Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
Over the past several years, more student loan borrowers are finding themselves buried under overwhelming student loan debt.
Today, over 44 million Americans have student loan debt. Even more shocking, total student loan debt in the country has increased more than 130% since the recession, amounting to 1.56 trillion dollars — yes, trillion with a “T.”
As student loan debt has turned into a full-fledged crisis, student loan refinancing companies have emerged to provide relief to student loan borrowers. These student loan refinancing companies — which are private lenders, unrelated to the state or federal government — offer a solution to student loan borrowers looking to lower their high interest rates and make student loan payments more manageable.
Through student loan refinancing, borrowers can refinance high-interest student loan debt and potentially score a lower rate, saving money on interest over time. Those savings can then go toward extra payments to get out of debt even faster. Additionally, borrowers can select a longer term to obtain a lower monthly payment as well.
3 questions to determine if refinancing federal student loans is right for you
While refinancing can be a major financial improvement to those who qualify, there’s one (big) caveat.
When you refinance your federal student loans with a private lender, you forfeit most federal student loan protections. Student loan refinance companies can refinance both federal and private student loans, but given this one potential issue, many borrowers often ask us: Should I refinance my federal student loans?
Read on for tips and tricks to help you decide.
1. How much money can you save by refinancing federal student loans?
When you refinance federal student loans, you give up benefits such as income-driven repayment plans and loan forgiveness, so it’s important to analyze if the risk/reward of refinancing makes sense.
Refinancing your federal student loans may get you a better interest rate if you qualify, and save you money, but how much you will actually save by refinancing? Be sure to run the numbers with our student loan refinancing calculator.
Student loans most likely to benefit from refinancing include Grad PLUS and Parent PLUS loans, which bear relatively high interest rates ranging all the way into the double digits, depending on the year you obtained them.
Most student loan refinancing companies allow you to check your prospective rate before filling out a full application. Checking your interest rate will typically result in a “soft” credit pull and won’t affect your credit score. Prequalifying lets you shop for the best interest rate and calculate how much you’ll save without hurting your credit.
2. Do you plan on using any federal repayment options?
The federal government has created several income-driven repayment plans, which lower monthly payments, to make repayment more manageable for federal student loan borrowers. These programs include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and the Revised Pay As You Earn (REPAYE) plan.
Some of these plans are need-based and only available to certain eligible borrowers. Others are available to most federal student loan borrowers. While there are definite downsides to an income-driven plan (such as paying more in interest or getting hit with a tax bill after loan forgiveness), these plans can be a lifesaver if you lose your job, experience economic hardship, or simply need the lowest possible payment.
Also, if you work as a federal employee or for a specific not-for-profit employer, you may be eligible for student loan forgiveness after making consistent payments over a set period. Consider these three examples:
By opting to refinance your federal loans, you are no longer eligible for any of these repayment plans or loan forgiveness programs through the federal government.
If you have a high debt load, it is usually a safer bet to keep your federal loans, along with the option to apply for alternative repayment plans if needed.
If you are confident in your ability to repay your loans over your given repayment term and are seeking to maximize savings, and you also have a good credit score and healthy income, refinancing your federal loans could be a wise option.
3. What are the potential new repayment terms from refinancing?
If you’re thinking of refinancing your federal student loans, it’s crucial to compare your repayment terms. Be sure to look at your:
- Repayment period (or how long you will be paying your loans)
- Interest rate
- Monthly payment
For federal student loans, you can have anywhere from 10 to 30 years (for consolidated loans) to repay your loans. Refinancing companies typically offer repayment terms ranging from 5 to 20 years.
Also note that federal loans are fixed-rate loans and guaranteed to maintain the same interest rate during repayment.
Private lenders, on the other hand, offer both fixed and variable interest rates. These options can either hurt you or help you, depending on current and future interest rate market conditions. It is typically a safer bet to choose a fixed-rate loan, but you can also realize additional interest savings with a variable rate loan in a low interest rate market.
If you do choose to refinance your federal student loans, understand what impact it may have on your monthly payment as well. You’ll want to make a side-by-side comparison of your repayment terms to understand if refinancing will truly benefit you in the end.
Wondering if refinancing is a good idea for you? Answer a few questions below and we’ll help you find the right solution! Otherwise, scroll down to read on.
Student Loan Hero’s recommendation:
Deciding to refinance your federal student loans can be a big decision. There’s no doubt that refinancing can be helpful for private student loan borrowers, but given the repayment flexibility and loan forgiveness options the federal government provides, it’s a tougher decision to make regarding federal student loans.
So what do we recommend? If you recently graduated, are underemployed, or thinking of changing jobs, we recommend keeping your existing federal loans due to the generous repayment options available until you stabilize your employment situation.
However, If you are in a comfortable and secure financial and employment position, have good credit, and are seeking to eliminate your student loan debt as fast as possible, we recommend examining refinancing as a viable option.
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 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 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
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
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|