How This Parent Refinanced $150,000 in Student Loans — Without a Degree

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This post was originally published on Dec. 27, 2017.

If you borrowed for college but did not graduate , trying to refinance student loans without a degree can be a challenge. That goes for students and, in the case of Tina MacDonald, parents too.

Having never finished college themselves, MacDonald and her husband prioritized their son’s education: They borrowed federal Parent PLUS Loans to pay for a private education. However, doing so caused them to rack up six figures of debt and endangered their retirement.

In her search for possible solutions, MacDonald heard about student loan refinancing and thought it sounded like a good strategy to pay off the debt. Unfortunately, her lack of a diploma was a sticking point initially.

To refinance student loans without a degree is possible, however. Let’s see how MacDonald accomplished it (and how you can too) by looking at the following topics:

Borrowing money to pay for her child’s education

MacDonald’s son chose a prestigious but expensive private school for college. He took out his own loans but needed help to cover the rest, so MacDonald and her husband offered to take out loans to pay for the remaining balance.

To cover tuition and other fees, MacDonald took out a total of about $140,000 in Parent PLUS Loans. Unfortunately, they came with a high interest rate of 7.90%.

“After five years, (the loan balance) grew to over $150,000,” MacDonald said.

The monthly payments on the loans were huge, so MacDonald opted for a graduated repayment plan — where payments start small and increase every two years — to reduce the monthly payment.

At first, the payments were manageable, but they increasingly became difficult. By the time she started researching other options to manage her debt, her monthly payments were $1,835.

“At the time (I considered refinancing), we had been through two increases already,” she said. “In a few years, (the payments) would have been insane.”

Looking into student loan refinancing for Parent PLUS Loans

With such a large payment, MacDonald worried about saving enough for retirement and her other children’s education. She began researching options online.

“I’ve always been kind of interested in finance, and I’ve always handled the mortgages and the insurance,” MacDonald said. “Over the past couple of years, I had been thinking about (refinancing).”

During her research, she came across Student Loan Hero and signed up for the weekly newsletter. She learned about how refinancing Parent PLUS Loans and how it could potentially help her.

“It was a big decision, and I was afraid,” MacDonald said. “That interest was crazy. But I kept thinking about that pending increase (with the graduated repayment plan). My payments would have been over $3,600 a month.”

Despite the benefits of refinancing, MacDonald was nervous about giving up the perks that come with federal loans.

“The only thing that frightened me is that when my husband was laid off a few years ago, we were able to put our payments on hold,” she said. “It was a big deal to give that option up.”

However, MacDonald decided to pursue refinancing despite the possible drawbacks of refinancing federal student loans.

Finding a lender to refinance student loans without a degree

MacDonald looked at our list of recommended student loan refinancing lenders and ended up applying to four of them. Initially, she worried that the loans were too big to refinance all at once, so she applied to have just half of the loans refinanced.

MacDonald and her husband are in their late 50s and make over $300,000 per year. Although that would make them sound like ideal applicants on paper, two lenders denied them.

Turned out, trying to refinance student loans without a degree — even as parents — was easier said than done.

“Even though we’ve never been late on a payment, we were denied because we never finished college,” she said. “They wouldn’t consider us because we didn’t have a degree.”

Thankfully, she did find a lender willing to refinance student loans without a degree: SoFi. After completing the application online, she received an approval notification just a few hours later.

Even better, MacDonald’s new loan included unemployment protection and would have a fixed interest rate of just 5.50%. With the new rate and loan term, she no longer had to worry about the payment growing.

“My payments are just under $1,800, but they’ll never change,” she said.

With more wiggle room in her budget, MacDonald said she feels more secure.

“A lot of people are afraid of financial things and don’t take action,” she said. “But you can save so much money by doing it.”

You can refinance student loans without a degree, too

By refinancing her loans, MacDonald was able to lock in a monthly payment she could afford, freeing up money to put toward her other goals. That extra cash flow will go a long way in helping her other, younger children pay for school and for her own retirement.

Student loan repayment without a diploma on the wall can be a serious burden. The outstanding loans can affect your monthly budget, your ability to get a mortgage and even how much you can save for retirement.

Fortunately, there are reputable lenders that refinance student loans without a degree.

SoFi was the solution for MacDonald, but another lender could be up your alley.

If you’re looking to refinance student loans without a degree, check out other banks, credit unions and national companies with this option:

More lenders that refinance student loans without a degree
LenderSelect requirements (not a full list)
Citizens BankMake 12 full, on-time monthly payments before applying.
PNCYou’re no longer enrolled, and you’re active in repayment.
EdVestinUYou’re a U.S. citizen or permanent resident and are at least 18.
DiscoverYou’re a U.S. citizen or permanent resident and are at least 18.
Rhode Island Student Loan Authority (RISLA)You’re a U.S. citizen or permanent resident.
Advantage Education LoanYou’ve entered your grace period or repayment on the loans you want to refinance.
INvestEDYou’re a U.S. citizen or permanent resident and you or your cosigner has been employed continuously for 12 months.
MEFAYou’re a U.S. citizen or permanent resident and haven’t experienced a delinquency in the past 12 months.

Andrew Pentis contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.89% – 6.66%1Undergrad
& Graduate

Visit Splash

1.89% – 5.90%2Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.99% – 5.34%4Undergrad
& Graduate

Visit Earnest

1.97% – 8.54%5Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

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.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of December 1, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Earnest.

Earnest Disclosures

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 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% 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 October 26, 2020, 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 10/26/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 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.


5 Important Disclosures for LendKey.

LendKey Disclosures

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.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 11/13/2020 student loan refinancing rates range from 1.97% to 8.54% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.