Refinancing with Earnest
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Your student loan grace period is like spring break for your loans. There’s nothing you need to worry about during this time, and barring other concerns, your financial life should be fairly stress-free. But once the period ends, reality sets in.
The end of your grace period means that it’s time for you to begin repaying all of that money you borrowed. Though no one looks forward to paying off loans, planning the repayment of your student loans now can make your life easier later.
With the grace period set to expire this month for 2015 college graduates, it’s time for student loan bills to start rolling in.
Before you curse the end of your grace period, here are a few tips to make the transition easier and less stressful.
1. Check whether you can further postpone payments
Typically the student loan grace period ends six months after the student’s attendance at college dropped below half-time. For grads, this period begins six months after completing their degree.
Yet, some grace periods don’t end after six months. In certain situations, you can put off payments longer.
Generally, if you return to school at least half-time before your grace period ends, then your loan clock is reset. You won’t need to make payments while you’re taking classes, and you’ll get a new six-month grace period once you graduate or drop below half-time attendance.
If you’re on active military duty, then you also get a break. If you’re called to duty to serve more than 30 days, then you’ll get another six-month student loan grace period once you return.
If neither of these situations applies, then you might still have other options. Your best bet may be to request deferment or forbearance on your loans.
Keep in mind, however, that even if you are allowed to put off payments, you might not want to or simply shouldn’t. No option makes student loans disappear, and some even add to the balance you’ll ultimately owe.
2. Set up your repayment system
Paying back student loans can be confusing, especially if you have statements flying in from all over the place. Believe me: I hate trying to keep track of bills as much as you do. Why not make it easier on yourself?
One way to do that is to track all of your student loans from one place. I’m biased, of course, but you can do that for free with a Student Loan Hero account.
It’s easy to set up, and it can spare you the frustration of handling all of your loans individually. Student Loan Hero even explains how you can save money on your loans, which will help you to pay them off more quickly.
Once you’ve organized your loans, figure out the best strategy for repaying them. Should you sign up, the Student Loan Hero dashboard can even guide you through options for actually paying off your loans.
One popular strategy is to make automatic payments. Instead of manually paying each bill each month, it’s easier to set them up on autopilot. Plus, some federal student loan services will reduce your interest rate by 0.25%. Though it’s not much, it’s free money. Why not take it?
3. Think carefully about consolidation
By now, you’ve probably heard about federal loan consolidation. Though it can be a good strategy, you should know a few things before opting to consolidate.
Consolidation takes all of your loans and groups them together. Interest rates are averaged based on the balances of each loan, meaning that you’ll ultimately pay the same interest whether you consolidate or not. The chief advantage of loan consolidation is paying only one bill instead of many.
So, when shouldn’t you consolidate? Specifically, if you 1) have loans with different interest rates and 2) plan to pay more than the minimum payment each billing cycle, then consolidation may cost you. Since you won’t be able to pay off loans with the highest interest rates first, you won’t save any money on interest.
Keep in mind: once you consolidate, it can’t be undone. Choose wisely.
4. Take a look at your interest rates
There are only three ways to save money while repaying student loans:
The popular option for reducing interest rates is to refinance with a private lender. Current rates are as low as 1.95% APR, but you must qualify. Want to learn more? Check out the questions to ask before refinancing student loans.
Increasing payments without refinancing or consolidating can be a great option for paying off loans faster while saving money. As mentioned above, your best bet is to pay off student loans with the highest interest rates first.
For example, let’s say you have three loans:
Loan 1: $8,000 balance at 11% interest
Loan 2: $6,000 balance at 3.5% interest
Loan 3: $5,000 balance at 6.8% interest
Since every month you’re charged the most interest on Loan 1, you should pay that loan off as soon as possible.
To do this, make the minimum payments on Loans 2 and 3 each month, and put everything else toward Loan 1.
Once Loan 1 is paid off, pay the minimum on Loan 2 and put everything else toward Loan 3.
By following this strategy, you’ll save the most interest possible on each subsequent payment. Just make sure that your servicer knows to apply extra payments to the principal balance and not to future payments.
5. Don’t skip payments
If you have a loan, one of the worst choices you can make is to skip a payment. It’s a bad decision for a variety of reasons including:
- You can end up defaulting on your loan, which can mean that your loan becomes a case for collection agencies.
- Charges can be added to your balance. Not small ones, either. Think up to 40%.
- You can ruin your credit score. Late payments and loans in default will cripple your credit score. Trust me: Future you will not be happy when he or she gets turned down for an auto loan or mortgage.
Remember that there are nearly always options. Though I’ve explained popular ways to begin paying off your loans, don’t forget that forbearance and deferment are alternative options. When in doubt, call your servicer to see what help is available.
What will be (or was) your first step when your student loan grace period ended?
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
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
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|