Refinancing with Earnest
Refinancing rates from 2.41% APR. Checking your rates won’t affect your credit score.
When you learn about a fellow student loan borrower finishing off their debt, you might be eager to read their story — only to find it unrelatable to yours. Maybe the borrower didn’t have as much debt as you do, or perhaps they earned a six-figure paycheck that’s out of your reach.
Consider the essential elements of Student Loan Hero’s 50 (and counting) success stories, and your outlook might change.
On the surface, these ex-borrowers — from a social worker earning a $24,000 salary to a technology executive raking in $200,000 — have very little in common. Mixed in are teachers, lawyers, bloggers, an array of medical and financial professionals, and even a waitress and a nanny. Seventeen of them were repaying the debt they borrowed for a second or third degree.
They are also all over the map when it comes to repayment, reporting anywhere from $14,000 to $600,000 of education debt, with loan terms that range from seven months to more than 15 years.
Looking back, however, we’ve come to realize that despite their differences, these 50 borrowers succeeded by employing a very similar set of tactics.
1. Cutting spending
The greatest majority (34) of borrowers cited trimming expenses as a key factor in making progress on their repayment. Not all of these borrowers resorted to in-depth, line-by-line budgeting, but they at least consciously decided to cut back here and there.
Reducing routine costs allowed them to at least meet their minimum monthly payment, and in many cases to make extra loan payments as well. (See strategy No. 4, below.)
For example, Jon Barker repaid $130,000 in five years by replacing his “cash-guzzling hobbies” in favor of the free entertainment available at his local library.
To tighten your belt, consider some of our tricks for reducing spending.
2. Taking on a side hustle
You can budget only so much, but you can always increase your income. For 19 of the success story borrowers we’ve looked at, starting a side hustle made it possible to make larger payments to their lenders.
Kara Perez was among those who decided that a full-time job wasn’t enough to accelerate her loan repayment. To repay $25,000 in 42 months, she coached lacrosse, catered, and served as a production assistant, among a handful of other part-time gigs.
3. Selecting the debt avalanche or snowball method
Many student loan borrowers spread their monthly payments equally to their handful of creditors, hoping to reduce their overall dues one step at a time. But 19 of our interviewees relied on a one-loan-at-a-time strategy (while paying the minimum on their other loans, of course).
Eleven opted for the debt snowball method, attacking the smallest loan balances to close them out first. Among them, Jessica Garbarino repaid $56,00 in five years using the snowball method because, as she put it, “I am a firm believer that the small wins help keep you motivated.”
The other eight borrowers preferred the debt avalanche method, repaying the highest-interest loans initially to save as much as possible. Melisa Boutin, for example, hastened her repayment via the avalanche method, zeroing in on a foreign bank loan carrying a 9.00% interest rate.
Settle the snowball-avalanche debate for your own repayment.
4. Making extra payments
Fourteen of our out-of-debt borrowers recounted throwing every red cent they had at their debt until it disappeared. Some relied on salary increases, income tax refunds and even inheritances. We connected with one borrower — Cameron Battagler — who shortened his loan term by finding a $1,500 state grant, helping him repay a total of $30,000 in about 30 months.
It doesn’t take a genius to realize how much interest you could save by submitting additional payments. Our lump sum and prepayment calculators can help you figure out your potential interest savings.
5. Seeking help from loved ones
Nearly half of our ex-student loan borrowers weren’t in repayment alone.
A dozen of them gave credit to supportive family and friends, including 2016 graduate Caitlin Navratil who covered a $15,000 debt in 10 months. Navratil borrowed — and refinanced — on discounted interest rates from her mom and dad.
Another dozen success story subjects combined debt with their significant other for a team-oriented payoff. That included Danielle and Jonathan, who repaid $52,000 in two years, in part by calling each other “accountability partners.”
Even if you don’t have a loved one to lean on for monetary help in repayment, you could also tap certain family members or friends for student loan advice.
6. Refinancing to a lower rate
Consolidating your debt with a private lender — known as student loan refinancing — is right for some borrowers, but not for others. Refinancing might allow you to reduce your interest rate, for example, but it would also cause you to irreversibly lose federal loan safeguards like income-driven repayment.
For some borrowers, such as Schauren Hinson, refinancing was the critical plot twist that greatly eased repayment. Hinson, a nurse who repaid $70,000, managed to refinance her debt to the tune of a 3.00% interest rate via industry leader Earnest.
Unsurprisingly, each of the eight borrowers from our success stories who refinanced with a private lender had high debt loads but a stable career — five of them were medical professionals.
You don’t have to earn a six-figure income to qualify for refinancing, but a strong credit history goes a long way. You could also piggyback on a cosigner with stronger credentials.
Write your success story by finding the right repayment strategy
Of course, it’s impossible to capture every useful student loan repayment strategy in a sample size of 50 borrowers. After all, there are nearly 45 million Americans with outstanding education debt.
From income-driven repayment to receiving loan forgiveness and beyond, many other game plans work wonders for borrowers.
Among the success stories we’ve reported on so far, other useful (albeit less-used) plans included:
- Making in-school payments or transferring to a cheaper school
- Decreasing living expenses by moving abroad — or moving in with roommates
- Changing careers to increase income
- Setting a strict deadline for finishing repayment — and sticking to it
Of course, every borrower mixes and matches approaches that work best for their unique repayment.
Tallying up the strategies used by our 50 successful borrower stories, we found that only one was employed unanimously: Each person or couple maintained their motivation until the end of their repayment.
Once you’ve found your inspiration, find the other repayment strategies that will work for you. Then your own success story will write itself.
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 3.36% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.41% APR (with Auto Pay) to 6.99% 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 April 17, 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 04/17/2019. 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 our student 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 SoFi.
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.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
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 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.41% – 6.99%1||Undergrad & Graduate|
|2.41% – 7.89%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.38% – 6.81%4||Undergrad & Graduate|
|2.41% – 8.19%5||Undergrad & Graduate|
|2.60% – 9.60%6||Undergrad & Graduate|