Refinancing with Earnest
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There’s no way to sugarcoat it: Student loan debt is stressful and can force you to put your life goals on hold. It might become an issue in your 30s if it causes you to put off getting married, buying a home, or having kids.
Having student debt can be disheartening, but if you’re saddled with it after you hit the big 3-0, don’t give up hope.
“It’s not ideal to be paying back student loans in your 30s, but it’s certainly not a problem,” said Kerri Moriarty, a financial expert who spent five years on the founding team of Cinch Financial, a startup aimed at helping people manage their money. “You can’t help how much debt you have and how much money you have to pay it back.”
The key is to make a plan so debt doesn’t prevent you from moving forward with your goals. If you’re not sure how to start, we talked with some experts to create a four-step plan.
1. Compile a list of your debt
It might be tempting to stick with the payment plan you’ve been on since you graduated and avoid thinking about your debt, especially if it’s a source of frustration. But you should check in with your debt. Doing so could give you a look at how much longer you might be making payments and whether you have better options for repayment.
“Don’t ignore it,” Moriarty said. “Know your interest rates, know your balances, and, most importantly, know your payoff timelines.”
Make a list of the student debt you have, including the lenders, interest rates, and payoff dates. You can use the National Student Loan Data System, a database managed by the U.S. Department of Education, to find your outstanding federal student loan balances. Your credit report, which you can obtain once per year at no cost from AnnualCreditReport.com, can reveal which private lenders you owe money to.
2. Make a list of your financial goals
Student loan debt may not be the only debt you have, and paying it off may not be your only goal. To decide whether you should prioritize paying off debt or doing other things with your hard-earned cash, list the financial goals you hope to accomplish. But remember: You don’t have to focus on one goal at a time.
“Don’t feel like having student loan debt completely prohibits you from combining finances with your partner or buying a home,” Moriarty said. “Just make sure it’s on everyone’s radar.” She advised talking about money with your partner and deciding how you’ll share your debt burden if you move in together or get married.
Moriarty also said it often makes sense to pay off other debt, such as credit cards, before putting extra money toward your student loans. That’s because student loans could have lower interest rates. “Pay down your highest-interest debt first, which saves you a significant amount over the long term and gets you out of debt faster,” she said.
While you may be worried about having lingering debt in your 30s, it could be smart to decide against paying off your student loans early. You may decide that saving for a home down payment or putting money toward your retirement fund is more important than making extra payments on your debt.
3. Create a budget with your goals in mind
Once you have a clear idea of what your goals are, it’s time to divvy up your earnings. “The best thing you can do is give every dollar a job using zero-based budgeting,” said Christian Stewart, founder and financial coach at Do Better Financial. “Managed money goes farther, and you get to tell your money what to do instead of wondering where it went.”
Build your goals from the previous step into your budget. You might choose to save 10% of your income for retirement or set aside a fixed amount of money to buy a home in two years. That will help you see how much cash you have available for each of your priorities.
Doug Keller, a personal finance expert at Peak Personal Finance, recommended making automatic transfers if you’re struggling to stick to your budget. Even $50 or $100 transferred into savings each month could grow into a sizable amount over time. You can put that money toward loan repayment or other goals later.
If you decide not to be aggressive in repaying your student loans, you might choose a repayment plan with lower payments or consolidate your student loans. Depending on the types of loans you have, you could have a lot of flexibility in repayment.
“Thoroughly research your repayment options,” Stewart suggested. “From Income-Based Repayment (IBR) to consolidation or forgiveness, there are quite a few ways to make payments more manageable.”
Stewart pointed out that there can be downsides to programs such as IBR that cap your payments at a portion of your discretionary income. You may pay more in interest over time, remain in debt for decades, and owe taxes on any forgiven amount. Meanwhile, if you refinance your federal student loans, you could lose certain borrower protections.
Still, the trade-offs may be worth it to free up money for other goals.
4. Put your plan into action
Finally, it’s time to execute your action plan by living on your budget, making loan payments according to your payment plan, and allocating money toward your goals.
Doing so takes discipline, as managing money can be hard. “Living above your means is a common mistake people make as they get older, even without student loans to repay,” said Keller. If you can avoid this hurdle and find a way to put money toward your goals while repaying your student debt, you’ll feel better about owing money in your 30s.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|