Refinancing with Earnest
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Refinancing student loans can be a great way to lower your interest rate and monthly payments. While there are several refinance student loan options, each come with eligibility requirements.
Borrowers are often denied for refinancing student loans either because their credit score is too low or they don’t have enough income. With the average student loan debt in the U.S. currently sitting at $37,172, it’s rare that someone will be denied because they don’t have enough student debt.
But that’s exactly what happened to me.
My failed ‘refinance student loan’ strategy
I was fortunate to avoid a staggering amount of student loans during college.
By the end of my college career, I had taken out three separate federal student loans for a mere $9,133. Since two of the loans were already carrying low interest rates, I set out about a year ago to refinance the third.
I was looking to refinance around $3,000. Each of the student loan refinancing options I looked at had a minimum lending amount between $5,000 to $10,000. And while I could have refinanced all of my student loans together to lower my interest rate on this particular one, it wasn’t worth giving up the low interest rates on the other two.
For reference, here are the minimum balances required to refinance student loans with our top picks:
- SoFi: $5,000
- Laurel Road: $5,000
- CommonBond: $5,000
- LendKey: $7,500
- Citizens Bank: $10,000
- College Ave: $10,000
3 steps to take if you can’t refinance student loans
If your student loan balance is too low to refinance, you’re not out of options. Here are a few alternative ways to tackle your student loans:
1. Balance transfer credit card
If you only have a few thousand dollars left on your student loan, a balance transfer credit card can help you pay it off with no interest at all.
Balance transfer credit cards offer promotions anywhere between 12 and 24 months, during which you can pay off the balance with a 0% APR.
There are a few things to keep in mind before choosing this option:
- If you fail to make the minimum payment at any time during the promotion, you’ll lose the 0% APR.
- Not all balance transfer credit cards accept student loan balances. WalletHub’s 2015 balance transfer report lists which ones do.
- Most balance transfer cards charge a fee, usually a percentage of the balance you transfer. Depending on your interest rate and the fee (usually three to five percent), it might not be worth it.
- You’ll no longer be eligible for student loan forgiveness programs.
- If your finances change and you can’t pay off the balance before the promotion ends, you’ll be stuck with a much higher interest rate.
A balance transfer credit card may be a solid option if you have a steady job and predictable income. But if there’s any degree of uncertainty, steer clear.
2. Increase your income
Whether or not you’re consolidating or refinancing a student loan at all, the fastest way to cut down your debt is to increase your monthly payments.
That may be easier said than done, though. Many student loan borrowers opt for income-based repayment plans because they can’t afford to make bigger payments. Therefore, consider taking on a second job or side gig to boost your monthly income.
Also, check your withholdings and deductions on your paycheck. There may be ways to decrease them without compromising other financial goals. You can also ask your employer if there are any overtime opportunities. If you’re a model employee, consider asking for a raise.
Of course, resist the urge to use the increase in your take-home pay for other things. As long as your high-interest student loan account is open, put everything toward that debt if you want to get rid of it as quickly as possible.
3. Live on a bare-bones budget
If you can’t increase your income enough to make a difference, take a look at your expenses. Even if you already budget religiously, you may find areas where you can reasonably cut back.
For example, consider replacing a newer car with a big monthly payment with an older car that’s still reliable. When you’re about to buy something, ask yourself whether you need it. And if you do, consider second-hand options before buying new.
Also, reach out to your cell phone and internet providers to try to talk down your rates. And when it comes to cable TV, look into cheaper alternatives or cut the cord entirely.
In the end, your goal isn’t to pinch pennies but to save yourself time and money in the long-run. A bare-bones budget will be different for everyone, but as long as you’re cutting unnecessary expenses, you’re on the right track.
Refinancing student loans isn’t your only option
If you can’t refinance student loans because of a low balance, don’t be complacent. Take steps to pay them off quickly so you can have the freedom to use that cash for more important things. The sooner you do it, the sooner you can work toward other, more exciting financial goals.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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 Month/Day/Year, 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 08/21/18. 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 ourstudent 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 Laurel Road.
Laurel Road Disclosures
3 Important Disclosures for SoFi.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|