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If you’re trying to take charge of your debt by refinancing your student loans, you know it can be tough. After all, getting denied can be frustrating.
One of the most common reasons lenders reject applicants is because they did not attend a Title IV-qualifying institution.
Title IV is an important distinction for schools, and whether or not your school fits the criteria can have long-lasting implications for you. Find out what this classification means and why lenders are so stringent about it.
Title IV of the Higher Education Act
President Lyndon Johnson signed the Higher Education Act of 1965 to create protections for college students and to make college more affordable. It also increased the number of government dollars allocated for federal loans, scholarships, and more.
One of the most significant parts of the law is the Title IV section. It’s designed to ensure that a school provides quality instruction and can help students secure a good job after graduation.
Title IV schools are the only institutions where individuals are eligible for federal student aid. Attendees of these colleges can receive student loans, grants, and enter a federal work-study program.
How schools become Title IV universities
The requirements for a school to become a Title IV college are rigorous. To be eligible, the state where the school is located must authorize it to offer postsecondary educational degrees.
An agency approved by the Secretary of Education must grant accreditation after reviewing the school’s curriculum and the university must only accept students who have a high school diploma or GED.
Public, private, for-profit, and vocational schools can become Title IV educational facilities. In the case of vocational schools and private colleges, the school must have a license and offer the same postsecondary programs for at least two years before they apply. Schools also have to submit financial audits to prove they adhere to auditing standards.
If it’s a for-profit institution, the school cannot have applied for bankruptcy protection. The Department of Education requires schools to issue some sort of a degree, such as an associate’s or a bachelor’s.
In the case of vocational schools, the credential must be able to be used to get gainful employment. That means that most graduates must be able to provide for themselves and keep up with their debt payments with a job after graduation.
The application process can take years, and not all schools who apply get approved. Many schools are in operation that don’t fit into this classification, so it’s a serious factor to consider when evaluating your college options.
Why do lenders require schools to be Title IV?
If you’re looking to refinance your student loans, most lenders require that the school you used your student loans to attend is a Title IV institution.
That’s because this classification is a measure of your degree’s validity and value. When reviewing schools, the Department of Education looks to see if the college’s degree programs prepare students for gainful employment.
The Department of Education and refinancing companies look at the gainful employment rate to determine if graduates can reasonably repay their student loans. If their degree only leads to minimum wage work, graduates are unlikely to be able to repay their debt. That means they’re a less appealing candidate to lenders.
Most lenders require borrowers to graduate from a Title IV school as a safeguard. If your school was not a Title IV college, you are less likely to find well-paying work and will be unable to afford your debt.
How to find out if your school is a Title IV institution
If you’d like to find out if your school is a Title IV institution or not, search for it on this list. For borrowers who did not go to a Title IV school but still want to refinance their loans, you have few options.
Lenders like SoFi, LendKey, and College Ave all require borrowers to graduate from a Title IV school. However, Citizens Bank is one of the few financial institutions who will work with you if your school isn’t on the list. So check with Citizens Bank to see if you are eligible. Otherwise, refinancing your loans may not be an option.
Your school’s accreditation matters
While lenders can be rigid about their eligibility requirements, it’s for a good reason.
A Title IV classification means that graduates are more likely to find solid employment and be able to repay their debt. Schools that do not meet the criteria may produce degrees that are not valuable in the workforce. That can limit your career opportunities and earning potential.
For more information about student loan refinancing, here are 10 questions you should ask before you refinance.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|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 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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 email@example.com, 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
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
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.
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.
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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|