Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
The average college graduate walks away with $37,172 in student loan debt. Because of interest rates, loan balances can grow over time causing you to pay back thousands more than you took out in the first place.
If you’re burdened by student loans, refinancing them can help you take charge of your debt and save money. Find out how refinancing can help you get on track for your future.
Refinancing your student loans
Refinancing is often a smart option for borrowers who want to get rid of their student loans faster. When you refinance, you work with a private lender to take out a new loan that covers the amount of your original ones. The new loan will usually have different terms, including a new interest rate, reduced monthly payment, and different length of repayment.
Refinancing can be a useful debt repayment strategy, but there are some important factors to consider before you dive in. If you have federal student loans and refinance them with a private lender, you lose federal benefits like access to income-driven repayment plans or the option to put your loans into forbearance or deferment. Refinancing only makes sense if your financial situation is relatively secure.
3 ways refinancing can help you save
But refinancing has many benefits. It can save you money, give you more breathing room in your budget, and limit your debt burden. Here are three ways refinancing your student loans can help you now.
1. Reduce your debt-to-income ratio
If you’re shopping for a new car, home, or need a line of credit, lenders look at your debt-to-income (DTI) ratio. Your DTI is a calculation of how much of our monthly income goes towards debt, such as student loans or credit cards. The higher your ratio, the less likely you are to get approved for a loan.
Refinancing your student loans to get a lower monthly payment can help lower your DTI ratio, making you more attractive to lenders.
2. Free up money in your monthly budget
When you refinance, it’s possible to get a lower interest rate or extend your repayment term, if desired. That can result in a significantly lower monthly payment. If you’re struggling to pay all of your bills, refinancing to get a lower payment can give you more room in your budget to pay for other essentials.
Keep in mind that if you refinance to reduce your monthly payment, this might extend your repayment term. Even if you get a lower interest rate, if you add years to your loans, you can end up paying hundreds of even thousands more in interest. Carefully weigh your needs right now with your long-term goals.
3. Save thousands over time
If you are laser-focused on paying off your loans, refinancing your debt could save you thousands over the length of your repayment. For example, say you had $35,000 in Direct PLUS loans, which currently has an interest rate of 6.31%. If you were on a standard 10-year repayment plan, you would have a minimum payment of $394 and would pay $12,285 in interest over the length of your term.
If you were able to refinance that loan at 3.5% with a 10-year term, your monthly payment would be $346. Best of all, you’d pay just $6,532 in interest, saving yourself nearly $6,000.
Use the calculator below to see how much you could save on your student loans by reducing your interest rate.
Student Loan Refinancing Calculator
4 ways to use the money you saved
Refinancing can help you save money both on your monthly payment and in interest. That’s a lot of money you could use for your future goals. Here’s how you can use those payments to reach your future goals faster.
1. Pay off other high-interest debt
If you dream of being completely debt-free but have credit card debt or an auto loan on top of your student debt, refinancing can free up cash you can use to pay them down. If you apply the money you save on your student loans to another high-interest debt, you can save even more money and get out of debt faster.
2. Save a down payment for a home
For those who want to buy a home but think it’s impossible with student loans, refinancing can help your dream of homeownership become a reality. You can lower your DTI ratio while using your savings to save for a down payment.
According to CommonBond, borrowers who refinance their loans with them save $24,046 on average over the life of their loan. That could be a substantial down payment on your first home.
3. Build your retirement nest egg
If you’ve put off saving for retirement because you were struggling with student loans, refinancing can give you the room in your budget you need to start contributing. And starting now can really pay off in the long run.
For example, let’s say you’re 25 and refinanced your loans. Your payment is reduced by $50 a month and you invest that extra cash in a 401(k) with a 7% annual gain. After 10 years, you’d have no more student loan debt and would have $8,654 in retirement.
With no more debt, you could apply those payments to your retirement savings, building up a large nest egg. See how much you could save for retirement with our investment calculator.
4. Invest in the stock market
If you want to build long-term wealth, investing is an important part of your financial plans. Investing your student loan savings into an investment account, with services like Betterment, can make your money work harder for you.
Pursuing your goals
High-interest student loans can be a huge burden and prevent you from achieving your goals. By refinancing your student loans, you can take control of your debt and accelerate your repayment. That can help you achieve the financial dreams you’ve set for yourself.
If you’re ready to refinance, sign up for the Student Loan Hero app and compare lender offers.
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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
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.
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.
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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|