Refinancing with Earnest
Refinancing rates from 2.54% APR. Checking your rates won’t affect your credit score.
Although there are plenty of legal, legitimate businesses that can help you manage your student loans, there are also predatory scammers out there looking to make a quick buck at the expense of borrowers.
As a student loan borrower, you must be able to signs of a student loan scam so you don’t get tricked by empty promises — or even worse, have someone steal your money or identity.
Before passing over any personal information to a company that promises to help you consolidate your student debt, watch out for these four major red flags.
Red flag #1: If it seems too good to be true, it probably is
Just like an email from a foreign prince who promises to pay you $10 million if you transfer him $5,000 first, student loan scammers make offers that are way too good to be true. And as with nearly everything in finance, if an offer seems too good to be true, it probably is.
If someone tells you they can magically wipe away your debt or reverse your default, be wary. While there are ways to get your student loans forgiven or rehabilitate a defaulted loan, they probably won’t happen overnight.
If a company is promising to make your debt go away right away, it’s probably a scam. These companies know how desperate some borrowers are to wipe out their student loan balances, and they take advantage of that.
But unfortunately, falling for a scam like this could cost you, and potentially leave you in an even worse position than before.
Red flag #2: You have to pay an upfront fee for services
Consolidating federal student loans is a useful way to simplify debt by combining multiple loans into one. It also allows certain loan types to become eligible for income-driven repayment plans, and can even help get defaulted loans back into good status.
But you don’t have to pay a fee to consolidate your student loans — you can apply for consolidation for free at StudentLoans.gov. So if someone asks you to pay a fee to consolidate, you could be dealing with a scammer.
That said, there are legitimate student loan counselors that charge a fee for their time and services. But you typically shouldn’t have to pay that money upfront — you would pay after they’ve completed their work.
And remember that you don’t have to pay for anyone’s assistance — the consolidation application, and information about the process, is easily available online at no charge.
Red flag #3: Poorly written, unprofessional offers
Along with over-the-top promises and sketchy fees, you might notice that a student loan company’s website or ads are littered with spelling mistakes or grammatical errors.
Legitimate companies will look professional and use impeccable language. If you’re seeing poor writing and unprofessional advertisements, think twice before handing over any of your personal information.
Private student loan consolidation programs should always be clear about what they offer, what costs and commitments are involved and how your student loan payments are changing. If anything is unclear or sloppy, take your business elsewhere.
Red flag #4: You’re getting threatening phone calls
Although most student loan scammers will try to sweet-talk you with empty promises, others go the opposite route and threaten you with severe consequences if you don’t fork over your personal information.
For instance, you might get a call that says you’ll be arrested if you don’t make an immediate payment on your student loans. But if you hand over your credit card information, you’ll soon realize it was a mistake.
No one is ever going to arrest you for not paying a student loan, and scammers like these are just trying to get their hands on your credit cards, bank account or Social Security number.
That said, it is possible to get sued if you default for a long time on a private student loan. If you stop paying and responding to communications, a private lender could bring you to court to collect the balance.
Before this happens, speak with your lender about ways you can avoid default or get your loan back into good standing.
How to consolidate or refinance your student loans for free
Although there are some legitimate companies that will help you manage your student loans for a fee, you can consolidate or refinance without the help of a third party. Consolidating your federal student loans can be a good strategy for simplifying debt or getting out of default.
If you’re looking to combine multiple loans into one, you could also consider refinancing your student loans. You’ll refinance with a private lender, and both federal and private student loans are eligible.
Basically, the lender will take your old loans and issue you a new one in their place. Depending on your credit and income (or your cosigner’s), you could qualify for a lower interest rate than you have now.
You’ll also get the chance to adjust your monthly payments and choose new repayment terms. This opportunity to restructure your debt could be helpful if you need relief from your monthly bills, or conversely, are looking to pay off your debt faster than scheduled.
You can apply for refinancing offers directly with lenders like SoFi, CommonBond, Earnest, Laurel Road or Citizens Bank. Most of these lenders make it easy to get a rate quote with no impact on your credit score.
Before selecting an offer, though, make sure you understand that refinancing federal student loans means turning them private. As a result, you would lose access to federal loan benefits such as forgiveness programs, repayment plans and loan consolidation.
Whatever you choose, remember that you don’t need the help of a third party to apply for consolidation or refinancing. Although you might rely on them to learn about your student loans, you’re able to apply for consolidation or refinancing on your own for free.
With student loan consolidation scams, follow your gut
While there are laws preventing such cons, and some states have taken action against student loan consolidation scams, the best line of defense is your own good judgment and common sense.
If you do find yourself in a bad situation, reach out to your state attorney general and contact the Federal Student Aid office right away to see if you can get help before it’s too late.
Above all, be informed and vigilant. By understanding how student loans work, you can protect yourself from scammers who are making promises too good to be true.
Eric Rosenberg contributed to this report.
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 SoFi.
2 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 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 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 0318/2019. 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 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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.
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 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|