Refinancing with Earnest
Refinancing rates from 2.50% APR. Checking your rates won’t affect your credit score.
Today, college grads are underemployed and wondering how they can afford to make their student loan payments.
Refinancing your student loans has the potential to reduce your interest, lower your monthly payment, or help you pay off your debt sooner. However, refinancing myths may deter eligible borrowers from taking advantage of this opportunity.
While refinancing isn’t always the right choice for everyone, it can be a smart move to save you money. Before you decide what to do, carefully consider your situation and make sure you aren’t making choices based on these common misconceptions.
1. Refinancing and consolidation are the same thing.
One of the biggest refinancing myths is that refinancing is the same as consolidation. Though the terms are sometimes used interchangeably, these are two very different concepts.
“Consolidation is simply the combining of multiple student loans into one,” said Jamie Wharton, Outreach Coordinator at Earnest. The interest rate for your consolidated loan is a weighted average of the interest rates on all the loans you combined.
On the other hand, you can refinance with a single loan or multiple loans, but this involves getting a new loan with a new interest rate, Wharton explained.
Before you decide which route to take, make sure you know the difference.
2. When you refinance, you must include all of your student loans.
One of the reasons people don’t refinance is because they don’t want to refinance all of their student loans. They mistakenly believe that it’s an all-or-nothing proposition.
However, this isn’t the case. You can refinance a single loan or multiple loans.
In my own case, I used a consolidation loan to better manage my federal loans and I refinanced my private loans separately. This worked out well for me, resulting in lower interest rates all around.
“Consider looking at the current interest rates for your student loans and refinance the ones with the highest interest rates,” said Wharton.
Figure out which loans will be best managed using federal programs and which you want to take care of privately. You can mix and match in a way that provides you the biggest benefit over time.
3. Getting a refinancing quote hurts your credit score.
Unfortunately, some refinancing myths come wrapped up in general misconceptions about credit. A common belief is that getting a refinancing quote will result in a lower credit score. But that’s not true.
“When you initially check your rate for student loan refinancing, we perform … a soft inquiry or soft credit pull,” explained Wharton. “Soft inquiries do not affect your credit score.”
Many refinancing lenders start with a soft credit check. Verify that they will perform a soft pull before you request a quote, though — just to be sure. This way, you won’t see a drop in your credit.
Student loans can hurt your credit score if you miss payments. Once you refinance your student loans, make sure you keep up with your payments. Just like any other loan, you must stay on top of things if you want to maintain a good financial reputation.
4. You can only refinance your student loans once.
Once you refinance your student debts, you’re stuck with that loan forever, right? Wrong.
“You can actually refinance a loan that has been previously refinanced or consolidated,” said Wharton. This may be a smart move if you’ve refinanced once and interest rates fall later. It’s also possible to refinance your debt to a variable rate if you think student loan interest will fall in the future.
But before you decide to re-refinance your loans (wow, that’s a mouthful), make sure you understand the risks and benefits.
5. You lose all forms of student loan debt relief when you refinance.
It’s true you lose access to the more generous and flexible federal student loan repayment options if you refinance your debt. But that doesn’t mean you lose all hardship protections.
Many private student loan servicers allow you to pause your payments or make interest-only payments for set periods of time. This means you can get relief if you’re temporarily unable to afford your student loan payments.
Be aware that private lenders often have stricter eligibility requirements. Only certain situations, such as job loss, may make you a candidate for hardship protections. So review your lender’s policy and see what it takes to qualify for help.
In order to make the most of this option, let your lender know as soon as you realize there’s a problem. You want to learn your options as quickly as possible and work with your lender to reduce the impact to your financial situation.
See if refinancing is right for you
Not everyone should refinance. However, the decision should be based on facts — not refinancing myths.
Take a look at your own situation and carefully consider your income and current payments.
What repayment programs do your federal loans qualify for?
What are your goals for paying off student loans and improving your cash flow right now?
If you don’t plan on using federal repayment and forgiveness programs and you qualify for a lower interest rate, refinancing your debt just may save you money.
If you’re still not sure if refinancing is right for you, ask yourself these 10 questions.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.
2 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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% 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 April 17, 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 04/17/2019. 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 email@example.com, 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. 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. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
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.
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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.81% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|