Refinancing with Earnest
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If you have federal student loans, you usually don’t need to start making payments until six months after you graduate. That doesn’t mean you should wait until then to start thinking about a repayment strategy.
If you’re thinking about how to manage your student loan debt, consider refinancing. Potential benefits include a lower interest rate, a single loan to repay, and new loan terms.
Sounds promising, right? However, there’s still a lot to figure out. Here’s what’s possible, and how to decide if refinancing student loans is right for you.
Can you refinance student loans while in school?
Refinancing means taking out an entirely new and separate loan to replace your existing student loans. Unfortunately, it’s usually not possible to refinance student loans while you’re in college.
Lenders try to predict if you’re the kind of person who reliably repays your debts. They all have underwriting standards they use to decide if you’d be a safe bet to lend to.
But college students lack the qualifications that are usually central to lenders’ underwriting decisions:
- College student lack payment history. If you’re still in college, you probably haven’t even started making payments on student loans yet. So there’s no way for you to show a history of on-time payments.
- Current students have yet to complete a degree (and may not). Degree completion or no longer being enrolled in college are important requirements for most lenders. So most current college students simply won’t qualify. They’re still in school
- College students often won’t meet income thresholds. It can be difficult to prove that you can cover the payment on a new loan while you’re in school and not working full-time. A lender has no real way of projecting how likely it is you’ll graduate or get a job. And a full-time job is key to being able to afford your student loans in repayment.
Student loan refinancing requirements from top lenders
As stated above, most lenders won’t approve you for student loan refinancing until you’re out of school.
In fact, almost all the top borrowers require you be a graduate or no longer enrolled in school:
- SoFi requires that you hold at least a Bachelor’s degree to refinance student loans.
- Laurel Road invites working professionals with a BA or BS degree to apply for student loan refinancing.
- CommonBond states that borrowers need to have graduated from a Title IV college to refinance with them, so current students are out of luck.
- Citizens Bank doesn’t require a degree to refinance student loans, but it states on its site that “eligible applicants may not be currently enrolled in school.”
- College Ave has several eligibility requirements for student loan refinancing, including being a college graduate.
- LendKey, a platform that connects borrowers with student loan refinancing lenders, states you must have a degree from a Title IV school to qualify for refinancing.
- Earnest is one possibility for refinancing while still in college. Per the lender’s FAQ section, the “debt you’re refinancing is for a completed degree or one that will be completed at the end of [the current] semester.” So you might be able to start the process before you’ve graduated, but you’ll need to be near the finish line.
Graduate students might qualify for refinancing in college
If you’re a current graduate student who has completed one degree and are working on a graduate degree, you might be able to refinance student loans borrowed for your undergraduate degree.
Your chances will probably be best if you’re attending school part-time while continuing to work a day job, which will help satisfy income and employment requirements. Even so, it will still probably be easier to either refinance student loans before going to grad school, or wait until you’re done to start the process.
Parents can refinance while their child is in college
If you’re a parent who borrowed for a child’s education with Parent PLUS loans, you might not need – or want – to wait until your child completes school to refinance.
Unlike other federal student loans, Parent PLUS loans carry credit and eligibility requirements that you must pass to borrow through this program. And unlike your college student, parents are more likely to have a full-time job with high pay. So, if you have a Parent PLUS loan, you’re probably already well-qualified for student loan refinancing.
There’s another central difference for Parent PLUS loans. Unlike student-borrowed loans, Parent PLUS loans enter repayment immediately upon disbursement – usually while your child is still in school. While you can defer these loans if your child remains enrolled at least half-time, you will still accrue interest on the loan.
Lastly, Parent PLUS loans can be expensive. According to Consumer Reports, “For the 2016-2017 school year PLUS loans taken out by parents have a 6.31[%] fixed interest rate and there is also a 4.276[%] fee tacked on to that.” That means parents paid over 10% last year for a PLUS loan. At the same time, these loans are ineligible for many federal repayment plans. These two facts combined can make it worthwhile for parents to refinance Parent PLUS loans while their child is still in school.
Alternatives to refinancing student loans
Thankfully, there are other ways to ease the burden of student loan debt while you’re in school.
With unsubsidized Direct or Direct PLUS loans, you can make payments toward the interest while you’re still in school. And getting a head-start on paying the interest can make a big difference in your monthly payment. It can also help you avoid paying capitalized interest.
Another alternative to consider is a repayment plan for your federal student loans. Use the time when you’re still in school to check out federal program options. That way, you’re prepared to make payments when you graduate.
For federal student loans, these include:
- Extended repayment plans. Borrowers can choose to repay federal student loans over 25 years instead of 10, and are eligible if they hold more than $30,000 in student loans.
- Graduated repayment plans. Payments start low and gradually increase. You’ll most likely pay more for your student loans over time.
- Income-driven repayment plans. These include PAYE, REPAYE, IBR, and ICR. They determine your monthly payment amount based on your current income, making your student loan payments more affordable.
- Direct Consolidation Loan. This federal student loan option allows you to combine multiple federal student loans into a single, new loan. You can choose repayment period of 10 to 30 years, and the new loan’s rate will be a weighted average of your previous student loan rates.
Be sure to check out our comprehensive list of 70 repayment assistance programs for more options.
And don’t forget about student loan forgiveness programs – a great option if you fit the requirements.
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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|