Refinancing with Laurel Road
Refinancing rates from 1.99% APR. Checking your rates won’t affect your credit score.
If you’re feeling overwhelmed by your student loans, you’re not alone. Graduates in 2018 walked away with an average $29,800 in education debt.
It’s not uncommon to leave school with a mix of federal and private loans. You could very likely have multiple loan servicers, due dates, and minimum payments. Keeping track of what you owe each month and when it’s due can be confusing, and you might even miss payments because of how many you have.
In cases like this, deciding to consolidate student loans could help you manage your debt more efficiently. But it’s not a one-size-fits-all strategy. Here are the pros and cons of consolidating student loans and what to keep in mind before moving forward.
What is student loan consolidation?
If you have multiple federal student loans and want to simplify your payments, one option is to consolidate your debt with a Direct Consolidation Loan. When you consolidate your loans, the federal government issues you a new loan for the amount of your old ones. Moving forward, you’ll have one single payment and one large loan rather than several.
The interest rate on a Direct Consolidation Loan is fixed, meaning it will stay the same for the length of your loan. The rate is the weighted average of the interest on your previous loans.
By taking out a Direct Consolidation Loan, you can minimize the stress of your debt while retaining your federal loan benefits. Often, a Direct Consolidation Loan can help you qualify for beneficial federal programs such as income-driven repayment (IDR) plans.
When does it make sense to consolidate student loans?
Loan consolidation isn’t for everyone, but it does have certain benefits that can help you beyond just streamlining your payments. Here are three situations where consolidating your debt makes sense.
1. You want to lower your monthly payment
When you graduate, you’re automatically enrolled in a 10-year Standard Repayment Plan. If you can’t afford your payments, consolidating can help. When you take out a Direct Consolidation Loan, you can extend your repayment term to up to 30 years, significantly reducing your payment.
You’ll pay more in interest over the length of your loan with the longer repayment term, but the trade-off is that you’ll have more breathing room in your budget in the early stages of your career.
2. You don’t qualify for IDR plans or loan forgiveness
If you have older federal loans through the Federal Family Education Loan Program or Perkins Loans, you don’t qualify for the following benefits:
- IDR plans: Under an IDR plan, your repayment term is extended, and your monthly payment is capped at a percentage of your discretionary income. Depending on your income and family size, you could qualify for a payment as low as $0. After 20 to 25 years of making payments, the remaining balance is forgiven. But you’ll owe taxes on the amount that was wiped away.
- Public Service Loan Forgiveness (PSLF): If you work for a qualifying nonprofit organization or government agency, you might be eligible for loan forgiveness through PSLF. After making 120 qualifying payments — payments made under an IDR plan qualify — the remaining balance of your loans is forgiven, tax-free.
But there’s a workaround: When you consolidate your loans, they become part of the Direct Loan Program. Moving forward, you could now be eligible for both IDR plans and loan forgiveness.
3. You want a fixed interest rate
If you have older federal loans, you may have some with variable interest rates. That means the interest and monthly payment can change according to market conditions.
If you want the stability of a fixed-rate loan with steady payments, consolidating can help. Once you consolidate, your new loan will have one fixed rate and a payment that stays the same for the duration of your loan.
Consolidating vs. student loan refinancing
Although some people use the terms “consolidation” and “refinancing” interchangeably, they’re very different. Although a Direct Consolidation Loan has some benefits, it’s unlikely to save you money. And if you have private student loans, you’re not eligible for consolidation.
Refinancing works differently. With this approach, you take out a refinancing loan from a private lender for the amount of some or all of your federal or private loans. The refinanced loan can have entirely different terms, such as a new repayment period, minimum monthly payment, and interest rate.
But there are also some drawbacks to refinancing. If you refinance federal student loans, you’ll lose out on perks such as access to IDR plans and PSLF.
When refinancing your student loans makes sense
In some situations, refinancing your student loans may be a better option for you than consolidation. Here are some situations where refinancing can help.
1. You want to save money over the length of your loan
Through refinancing, you could qualify for a lower interest rate, which can help you save hundreds or even thousands of dollars over the length of your loan.
For example, if you had $35,000 in student loans, a 10-year repayment plan, and a 7.00% interest rate, you’d repay a total of $48,766 over the length of your loan. Because of interest, you’d pay over $13,000 on top of the amount you borrowed.
But if you refinanced and qualified for a 10-year loan at a 4.00% interest rate, you’d repay $42,523. By taking a few minutes to submit your refinancing application, you’d save over $6,000.
2. You want a fixed interest rate
If you have private student loans — or older federal loans, as mentioned — you might have a variable interest rate. Because variable rates can fluctuate over time, your payments can increase, too.
If you prefer one set payment each month, you can refinance your loans and opt for a fixed interest rate. Your rate will never change, so your payments stay the same for the length of your repayment.
3. You want to reduce your monthly payment
If you’re struggling to afford your monthly payment, refinancing can help reduce it. You can qualify for a lower interest rate and a longer repayment term, decreasing how much you owe each month.
For example, if you had $30,000 in loans, eight years left of repayment, and an interest rate of 7.00%, your monthly payment would be $409. If you qualified to refinance at a 4.00% rate and extended your term to 15 years, your payment would drop to $222. Thanks to refinancing, you’d free up $187 a month in your budget.
You can use our calculator to see how much you can save by refinancing your student loans.
Beware of consolidation and refinancing scams
In recent years, many scams have arisen that prey on borrowers struggling to keep up with their payments. For example, some companies will offer to consolidate your loans for you for a fee. But consolidating your federal loans is completely free, and you can apply online in less than 30 minutes.
If you decide to refinance instead, you can shop around and compare offers from multiple refinancing lenders. You can also complete the application online without paying an application fee.
When it comes to consolidating or refinancing your loans, avoid companies that try to charge you fees to get started.
Should I consolidate my student loans?
The answer to this question depends on several factors, including whether you want to simplify your payments or save money with refinancing. Compare the pros and cons of consolidating student loans or refinancing them to choose the best path for you and your finances.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 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 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% 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 June 15, 2020, 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 6/15/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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.
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 0.19% effective June 10, 2020.