Refinancing with Earnest
Refinancing rates from 2.27% APR. Checking your rates won’t affect your credit score.
When you’re trying to find student loan repayment advice, most help is aimed at borrowers who are struggling to make monthly student loan payments. And with good reason – when you’re shouldering tens of thousands of dollars in education debt, and monthly payments you simply can’t afford… you need all the help you can get.
But the fact is, student loan borrowers who aren’t struggling to make loan payments need student loan repayment advice, too.
Why? Because the tendency with most borrowers who are successfully repaying their student loans are using the “set-it and forget-it” student loan strategy. Does this sound familiar? You graduate, choose a repayment plan, maybe even set up auto-pay and never look back.
In fact, you probably don’t want to think about your student loans again until the day that final payment is made, somewhere in the distant future. This approach is understandable, but chances are, it will cost you thousands of dollars in interest you could have avoided.
Given federal student loan delinquencies are roughly 14% (as stated by the New York Federal Reserve), and another ~30% aren’t actively repaying due to grace, deferment, or forbearance period, we estimate roughly ~50-60% of borrowers are actively making their monthly payments comfortably.
So what’s the best advice for a student loan borrower who is able to make monthly payments? First off, be sure to revisit your repayment strategy every 6 months, and determine whether it’s time for a change.
For example, did your job or income change? Did your credit score improve? If so, you might be able to refinance your student loans at a lower interest rate, to save money on monthly payments or pay off your student loans faster, while also saving a significant amount in interest over the life of the loan. Here are 6 Reasons to Refinance Your Student Loans.
And because it’s typically easier to qualify for refinancing a year or two after graduation, you’re best bet is to ditch the set-and-forget approach in favor of a periodic check-in with your repayment strategy. How do you know when it’s time to do that? Here are three signs the day has arrived:
1. Making monthly payments is easier than it used to be
The first few years after undergrad or graduate school are tough for most people. Your degree may hold the promise of higher income in the future, but your first job out of school is still paying you like it’s your first job out of school. And until your pay goes up, student loan payments can swallow up a whole paycheck.
But ideally you spent the last few years working hard, maybe even receiving a promotion at work and, along with it, came a higher salary. You may not have noticed when the scales tipped, but if you’re not stressing about your monthly student loan bill anymore, chances are your cash flow has improved. Since this is one of the factors used to determine student loan refinancing eligibility, it may be a sign that you’re ready to refinance.
And if you’re not yet eligible for refinancing, consider using your monthly cash surplus to increase your student loan payments. Prepaying student loans is another great way to reduce interest and pay off your loans faster, and all education loans allow for penalty-free prepayment. Just make sure your lender is applying the extra money to principal instead of holding it for future payments. Here’s a great student loan prepayment calculator to help you find out how much you can save by prepaying.
2. You’ve been making on-time payments for a long time
Crazy as it might sound, having student loans can actually be a positive thing – at least when it comes to your credit – as long as you’re paying regularly and on time. Since federal loans are available to borrowers regardless of credit score, it gives them an opportunity to build credit history and prove that they can manage debt responsibly. Also, having a mix of debt types (i.e – revolving credit or credit cards vs. an installment loan or student loan) can also help improve your overall credit score. Having good credit can mean more borrowing power and lower interest rates on future loans – two things that can positively affect your financial bottom line.
If you’ve been paying your student loan bill on time, every time, it’s likely had a positive impact on your credit score. And since credit score is one of the biggest factors in determining refinance eligibility, your diligence may pay off in the form of a lower refinance rate. To learn the other factors that go into credit score, you can find FICO’s factors and weightings here.
3. You know your career path lies in the private sector
A common misconception about federal student loans is that they can’t be refinanced, but the truth is that the option is available now through a few lenders, and SoFi was one of the first lenders to offer it. Since the vast majority of outstanding student debt is made up of federal loans, it never made sense to us that borrowers couldn’t refinance these loans as market interest rates declined and the borrower’s financial stability improved.
The one consideration for refinancing federal student loans with a private lender (the only way it can be done, since the government does not currently offer refinancing) is that certain benefits and features do not transfer with the loans. For example, some federal loans offer conditional loan forgiveness for teachers and public employees. If you’re eligible for these programs, you probably don’t want to miss out on the benefits.
But if you don’t qualify for a public service loan forgiveness, it may not make sense to stick with federal student loans just for the “potential benefits” you’ll never get to use. Not sure whether a federal forgiveness program may apply to you? Check with your alma mater’s financial aid officer, your student loan servicer, or sign up with Student Loan Hero to see which program you are eligible for – the experts out there can help you navigate the fine print.
No one likes to think about their student loan debt, which is what makes the set-and-forget money management approach so understandable. But when leaving your student loans on auto-pilot for too long could mean leaving thousands of dollars on the table! It’s worth taking a second look to see if there’s a better student loan deal available. If you’re seeing the signs above, it’s probably time to consider implementing the student loan repayment strategies mentioned.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 3.47% APR (with Auto Pay) to 7.59% APR (with Auto Pay). Variable rate loan rates range from 2.27% APR (with Auto Pay) to 6.89% 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 August 15, 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 08/15/2019. 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 2.37% effective July 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.27% – 6.89%1||Undergrad & Graduate|
|2.27% – 7.55%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.24% – 6.67%4||Undergrad & Graduate|
|2.37% – 7.95%5||Undergrad & Graduate|
|2.46% – 9.24%6||Undergrad & Graduate|