Refinancing with Earnest
Refinancing rates from 2.50% APR. Checking your rates won’t affect your credit score.
If I were to ask you the most frustrating thing about student loans, would your monthly payments be the answer?
It can be tough figuring out a way to budget your student loan payments, especially when your income isn’t where you want it to be.
But what if I told you that you might be able to remove worrying about student loan payments from your list? Would you leap at the chance to free up more cash in your account?
Because there’s a chance that you can. Read on to find out how.
What is partial financial hardship?
If you ever look at your student loan payments compared to your income and feel that the balance is insurmountable, you’re not alone. In fact, this is when “partial financial hardship” comes into play.
Note that this is in regards to federal student loans only. If your loans are private, skip to the last section of this article to see what options are available to you.
Partial financial hardship is an eligibility requirement for two income-driven repayment plans: Income-Based Repayment (IBR) and Pay As You Earn (PAYE). Demonstrating partial financial hardship is an eligibility requirement for these programs.
However, the partial financial hardship requirement is different based on the plan. Federal Student Aid describes the partial financial hardship requirement for IBR as:
The annual amount due on your eligible loans, as calculated under a 10-year Standard Repayment Plan, exceeds 15 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line for your family size in the state where you live.
For PAYE, the partial financial hardship requirement is as follows:
The annual amount due on your eligible loans, as calculated under a 10-year Standard Repayment Plan, exceeds 10 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line for your family size in the state where you live.
The main distinction between the plans is the percentage difference between your AGI and your amount due based on the Standard Repayment Plan. Fifteen percent is the requirement for IBR, while 10 percent is the requirement for PAYE.
That’s not the only difference between these two plans. It’s important to compare the pros and cons of each income-driven repayment plan. For example:
- PAYE: Your monthly payments are capped at 10 percent of your discretionary income. Your loans can be eligible for forgiveness after 20 years. However, you’re only eligible for PAYE if you first borrowed your loans on or after October 1, 2007. Additionally, you must have received a disbursement on or after October 1, 2011.
- IBR: Your monthly payments could be up to 15 percent of your discretionary income. Forgiveness could take up to 25 years.
But first, you need to use a partial financial hardship calculator to see if you qualify.
Use a partial financial hardship calculator to see if you qualify
Being able to demonstrate partial financial hardship can be a game-changer for your finances.
Taking on an income-driven repayment plan means your payments will no longer be calculated based on standard repayment plans. Rather, your payments are based on a percentage of your income.
It’s not enough to just say that you’re struggling to make your payments. As shown in the definitions above, there are real numbers to consider. These numbers determine if you are in a place of partial financial hardship and eligible for IBR or PAYE.
Look at what you owe in total on your loans now or the amount you owed when you initially entered repayment, whichever is greater. Then, plug that number into these partial financial hardship calculators:
If your income is too high to be eligible for either of these plans, these calculators will tell you so. That said, when it’s time to apply formally, you’ll need to do so here.
If your federal student loans aren’t all Direct, then you still may be able to qualify. FFEL loans can also be included in these plans as long as they’re not in default and/or are not a Federal PLUS loan made to a parent borrower.
Should you try to refinance instead?
Income-driven repayment plans can ease the burden of high monthly student loan payments. But there are two instances when these programs are not the best option:
- When you have only private student loans.
- If your main goal is to pay your student loans off faster.
For starters, private student loans aren’t eligible for any federal student loan benefits, including income-driven repayment plans. However, your private student lender may have other programs to help. Reach out to them directly to see what they offer.
Secondly, income-driven repayment plans can keep you in debt longer if you don’t apply for forgiveness when eligible. That’s because the lowered payments could have you only paying on interest for years.
If you have private loans or want to pay your loans off faster, there is another option: refinance your student loans.
Refinancing your student loans is the act of taking out a new, private loan to pay off your current private student loans and/or federal loans. The goal? To get a lower interest rate.
A lower interest rate enables more money to go to your balance rather than just interest. But if you want to refinance to pay your loans off faster, you need to either choose a shorter repayment term or a long repayment term with a commitment to pay more than you owe each month.
The only downside? Your federal loans will lose federal protections, such as income-driven repayment plans. That doesn’t have to be a non-starter, but it’s something to be aware of before you close on a refinanced loan.
Take control when payments are too high
Managing student loan debt isn’t easy. Problems with handling it continue to arise – nearly 40 percent of student loan borrowers are in default. Don’t let this happen to you.
The sooner you take control, the better your chance of rectifying the situation. That could mean income-driven repayment plans or a student loan refinance. You could even try deferment if necessary. The point is: you have options.
Don’t let these options pass you by – no matter how impossible your situation may seem. Take control of your student loans before they overwhelm you.
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 2.50% 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 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.
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.
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.
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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|