Refinancing with Earnest
Refinancing rates from 2.54% APR. Checking your rates won’t affect your credit score.
When Ann Weinstock’s son was in college, his financing plans fell through. Scrambling to help her son stay in school, she contacted the university. Financial aid counselors encouraged her to take out Parent PLUS Loans.
“The college didn’t really explain what that meant,” says Ann. “I thought my husband was just a co-signer, but then I found out the loan was entirely in his name.”
Ann researched her options online, but found incorrect information and conflicting advice. But after stumbling across Student Loan Hero, she was able to find a real solution.
Here’s what Ann and her family did to take charge of their loans.
Getting into student debt
To pay for school, Ann’s son Logan took out Stafford student loans in his own name. For other expenses like room and board, he planned to work as a resident assistant (RA) in the upcoming semester. That opportunity would have covered the rest of his expenses, but at the last minute, the job fell through.
With just weeks before the start of the new semester, Logan and his parents had to find a way to keep him in school. Encouraged by the school to take out Parent PLUS Loans, Ann and her husband borrowed the money to help Logan complete his degree.
But it wasn’t until Logan graduated that Ann found out how a Parent PLUS Loan works. Rather than her son owning the debt, she and her husband were completely responsible for the loan, and the debt appeared on their credit report.
“We’re in our 50s,” says Ann. “I don’t know what the future holds, and having that debt over our heads worried me. It would impact our credit and retirement plans.”
Finding a solution
Ann wanted to find a way to make the loan payments more manageable and transfer the loan to her son’s name.
At first, Ann thought Direct Loan Consolidation would be the answer they needed. However, the new loan would have an interest rate equal to the weighted average of their current loans.
Put simply, that method wouldn’t save them any money on interest. Plus, the loans would still be in the name of Ann’s husband.
Ann tried to find another solution online, but the information she found was confusing and sometimes downright wrong. Even when she called her loan servicer, the customer service representative told her it was impossible for her son to take over the loan. Frustrated, Ann kept looking for answers.
“I was researching and I came across the Student Loan Hero website,” says Ann. “It had great information and tips.”
She found an article about refinancing Parent PLUS Loans into a child’s name, but after everything she had read before, she was skeptical that it was possible.
“I sent in a question to customer support,” says Ann. “I spoke with Kat and she explained that my son could refinance the loans in his own name. She shared with me a list of lenders that might work with us.”
Refinancing Parent PLUS Loans
Ann reviewed our list of partner lenders and talked the idea over with her son.
“SoFi and DRB [now known as Laurel Road] were the top two,” says Ann. “When my son came home from college, he reviewed them, too. We ended up choosing [Laurel Road] because they offered a slightly lower interest rate.”
Logan applied for the refinancing loan himself and found the process simple and quick.
“He actually did everything online,” Ann says. “He completed the application and uploaded his offer letter from his new job, school transcripts, and a copy of his diploma. He said it was very easy.”
Logan was approved for the loan within a few days. He was also able to get a lower interest rate and an extended repayment term to give him more breathing room in his budget.
He’ll pay the new loan over 20 years, so his new payment is $150 less than the payments were for the Parent PLUS Loans. While he’ll pay back more in interest, extending the term gives him more room in his budget now. For Logan, that’s helpful as he moves to a new state for work and starts his career.
Ann says one of the best parts of working with Laurel Road is that they were willing to honor the old loans’ grace period, rather than requiring immediate payments. It took some back and forth between Ann and customer service, but now Logan doesn’t have to make payments until January 2018.
Finally, the loans are now solely in Logan’s name, rather than Ann’s or her husband’s. Refinancing the Parent PLUS Loans gives them some much-needed relief; Ann says that’s due to her research and persistence.
“[If you’re in this situation], don’t give up, keep trying, and research as much as you can,” she advises. “People and lenders kept telling me it was impossible. If it wasn’t through your website and your advice, we would still be stuck with the lender,” says Ann.
Understanding your repayment options
If you‘re struggling with loans you took out for your child’s education, it’s important to understand all of your repayment options.
You can work with your children to refinance the debt into their name, or you might qualify for an Income-Contingent Repayment plan. Research different repayment methods to find what works for you and keep looking for answers.
For more information about refinancing Parent PLUS Loans into your child’s name, check out this article.
Disclaimer: As a thank you to Ann and her family for sharing their Student Loan Hero experience, we sent them a gift card.
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 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.
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|