Refinancing with Earnest
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For many of us, a new year can mean new changes in our lives. Many will be starting or returning to school, while others will graduate or continue to pay off their student loans.
Just as your life changes, so do the rules related to student loans. In 2015, we’re expecting some big student loan changes that could both positively and negatively impact how student loans affect your life.
No matter what stage you’re at with student loans, read on to learn out about student loan changes for 2015.
1. Cuts to the Public Service Loan Forgiveness program
One big news story from 2014 in the student loan world was President Obama’s proposed limits on the Public Service Student Loan Forgiveness (PSLF) program.
Enacted in 2007, PSLF has promised to pay off large chunks of student loan debt for qualified borrowers. PSLF requires 120 on-time payments, which take at least 10 years to make. After this period, students who qualify by working in governmental or nonprofit organizations can have their remaining federal student loan balances forgiven.
Since it’s been less than 10 years since this program started, no one has actually benefited from the program yet. But thousands of students are prepared and excited to cancel out their student loans starting in 2017.
However, the part about unlimited forgiveness may soon change. As part of the 2015 budget, President Obama proposed a limit on PSLF: $57,500 per student.
While many have freaked out over this proposed change, others say that there may be little to worry about for those currently slated to have large balances forgiven by PSLF. Though a clear ruling has not yet been made, some suspect that those who already have loans will be grandfathered into the old rules. There’s one reason for this: the promissory notes for the loans included details concerning PSLF.
However, anyone taking out new loans would become subject to the new limits.
If you’re looking forward to have debt forgiven on another repayment plan such as Pay As You Earn, then these changes shouldn’t affect you either.
2. More students will become eligible for Pay As You Earn
Among good news, those with older federal student loans may be in luck. Thanks to an order by President Obama, about 5 million more borrowers are expected to become eligible for Pay As You Earn (PAYE) in 2015.
PAYE won’t change at core, since this repayment option will still cap payments at 10% of a borrower’s income. Plus, any remaining debt will be forgiven after 20 years. However, at present, only borrowers who took out loans after October 2007 are eligible to use PAYE. The forthcoming change will allow anyone who meets guidelines for PAYE to take advantage of the program, too.
This change is currently set to take effect in December 2015, so you’ll have to be patient for a little while longer until the change is launched.
3. Decreased federal student loan interest rates
As you may have heard, federal student loan interest rates are no longer fixed rates set by Congress as they were in years past. They’re now tied to the US Treasury 10-year note, meaning that when Treasury note rates fluctuate, so do federal student loan rates.
New rates went into effect on July 1, 2015, and they actually went down a bit from last year. Rates on undergraduate loans decreased to 4.29%, down from the 2014–2015 rate of 4.66%.
If you’re taking graduate student loans, rates went down as well. Rates decreased to 5.84% for the 2015–2016 school year. That’s down from last year’s 6.21%. This new rate continues to be lower than the 6.8% rate from 2006–2013.
However, this downward trend is not expected to continue in years to come. By 2017, rates could exceed 6.8% for undergraduate loans. But again, we won’t know until new rates are announced next year.
4. Changes to FAFSA
Though major changes aren’t expected for FAFSA in 2015, a few minor ones are worth noting.
Fastweb reports a few small changes to the FAFSA application process.
This year, a new log-in process aimed at increasing the security of personal information will take effect. Students will now log in with a new Federal Student Aid ID instead of with personal information such as Social Security numbers, names, and dates of birth.
How parents affect the process is changing, too. A parent is now defined by the state. For example, widowed stepparents aren’t considered to be parents of the FAFSA applicant unless they have adopted the applicant.
The definition of “separated parents” will change, too. Spouses legally separated and living in separate households are considered to be “divorced or separated” for FAFSA. Those parents living in the same household are considered to be “married or remarried.” In both cases, the correct designation will be indicated on the FAFSA and could impact the applicant’s eligibility for student aid.
There are a few changes related to Pacific Islander applicants and applicants in foster care.
If any of these changes apply to you, then you may need to update your FAFSA entries from last year.
Wildcard: Federal student loan refinancing
We’re still waiting to see whether any federal student loan refinancing bills are passed by Congress in 2015. Last year, Sen. Elizabeth Warren proposed one that did not pass.
This bill—the Bank On Students Emergency Loan Refinancing Act—would have offered refinancing of all federal and private student loans to the current rates for first-time borrowers. However, the act died in the Senate twice last year, and its future remains uncertain.
As always, be on the lookout and stay tuned to the Student Loan Hero Blog for updates. You can subscribe below to get all of the latest updates on student loan changes that could affect you.
(note: this post was updated 7/22/2015 to reflect actual 2015–2016 Federal Direct Student Loan rates)
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
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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 3.45% APR (with Auto Pay) to 7.49% APR (with Auto Pay). Variable rate loan rates range from 2.14% APR (with Auto Pay) to 6.79% 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 September 6, 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 09/06/2019. 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 Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
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 2.19% effective August 10, 2019.
6 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.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 08/01/2019. Variable interest rates may increase after consummation.
|2.14% – 6.79%1||Undergrad & Graduate|
|2.14% – 7.84%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.14% – 8.01%5||Undergrad & Graduate|
|2.06% – 8.93%6||Undergrad & Graduate|
|2.74% – 7.24%7||Undergrad & Graduate|