Refinancing with Earnest
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 8 lenders of 2020!
|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 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% 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 December 13, 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 12/13/2019. 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.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
6 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
7 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 1.76% effective November 10, 2019.
8 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|2.06% – 6.81%3||Undergrad & Graduate|
|2.62% – 6.12%4||Undergrad & Graduate|
|1.99% – 6.65%5||Undergrad & Graduate|
|1.99% – 7.06%6||Undergrad & Graduate|
|1.85% – 6.13%7||Undergrad & Graduate|
|1.90% – 8.59%8||Undergrad & Graduate|