Refinancing with Laurel Road
Refinancing rates from 1.99% APR. Checking your rates won’t affect your credit score.
Student loan refinancing offers a chance to lower your interest rate and choose new terms on your debt, if you qualify. But as with any approach to managing finances, refinancing isn’t for everyone.
While some borrowers could save money through refinancing, others might not see any savings — or could have trouble qualifying in the first place.
For more on the pros and cons of refinancing, we asked student loan experts what their take was. Here’s what they had to say about the benefits of refinancing — and where it falls short.
1. You could save a lot of money on interest
One of the biggest benefits of refinancing student loans is getting a lower interest rate. If you can meet requirements for credit and income — or apply with a cosigner who can — you could qualify for a low rate on your refinanced student loan.
“Refinancing can be a great way to save thousands of dollars by getting a lower interest rate,” said Travis Hornsby, a chartered financial analyst and founder of Student Loan Planner.
Let’s say you have a $30,000 student loan with a 6.8% interest rate on a 10-year repayment plan. If you refinanced that rate down to 4.5%, you’d save $4,119 in interest over 10 years.
“The big advantage with refinancing is the potential savings on interest,” said Michael Lux, attorney and founder of The Student Loan Sherpa. “It can mean lower payments each month and free up cash for things like buying a house or saving for retirement.”
Not only could you set aside the money you’re saving each month on interest, but you could throw it at your student debt to pay it off even faster.
2. … but your savings might not be as big as a lender advertises
Although lowering your interest rate may save you money, you also have to be careful not to get taken in by overblown promises from a lender.
Some might claim to offer you thousands of dollars in savings, but the math only works if you choose a specific repayment term and make a certain monthly payment.
“Lender advertisements concerning savings may not reflect the experience of individual borrowers,” said Mark Kantrowitz, publisher and vice president of research at SavingforCollege.com. “Even if the savings are real, most of the savings will come from a shorter repayment term and higher monthly payment, not from the lower interest rate.”
If you doubled your monthly payment, for instance, you could get out of debt in about half the time — with or without refinancing first.
“You can easily implement a higher monthly payment on your own, without refinancing, by making extra payments to [the] principal,” said Kantrowitz.
Although refinancing for a lower rate could maximize your savings, you also need to make sure refinancing is the right choice for your individual situation.
3. Shopping around will help you find the lowest rates
If your priority is finding the lowest interest rate, compare offers from a variety of lenders before choosing one.
“The best way to get a favorable rate is to shop around with a number of lenders,” said Lux. “Each lender uses different criteria when evaluating applicants, so the company advertising the lowest rate may not actually offer the best rate.”
Although comparing multiple offers might sound time-consuming, it doesn’t have to be. Some lenders instant rate quotes, so you can get a sense of your rate after providing just a few pieces of personal information.
Plus, these rate quotes won’t impact your credit score and don’t require any commitment. So if you’re curious if you’ll qualify, you could easily find out from lenders such as SoFi, CommonBond, and Earnest in a matter of minutes.
4. … but be careful about sacrificing federal benefits
Both private and federal student loans are eligible for student loan refinancing. But refinancing federal student loans turns them private, which means you’ll lose access to federal repayment plans, forgiveness programs and other perks.
“If you refinance a federal loan into a private loan, you walk away from important federal benefits and consumer protections, such as income-driven repayment, loan forgiveness programs, default resolution options, flexibility during times of hardship and discharges based on disability or death of the borrower,” said student loan lawyer Adam S. Minsky.
The federal government offers a variety of options to help you through periods of financial hardship, but private lenders aren’t always so flexible. Some allow you to postpone student loan payments through forbearance if you lose your job or return to school, but not all of them do.
So if you foresee needing federal programs in the future — or are working toward a program like Public Service Loan Forgiveness — refinancing your federal student loans would probably be a bad idea.
Even if you don’t mind sacrificing federal protections, check to see what benefits your prospective refinancing provider offers before committing to refinance with them. Some lenders, for instance, offer unemployment protection and even career counseling to their customers.
As Minsky advised: “Borrowers should thoroughly understand what they are getting — and what they are giving up — with any refinancing product before they sign.”
5. You can simplify repayment by combining multiple loans into one
Along with potentially saving you money on interest and choosing new terms on your student loans, refinancing also comes with another possible perk: the chance to consolidate several loans into one.
“The benefits of refinancing student loans include streamlining the repayment process by replacing multiple loans with a single loan,” said Kantrowitz.
Instead of keeping track of multiple payments and due dates, you’ll only have to remember one. This consolidation could simplify the repayment process and make it easier to pay back your debt.
Plus, you might have the option of refinancing parent PLUS loans or other loans that a parent took out on your behalf. As a result, you can assume responsibility for the loan, so your parent’s credit is no longer on the line.
This transfer of responsibility might be the solution you’ve been looking for to get your parent off the hook for your education debt.
6. … but be careful about which student loans you refinance
Although refinancing lets you simplify repayment by consolidating multiple loans, you don’t have to refinance all your loans. Instead, you might benefit from cherry-picking just one or two to refinance, depending on where you’d see the greatest interest savings.
For example, let’s say a lender is offering you a refinanced student loan at 5.00%. One of your loans has a 7.00% rate, so this reduction would save you money. But your other loan has a 4.00% rate, so accepting this offer could obviously cost you extra on that particular loan.
Instead of refinancing all your loans, figure out how you’d benefit the most. In some instances, you might have better luck just by focusing on your high-interest loans with the debt avalanche method of repayment.
“Some borrowers may be better off targeting the highest-rate loan for quicker repayment,” said Kantrowitz. “You can’t do that after consolidating. If the interest rate on the refi will be higher than most of the interest rates on the refinanced loans, except for one or two, you may save money by accelerating repayment of the highest-rate loans instead of refinancing.”
7. Refinancing more than once could lower your interest rate even more
Since refinancing has the potential to lower your interest rate and restructure your debt, it stands to reason that refinancing multiple times could benefit your finances further.
But refinancing more than once is likely only worth the effort if you can snag a lower interest rate the second or third time around.
“There might be an advantage to refinancing a student loan more than once … in an economic environment where interest rates are dropping,” said student loan lawyer Jennifer Weil.
However, Weil notes that this “is not where we are right now.” (For example, the Federal Reserve Bank of St. Louis rates continuing to rise over the short term.)
Another reason to refinance again would be if your credit score and income have gone up, and you want to see if you could qualify for even better terms.
Finally, you might refinance again to remove a cosigner from your loans. But before going this route, check to see if your lender already offers cosigner release after a period of on-time repayment.
8. … but be strategic about choosing a fixed or variable rate
When you refinance student loans, you have the chance to adjust your monthly payment by choosing new repayment terms, usually between five and 20 years. You’ll also get to choose between a fixed rate, which stays the same over the life of your loans, and a variable rate, which could fluctuate with the market over the years.
“Choosing between fixed and variable rates is entirely dependent on the student’s loan situation,” said Jacob Dayan, CEO and co-founder of tax services company Community Tax. “The length of time at which the loan will be paid back is a strong indicator when choosing between fixed and variable rates.”
Currently, variable rates usually start out lower than fixed ones, so they could save you money if you’re planning to pay your loan off quickly. But if you’re selecting a longer repayment term, a variable rate becomes more risky.
“Students who are able to pay off their loan relatively quickly have often sided with a variable rate,” said Dayan. “However, the longer it takes a student to pay off the loan with variable rates, the more chances there are for the rates to change over the lifetime of the loan. If a student’s future income is uncertain, and they don’t plan on paying off the loan quickly, many students consider fixed-rate student loans for more consistency.”
Use our student loan payment calculator to estimate the short- and long-term costs of each repayment plan and interest rate. By doing out the math, you can focus in on a repayment plan that works for your budget.
Weigh the pros and cons of refinancing to see if it’s right for you
The student loan experts we spoke with agree that refinancing has the potential to save you money on interest and restructure your debt with a plan that’s beneficial for your finances.
But you should also be careful about giving up federal protections, since these could come in handy if you lose your income or if you are in danger of going into default.
Whenever you’re dealing with loans, it’s important to benefits and drawbacks before making changes.
That way, you won’t make a challenging situation worse, but instead can make an informed choice that helps you conquer your student loan debt once and for all.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 7.10%1||Undergrad & Graduate|
|1.99% – 6.65%2||Undergrad & Graduate|
|1.99% – 6.24%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 5.64%4||Undergrad & Graduate|
|3.18% – 6.06%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
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 May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
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.
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 June 23, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 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 7/31/2020. 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 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 0.18% effective July 10, 2020.