency.
However, interest will continue to accrue while your loans are in forbearance, so this should be a last resort when managing your loans. Make sure you understand all of the potential drawbacks of forbearance before applying.
4. Negotiating lower payments
Your lender wants you to keep making payments; they don’t want borrowers to default. So if you’re unable to make your payment each month, contact your lender and explain your situation.
If you’re going through a hardship, let your lender know. They may be willing to negotiate a lower payment for a limited time to help you get back on your feet. You can also try negotiating your interest rate. Some lenders offer interest rate deductions for setting up autopay, for example.
5. Disability Discharge
While federal loans are eligible for Total and Permanent Disability Discharge if you are severely injured and unable to work, private student loans do not qualify.
However, some private lenders will cancel a borrower’s debt in cases of permanent disability. There is not a set standard for this process, and it can vary from lender to lender. The best thing you can do is ask your lender if they offer disability discharge.
If you declare bankruptcy, you can cancel your debts, such as your credit card balance. In some cases, you may also be able to eliminate your student loan debt. However, getting private loans discharged through bankruptcy is much more difficult than with other forms of debt.
If you go this route, you must be able to prove an undue hardship, meaning you are incapable of paying back your loans while maintaining a basic standard of living.
Bankruptcy is a serious step that can have consequences that last for years, so it’s not something to enter into lightly. It also can cost you thousands in legal fees and court costs. Before filing for bankruptcy, make sure you have exhausted all of your other options.
If you need a lower monthly payment to make ends meet, another option is student loan refinancing. Through refinancing, you take out a new loan that covers the cost of some or all of your current loans. The new loan will have different repayment terms, such as length of repayment, interest rate, and monthly payment.
Some lenders offer repayment terms as long as 20 years. While you’ll pay back more in interest, extending your repayment period can make your monthly payment much more affordable.
While private student loans have fewer repayment options and benefits than federal loans, there are still ways to make your payments more manageable. If you are struggling with how to get rid of private student loans, contact your lender and explain your situation. Opening the line of communication can help you identify a solution and take charge of your debt.
Jolene Latimer 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 3.50% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.43% APR (with Auto Pay) to 7.21% 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 April 17, 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 04/17/2019. 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 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.
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 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.43% – 7.21%1||Undergrad & Graduate|
|2.43% – 6.65%2||Undergrad & Graduate|
|2.43% – 6.59%3||Undergrad & Graduate|
|2.44% – 6.87%4||Undergrad & Graduate|
|2.46% – 7.08%5||Undergrad & Graduate|
|2.93% – 9.67%6||Undergrad & Graduate|