Refinancing with Earnest
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When I first graduated from college, I had no idea what student loan refinancing meant. I was content to set up the Standard Repayment Plan on my $20,000 student loan and dutifully make payments for the next decade.
But as I learned more about refinancing, I realized I could both save money and pay off my loan faster. Instead of wasting my paycheck on interest, I could keep more of it for myself.
But I was nervous about making the wrong financial move. Here’s how I addressed my concerns and refinanced for better terms on my student loan.
I weighed the pros and cons of refinancing
Before making any permanent changes to my student loan, I did a bunch of research on refinancing. I learned how student loan refinancing works and weighed the pros and cons.
The pros were fairly straightforward. Refinancing could leave me with lower monthly payments and a more competitive interest rate. Over the years, I could save hundreds — if not thousands of dollars — on student loan interest.
I could also move away from my old loan servicer, Navient. Although I’d never had problems myself, I knew other borrowers had serious complaints about the company. Switching to a different lender felt like another benefit in my eyes.
But I would also be giving up a few things. By refinancing, I would be changing a federal student loan of $20,000 into a private one. As a result, I would lose access to federal programs such as income-driven repayment and forbearance. If I were to lose my job, I wouldn’t have the same federal protections to help me out.
Ultimately, I felt confident about my ability to pay back my loans. I had a steady income, and since I was a few years out of college my credit score was in decent shape. A strong credit score could mean competitive terms on a refinanced student loan.
The pro of saving money outweighed the con of privatizing my student loan. Confident with my decision, I kicked my plans to refinance into action.
I checked my rates with several lenders
My first step toward refinancing involved applying for a rate quote with various lenders. This rate check let me compare preliminary offers. It didn’t affect my credit score at all.
Although each rate quote application looked a little different, the process only took a few minutes. Most of the lenders asked for my name, salary, education level, and loan amount.
Then, they showed me preliminary offers for loans. Interest rates varied depending on the length of the repayment plan and whether they were variable or fixed.
After comparing my offers, I saw that Citizens Bank offered me the lowest interest rate. By choosing Citizens Bank, I would save the greatest amount of money on my student loan.
I compared my new student loan with my old one
My $20,000 student loan from Navient had a 5.96% interest rate, and I was chipping away at it on a 10-year plan. My payments were about $250 per month.
My research on refinancing, though, motivated me to pay off the loan faster. I couldn’t crush through $20,000 in one year, but I could swing a five-year repayment plan.
Citizens Bank offered me a five-year plan with a 4.99% fixed interest rate. By paying $100 extra per month, I’d get out of debt years ahead of schedule. Plus, I’d get an additional 0.25% interest rate deduction by setting up auto-pay.
Before selecting this offer, I used a student loan refinancing calculator to compare my old loan with the new one. By reducing my rate from 5.96% to 4.74% (with the rate deduction), I would save almost $2,700 in interest over the life of my student loans.
That amount of savings made the decision a no-brainer. I was ready to refinance my $20,000 student loan with Citizens Bank.
I filled out a student loan refinancing application
Once I chose my new loan terms, it was time to submit a full application. I entered my name and contact information, as well as details on my education.
To confirm this information, I had to upload two main documents: a recent pay stub from my employer and a billing statement from my student loan.
I was able to access both of these documents online. Then, I simply uploaded them to the Citizens Bank application.
Finally, I read over the forms to make sure everything was correct. At this point, all I had to do was hit “submit” and wait for approval on my refinanced student loan.
The entire refinancing process took a few weeks
Once I submitted my application, I didn’t have to do anything but wait to hear from Citizens Bank. After a few weeks, I got an email that my loan was approved.
I could log into my account and set up auto-pay from my bank account. By setting up auto-pay, I knew I wouldn’t miss a payment as I transitioned from Navient to Citizens Bank.
Within the month, I was notified that my Navient loan had been closed. I logged into my Navient account and confirmed that the new balance was indeed $0.
From start to finish, the entire refinancing process took less than a month. Now, I don’t have to think about my student loan, unless I want to throw an extra payment at it from time to time.
I’m confident that I have the best terms currently available to me, plus I’m on a repayment plan that makes sense for my income.
Getting out of student loan debt
The biggest lesson I learned from this process was how important it is to be proactive about your student debt. You don’t need to passively accept the standard plan you get straight out of school.
Instead, choose a plan that best fits your individual situation. If you can swing it, you could pay your student loans off ahead of schedule. Just imagine how good it will feel to never have another student loan bill.
However, refinancing isn’t the best financial move for everyone. Federal student loans, for instance, have some protections that most private lenders don’t offer. But if you feel sure you can pay back the loan, refinancing can make it easier.
For me, this process was empowering. By taking control of my student debt, I feel more confident about handling my money and taking control of my financial future.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.57% – 6.32%||Undergrad & Graduate||Visit Earnest|
|2.80% – 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.36% – 7.73%||Undergrad & Graduate||Visit SoFi|
|2.68% – 8.79%||Undergrad & Graduate||Visit Lendkey|
|2.57% – 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.75% – 8.69%||Undergrad & Graduate||Visit Citizens|