Refinancing with Earnest
Refinancing rates from 1.81% APR. Checking your rates won’t affect your credit score.
If you’re looking to lower your interest rates and save money on payments, student loan refinancing could be the solution for you.
However, depending on your situation, refinancing might not be the best idea, especially if you don’t have a secure income or the best credit score.
Here are six pros and cons of refinancing student loans to consider before signing on with a lender.
6 pros and cons of refinancing student loans
Before you decide if it’s the right course for you, here’s a brief note on how student loan refinancing works. Refinancing means lumping your existing federal and private loans into a new loan with a private lender.
Through refinancing, you could score a better interest rate but lose access to federal loan protections. See if any of the following pros and cons of refinancing student loans speak to your situation.
1. Con: You need to meet lofty eligibility requirements
When you applied for student loans, you needed to meet specific requirements, such as being enrolled at least half time at an eligible school.
Similarly, top lenders offering student loan refinancing have requirements. Basic criteria include being a legal resident and holding an undergraduate or graduate degree.
But refinancing companies also require borrowers to be creditworthy. And you’ll need to have solid credit if you want to score the best rates. The best private student loan companies often require you to have a good or excellent credit score (typically 660 or above) to qualify.
2. Pro: You can apply with a cosigner to access lower interest rates
Refinancing requirements can be hard to meet. But you could enlist the help of a cosigner.
Although you’re not required to apply for refinancing with a cosigner, many top lenders give you the option to do so.
Say you don’t have the credit history or income to benefit from refinancing on your own. Consider asking a relative or other creditworthy adult to cosign so you can get a lower rate.
If you’re concerned about being joined at the hip to your cosigner, remember that many top lenders offer clear pathways to cosigner release. At Laurel Road, for example, you can remove a cosigner from your loan agreement once you make 36 consecutive timely payments.
3. Pro: A lower interest rate could lead to major savings
Whether you benefit from a cosigner or have built up your own strong credit history, refinancing will award you accordingly. It’s a merit-based system; the more qualified you are for refinancing, the lower your interest rate will likely be.
That’s a big deal because a lower interest rate means paying less overall. Say you refinance $40,000 worth of loans at a 6.00% interest rate. Over 10 years, you’d shell out $13,290 in interest. But if your rate was 4.00%, you’d pay $8,598 in interest, saving close to $5,000, according to our refinancing calculator.
Once you improve your credit score and debt-to-income ratio or find a cosigner, you don’t have to settle for the first interest rate you’re offered. A benefit of refinancing is that you can choose your lender, comparing offers until you find the best one.
Also, consider that refinancing gives you access to variable interest rates, which increase or decrease during your repayment according to market influences. The option of variable rates isn’t a pro for every borrower, but it could be if you’re looking to repay your refinanced loan over a shorter period.
4. Pro: A single monthly payment with the lender of your choice
Each time you took out a federal loan for college or grad school, you were assigned to one of nine federal loan servicers. You could’ve ended up with federal loans that were all from different servicers. Add private loans to the mix, and keeping tabs on your debt could be difficult.
One pro of refinancing is that you can end up making a single monthly payment to the loan servicer of your choice.
A Federal Direct Consolidation Loan achieves the same thing with federal student loans. However, you won’t score a lower interest rate. And you can’t lump your private loans into the new loan.
Refinancing, on the other hand, gives you the power to group all your loans together. You could even transfer a Parent PLUS Loan from your parent’s name to your own with top lenders such as SoFi and CommonBond.
5. Con: You’re locked into a repayment plan
One benefit of federal loans, including Direct Consolidation Loans, is that you can alter your repayment plan. You could switch from the 10-year Standard Repayment Plan to the 20-year Income-Based Repayment Plan, for example. The latter would set your payment based on a percentage of your discretionary income.
Refinancing offers no such flexibility. Once you’ve taken out your new refinanced loan, you have the same repayment plan until your debt is paid off.
Still, you should have a strong degree of choice at the outset. Earnest, a top refinancing company, offers the “radical flexibility to pick any monthly payment and term between five and 20 years.”
But remember that the lower your monthly payment, the longer your repayment term. That means you’ll pay more over time to cover your debt. Use our student loan term comparison calculator to help you decide how long you’d like to repay your loans.
6. Con: You lose federal repayment protections
Many top refinancing companies offer you the ability to pause your payments if you lose your job or suffer another money-related setback. CommonBond, for example, gives its refinancing borrowers up to 24 months of unemployment protection. In addition to awarding you forbearance for economic hardship, the lender could provide you with a consulting job via its CommonBridge program.
Still, deferment and forbearance options offered by the best refinancing companies are likely to fall short of what’s offered by the federal government.
The Department of Education lists several ways you could qualify for up to three years of mandatory forbearance. If your monthly loan payments account for 20% or more of your monthly income, for example, your servicer would be required to award you forbearance.
So if you see yourself potentially needing to pause your student loan payments, ask private lenders about their deferment and forbearance options. If you’re unimpressed, you might be wise to stick with your federal loan protections.
It’s also safer to keep your federal loans if you have a path to loan forgiveness. Refinancing companies don’t offer forgiveness options. If you work in public service, for example, check out Public Service Loan Forgiveness before opting to refinance.
Consider the pros and cons of refinancing student loans
As with any decision you make regarding your student loans, refinancing should be considered with care. If you’re a qualified borrower, refinancing could help you repay your debt faster. But refinancing isn’t right for everyone.
To avoid making the wrong choice, consider all the pros and cons of refinancing student loans. One other potential pro: It’s relatively easy to apply for refinancing.
Interested in refinancing student loans?Here are the top 7 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 3.45% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.81% APR (with Auto Pay) to 6.49% 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 November 6, 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 11/06/2019. 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 firstname.lastname@example.org, 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 SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
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.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
4 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.
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 1.9299999999999997% effective October 10, 2019.
6 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.
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 11/07/2019 student loan refinancing rates range from 1.90% to 8.65% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/23/2019. Variable interest rates may increase after consummation.
|1.81% – 6.49%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|1.99% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.02% – 6.30%5||Undergrad & Graduate|
|1.90% – 8.65%6||Undergrad & Graduate|
|2.74% – 6.24%7||Undergrad & Graduate|