Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
Single parents have to make ends meet with just one person’s income, time, support system, and resources. Every fixed cost, from rent to student loan payments, can strain the budget.
For single parents struggling with a parent student loan, it can feel like there’s no way to get ahead. However, single parents can solve the challenge of student debt with the capability, creativity, and grit that they rely on each day.
Here are some ways single parents can tackle student loans – and create more breathing room in their budgets each month.
Single parent, student loans: 5 ways to get ahead
1. Refinance student loans
As a single parent, you’re probably used to economizing and keeping expenses low. But have you considered cutting costs on your student loans? Refinancing to lower student loan rates can be one way to do that.
Rebecca Stevens, a single mom and product owner for Weave Communications, refinanced her student loans more than 10 years ago. She consolidated $10,000 in student loans when rates were at a historic low. Her new 1.50% interest rate helped keep her student loans affordable – even after she divorced and became a single mom.
Today’s student loan rates a bit higher, typically around 5.00 to 6.00%. But single parents whose current student loan rates are higher than that can still save by refinancing when approved for a lower rate and not extending the actual length of the term. With a lower student loan rate and the same term of the original loan, this debt will cost less.
Refinancing student loans also gives you the opportunity to choose new loan terms. For single parents, refinancing is a chance to choose a student loan repayment schedule that matches their goals.
“When I consolidated my loans, I took out the longest term possible so that my payments would always be low and manageable,” Stevens said. She now pays just $72 a month.
Carefully compare your options before you choose to refinance. Doing so will switch federal student loans to private student loans, which have fewer borrower protections and repayment options. And you’ll need good credit and income to qualify.
2. Income-driven repayment plan
Then there is the option to enroll in an income-driven repayment plan (IDR). Unlike refinancing, an IDR plan preserves your loans’ federal status – while still lowering payments.
An IDR matches your monthly student loan payments to your income and cost of living. Income-driven repayment plans are a smart choice for single moms and dads, who often earn less than married counterparts.
Single mothers, in particular, are more likely to face unemployment, reports Forbes. And single moms’ incomes are, on average, less than a third of the combined income for married couples with one or more child at home.
Sound like you? When low income is the problem, an income-driven repayment plan can reduce payments to match and free up monthly cash flow. It can even set payments as low a $0 for borrowers who are unemployed.
3. Defer or forbear student loans
For single parents who need a break from student loan payments altogether, deferment and forbearance are two options. These will “pause” student loan payments. Thus, the single parent has a period to get back on their feet financially before having to resume student debt repayment.
To get a deferment or forbearance, you’ll need to meet one of the following requirements (among others):
- Defer student loans while enrolled in college at least half-time, for the duration plus six months after enrollment ends.
- Defer student loans for up to three years due to unemployment or inability to find full-time employment.
- Defer student loans for up to three years due to financial hardship.
- Forbear student loans for up to 12 months at a time, at the discretion of your student loan servicer. Common reasons for forbearance include financial difficulties, medical or emergency expenses, or employment change.
Many single parents struggling with student debt can meet one of the above requirements for deferment or forbearance.
However, student debt will continue to accrue interest even if you don’t have to make payments. So deferring or forbearing on student loans will increase your student loan balance and increase your total costs.
4. Increase your income
Single parents should look for ways to maximize their take home pay. Of course, that is easier said than done, especially when you’re balancing work with family life. But there are a few things you can start thinking about:
- Look at where your paychecks are going. This can be a way to immediate increase your take-home pay. Adjust W-4 withholdings for bigger paychecks – as a single earner with a dependent child, you face fewer taxes. Consider scaling back employee-paid benefits.
- Focus on increasing your salary. Work toward earning a raise or switching jobs. Stevens was the primary breadwinner in her household for more than half of her 11-year marriage. Even so, she made getting a well-paying job a central focus as she went through her divorce. “I was not willing to leave the marriage until I found a job that met my financial criteria as well as having a good work-life balance,” she said.
- Communicate with your ex. Child support can make a big difference for a single parent’s budget. Keep an open discussion with your ex about how to cover your child’s costs. Hold them responsible for their end of the deal. If they stop paying or gets behind on child support, try to stay on good personal terms – while diligently following up on this big financial issue.
- Consider returning to college. Single parents are less likely to have a college degree than married parents, according to the National Center for Education Statistics. However, a college education can bring a huge boost in earning potential.
Going back to college, even as a parent, could be a smart investment in your future – and your child’s. Plus, enrolling in college is a qualifying reason to defer student loans.
5. Use public assistance
Spend some time researching benefits and support that’s available. This support can make all the difference to your financial situation. Take a look at programs in your area that can give you more resources to cover living costs:
- Women, Infants and Children (WIC), Supplemental Nutrition Assistance Program (SNAP), and local food banks can help cover grocery costs.
- Medicaid, Children’s Health Insurance Program (CHIP) and Affordable Care Act subsidies can make health insurance affordable (or free).
- Many states have child care assistance programs to help low-income parents cover preschool, daycare, and after-school care.
These programs can help ease money anxiety and improve your family’s quality of life.
Keep the positives in mind
Bottom line – single parenthood is demanding. Remind yourself that you’re up to the challenge. And remember that your kids are watching and learning from how you’re handling your student loans and finances.
For Stevens, her son is a huge source of motivation to do more with her money. “I really want to show my son how to be responsible with money,” she said. “I also want to teach him about taking on debt (being smart about it) and how to be responsible in paying it off.”
Student debt is a big burden, but you can manage it – and even get past it and pay it off. And in the process, you’ll show your kids what self-reliance and responsibility look like in action.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|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 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|