Refinancing with Earnest
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Have you ever looked at your monthly payments and been frustrated at how much is going toward interest? It’s a common issue for student loan borrowers with steep balances and high interest rates. In fact, some PLUS loan borrowers have interest rates of 7.90% to 8.50%. Ouch.
One way to counter the effects of high interest rates is through student loan refinancing. The idea is similar to refinancing a mortgage or car loan, with the goal of getting a lower interest rate.
Private student loan companies like SoFi, Earnest, CommonBond, and others are dominating the market, but states are starting to realize they can help borrowers through refinancing, too. A handful of states are offering refinancing programs to borrowers in an effort to lower interest rates and minimize the burden of monthly payments.
Is your state on the list? Find out which states are paving the way for student loan refinancing.
In May 2015, legislation was passed in Connecticut to allow the Connecticut Higher Education Supplemental Loan Authority (CHESLA) to refinance student loans for state residents.
Later this year, borrowers in Connecticut can refinance their student loans and get a lower interest rate, effectively saving them money on interest and making payments more manageable.
Currently, there’s little information about eligibility requirements and interest rates for those looking to refinance. If you live in Connecticut and are interested in refinancing, you may want to keep tabs on the opportunities available later this year.
The state of Minnesota recently unveiled a new program to help student loan borrowers called Self Refi. The program, which is administered by the Minnesota Office of Higher Education, is only available to Minnesota residents who have completed their degrees and have at least $10,000 in student loan debt.
According to the Self Refi website, in order to be eligible for this loan, borrowers must:
- Currently be a Minnesota resident.
- Have earned a certificate, diploma, associate, bachelor, or graduate degree.
- Have a minimum FICO score of 720 to qualify without a cosigner (650 with a cosigner).
- Have a maximum debt-to-income ratio of 45 percent.
- Have no delinquencies on his or her credit report.
- Have no unpaid charge offs, liens, or judgments totaling $300 or more.
- Have a cosigner if the borrower is not a U.S. citizen or permanent resident.
Borrowers who live in Minnesota can refinance through Self Refi and get a variable-rate loan for as low as 3.0% with a 5-year repayment term. Other options include variable or fixed-rate loans with a repayment terms of five, 10, or 15 years.
If you live in North Dakota, you may be able to refinance your loans at lower rates through the Bank of North Dakota’s DEAL One Loan.
Stafford, PLUS, Perkins, Direct, and private loans are eligible for refinancing. Borrowers and/or cosigners must meet credit requirements in order to be eligible.
In addition, borrowers can choose from a variable rate loan at 2.01% or a fixed rate loan at 5.20%.
The Rhode Island Student Loan Authority offers student loan refinancing for PLUS, Stafford, and private student loans.
Although the refinance loan is administered by The Rhode Island Student Loan Authority (RISLA), you don’t have to live in Rhode Island or have gone to school in Rhode Island to be eligible for this loan (crazy, right?!).
Borrowers could get a fixed rate as low as 4.24% when signing up for auto-pay and can choose from repayment options ranging from five to 15 years, with or without a cosigner.
In order to be eligible for this loan, borrowers must make at least $40,000 per year. Student loan borrowers from any state can apply for the RISLA refinance loan.
Other States With Refinancing Programs
In addition to the states mentioned above, Iowa, California, and Maine have passed legislation to enact refinancing programs. These programs are still in the early stages of implementation.
What to Know Before Refinancing
Whether it’s through a company or your state, refinancing your student loans will forfeit your federal protections, such as access to income-driven plans and loan forgiveness. It’s important to understand what you may be giving up in exchange for saving money on interest.
Should You Refinance Through a Company or State Program?
Now that student loan refinancing is expanding beyond private companies, you may wonder which option is better for refinancing your student loans.
Whether you choose to work with a company or your state, it’s crucial to compare the interest rates you are eligible for, how much money you will save over time, what federal benefits you may give up, and what benefits you get through refinancing (unemployment protection, for example, which is offered by lenders such as SoFi and CommonBond).
In the end, choose wisely and make sure you understand the costs and benefits of refinancing.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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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 firstname.lastname@example.org, 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|