Refinancing with Laurel Road
Refinancing rates from 1.99% APR. Checking your rates won’t affect your credit score.
The situation for student loans has drastically changed due to the impact of the coronavirus pandemic, with the government temporarily suspending all federal student loan payments and interest charges. Visit the Student Loan Hero Coronavirus Information Center for details.
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Whether grad school is just around the corner or a couple of years down the road, you may be wondering what to do with your undergraduate student loans as you take the next step. Refinancing, deferring or seeking out loan forgiveness are three ways to tackle it.
For some students, refinancing is an appealing option. But can you refinance student loans while in school or right after graduation? The short answer is “maybe,” depending on a few factors. To figure it out, let’s take a look at the following topics:
- Handling undergraduate loans in grad school
- How refinancing works
- Pros of refinancing
- Cons of refinancing
- Weighing your options
- What to do if you don’t qualify for a refinance loan
Refinancing means paying all of your debt off using a brand new loan, and it isn’t always an easy process to accomplish as an undergraduate or newly graduated student.
As a borrower, you might have a tough time refinancing as an undergrad since most lenders require proof that you graduated from college. In addition, lenders may require you to have a cosigner on your refinance loan.
One scenario to consider: You could wait to refinance after you are in graduate school. By that time, you will have earned your undergraduate degree and hopefully paid down some of those loan balances and applied for financial aid for your graduate studies.
However, there are a few solid options for handling your undergraduate student loans in graduate school. These suggestions can also apply to anyone with student debt.
- Continue paying your loans
- Choose forbearance or deferment (delaying repayment completely while in graduate school and begin payments after you obtain your advanced degree)
- Refinance your undergraduate student loans (which may also include deferring payment while in graduate school)
Before deciding which route is best for you, you should consider:
- The type of loan you have currently (federal or private)
- What your income will be during graduate school
- And what additional accommodations you will have to make if you choose to refinance.
Just because you can refinance, doesn’t necessarily mean you should. To learn more, read on.
Refinancing your undergraduate student loans involves getting a new loan from a private lender and using it to pay off your current federal or private debt.
The goals of refinancing include consolidating multiple student loan payments into a single monthly bill, possibly scoring a better interest rate, lowering your monthly payment or, ideally, all of the above.
You can refinance one loan or several at a time, but there are some downsides to consider, especially if you have federal student loans. Once you refinance with a private lender, you lose benefits that come with federal student loans, such as federal loan forgiveness and income-driven repayment eligibility.
If you don’t need these benefits, however, refinancing might help you save money on interest or lower your monthly payment.
When you refinance, you could get a lower interest rate, saving you money as you pay down your undergraduate student loans. You can get an idea of how much you could potentially save by taking a look at some of the rates available and then plugging the figures into our refinance calculator.
Be aware, though, that some of the lowest rates are reserved for the most creditworthy borrowers, and unless you have a strong credit history, you might need a cosigner to qualify for any refinancing loan at all.
Besides switching your interest rate, student loan refinancing lenders also offer various repayment terms, potentially giving you more control over your monthly payments. However, you must account for the fact that, depending on the loan, you may be accruing additional interest and adding more months or years to your student loan.
If you lengthen the term of your loan, you’ll end up with lower monthly payments. This could ease the pressure on your finances, but keep in mind that this will also likely result in your paying more in interest over the life of the loan.
What if you can’t afford any payment, especially while working your way through grad school? Although private refinance loans usually don’t have the same super-flexible forbearance options that federal loans do, many refinancing companies will give you the option to defer your student loans while in grad school.
Deferment of your student loans means you pause your payments for a specified period of time. CommonBond, SoFi and Earnest, are examples of companies that allow academic deferment on your undergraduate loans while you’re in grad school.
Plus, some refinancing lenders, like SoFi also offer loan protection programs for when you experience economic hardship, although interest will still accrue on your loan.
If you are able to refinance your student loans into a more manageable amount and then defer those payments, it could give you some financial relief during graduate school.
As noted above, the biggest downside of refinancing federal student loans in graduate school involves missing out on special protections.
Specifically, you’ll lose access to income-driven repayment plans, student loan forgiveness programs, and possible life-savers such as easy-to-get deferment and forbearance.
For example, you won’t be able to pick from the flexible federal repayment plans, including income-driven repayment that caps your monthly bill at a percentage of your disposable income. And if you’re suffering from especially low income, that payment might be “$0.”
Private loans are different, however. They aren’t eligible for those federal payment plans or for forgiveness programs such as Public Service Loan Forgiveness, which can wipe away your remaining balance after 10 years of qualifying employment. As a result, it makes more sense to refinance.
Note that pausing your loan payments while in graduate school might still be possible with a private lender, but as mentioned, interest will pile up during this period.
All things considered, refinancing federal loans is usually a poor choice, only because these let you easily defer your undergraduate student loans in school and avoid making payments entirely if you can’t afford it, while still holding on to your federal loan protections.
However, for private loans, refinancing may be much more viable, since there are no special protections to lose. This makes it a good choice, so long as you qualify and can save money with a lower interest rate.
But whether you refinance or not, you’ll also need to decide whether to make any payments on your loans while you’re pursuing your graduate degree — as mentioned, many refinancing lenders offer in-school deferment, and all (non-refinanced) federal loans have this option.
Since pausing your repayment will rack up interest and cost you extra money — except for subsidized federal loans — it could be wise to throw some money at your debt if you can.
In any scenario, you should only refinance if you can get a better deal on the overall cost of your loan. And of course, if you do decide to refinance, make sure to shop around so you can get your best deal possible.
If you apply for a refinance loan before graduate school but do not qualify or you need a cosigner and can’t find one, don’t worry too much about it.
Qualifying for a refinance loan can be difficult for college students or new graduates because of the hefty requirements to qualify for one, which is why such loans often include a cosigner.
Use the time between graduation and graduate school to build up your creditworthiness (most refinance lenders want to see a score of 660 or higher), keep paying down your original student loans and try to get your debt-to-income ratio below 50%. These actions will all help you become a better candidate when you apply for a refinance loan in the future.
Maya Dollarhide contributed to this report
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.19% – 6.08%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 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 June 23, 2020 and is subject to change.
2 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.
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 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% 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 June 15, 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 6/15/2020. 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 0.2% effective May 10, 2020.