Refinancing with Earnest
Refinancing rates from 1.99% APR. Checking your rates won’t affect your credit score.
Even though it’s expensive, attending college can be worth it. This becomes especially clear when you consider that more than 95% of the jobs created during the recovery following the Great Recession have gone to workers with some college education, according to Georgetown University.
So, you know college likely is a solid investment in your future. But can you afford the cost? If you live in South Dakota, you’re probably not the only one who can’t pay out of pocket for college. Seventy-five percent of those attending four-year schools recently ended up with South Dakota student loans, according to The Institute for College Access & Success (TICAS).
If you’re ready for higher education but aren’t sure how you’ll pay for it, read on to learn about your options — and how to save money as you repay your student debt.
Federal student loans: Subsidized and unsubsidized options
The federal government offers student loans that you can use to pay for school at any qualified college, including those in South Dakota. You can borrow between $5,500 and $12,500 per year as an undergraduate, depending on financial need and other factors.
There are two main types of federal student loans: subsidized and unsubsidized. Below is a handy chart explaining how these loans work.
Anyone can get federal student loans, regardless of credit situation or income, according to Katie Ross, the education and development manager for American Consumer Credit Counseling, a debt education and credit counseling company.
“In most cases, you won’t need a cosigner or credit check to get a federal student loan,” she said. “In fact, federal student loans can help you build good credit.”
Loan interest rates are set by Congress each year. The current rate is 4.45% on loans disbursed until June 30, 2018.
In order to start the process, you need to fill out a Free Application for Federal Student Aid (FAFSA). The information is sent to your preferred schools, and the amount you can borrow is presented as part of your financial aid package.
Pay attention to your application, though. “FAFSA errors are common,” warned Ross. “This could mean a difference of tens of thousands of dollars in aid.”
Parent PLUS Loans for your education
It’s also possible for your parents to help you by getting a Parent PLUS Loan. Rather than you having to repay the student debt, your parent takes on that responsibility on the loans.
Your parent will have to fill out a FAFSA as well. Unlike student loans, however, PLUS Loans come with credit requirements. A Parent Plus obligation also comes with a higher interest rate — currently at 7.00%.
While you might not have your parent cover the entire cost of your college with a Parent PLUS Loan, it can help if they are willing and able.
Private South Dakota student loans
The federal government isn’t the only place to turn to for South Dakota student loans. Private lenders can provide extra funding when federal loans won’t get the job done.
However, the best private student loans aren’t available to everyone. Each lender has its own requirements, terms, and interest rates. The requirements aren’t uniform as they are for federal loans.
Depending on your credit, though, it might be possible to get a lower interest rate with private student loans, according to Ronald Ramsdell, the founder and president of College Aid Consulting Services, a financial aid advisory firm.
Major national banks and private lenders aren’t the only ones offering good deals. “Don’t forget to shop around with local banks and credit unions to see what they have to offer,” he suggested.
However, if you don’t have the credit or income to qualify for private student loans on your own, you’ll need to bring a cosigner with good credit into the mix, Ramsdell said.
Finally, realize that private student loans don’t offer the same repayment options and protection as federal student loans. With federal loans, you can sign up for income-driven repayment to cap your monthly obligation at 10% of your income. While some private lenders, including Earnest, have hardship programs, they aren’t guaranteed. Plus, you might have to begin repaying private student loans while you’re still in school.
Interest-free South Dakota student loans
Some schools in South Dakota offer small, interest-free loans to students who need help with paying for supplies. For example, the University of South Dakota offers a loan of up to $500 to full-time undergrads at its Vermillion campus. This money can be used to buy supplies and textbooks at the campus bookstore.
Check with the college you plan to attend to find out if it offers similar loans. A small amount can go a long way when you aren’t required to pay interest.
Refinancing your South Dakota student loans
Once you finish school and enter repayment, it’s time to figure out if you can afford each month’s obligation.
In some cases, if your income is low or if you can’t find a job, going on income-driven repayment plans makes sense. Your payments are capped so they’re feasible, and you can consolidate your federal student loans so you have a longer term and lower, more manageable payments.
However, these strategies for handling your student debt can mean more money will be paid in interest charges over the life of the loan. Refinancing to a lower interest rate, on the other hand, can mean thousands of dollars in interest savings over the life of your loan.
According to TICAS, South Dakota graduates have an average debt of $31,362 at the end of a four-year program. Our consolidation vs. refinancing calculator can give you an idea of how much you could save by refinancing rather than consolidating your federal student loans.
The above example assumes a new interest rate of 2.57% and a new loan term of seven years if you refinanced your current loan. If you can afford to pay $46 extra each month under the new loan, you could be debt-free sooner — and potentially save $3,600.
As you can see, Direct Loan Consolidation, which extends your loan term to 20 years, results in a much lower monthly payment, but you’d pay almost $10,000 more over the life of your loan.
Many lenders look at a borrower’s credit and income when making refinancing decisions, however. You might not qualify for a lower interest rate without the help of a cosigner.
“Students shouldn’t consider refinancing if they don’t have a secure income, or if they are close to paying off their loans,” Ramsdell said.
“Student loan refinancing is a great way to save money or lower your payments,” said Ross. “But not all lenders and borrowers are good candidates. Weigh out your options before refinancing.”
Reduce your need for South Dakota student loans
Even though there’s a good chance you’ll need some student loans to finish school, there’s no reason to immediately turn to debt. Here are some of the steps you can take to reduce your need for South Dakota student loans and still pay for college:
- Fill out the FAFSA to see if you qualify for federal and school grants, as well as work-study programs.
- Apply for scholarships while in high school and keep applying for scholarships during college.
- Find a part-time job or get a side hustle during school to help pay for costs.
- Consider a less-expensive school with a lower bill, including starting at a community college.
- If possible, live at home for part of your college years to save money on living costs.
College can be expensive, but you don’t have to come out drowning in debt. Do what you can to reduce the initial cost, and then borrow only what you have to for higher education.
Need a student loan?Here are our top student loan lenders of 2020!
|* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
1 Important Disclosures for College Ave.
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.
(1)All rates shown include the auto-pay 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.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 11/4/2019. Variable interest rates may increase after consummation.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Important Disclosures for Discover.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 Important Disclosures for Citizens.
Undergraduate Rate Disclosure: Variable rate, 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 December 1, 2019, the one-month LIBOR rate is 1.70%. Variable interest rates range from 2.80% – 11.06% (2.80% – 10.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. 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. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
Please Note: International Students are not eligible for the multi-year approval feature.
|2.84% – 10.97%1||Undergraduate, Graduate, and Parents|
|2.87% – 10.75%*,2||Undergraduate and Graduate|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|2.80% – 11.06%5||Undergraduate and Graduate|