Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
According to the National Student Loan Debt Clock, the total amount of student loan debt is growing by more than $2,726 every second. Student debt has undoubtedly become a crisis that’s left legions of college graduates wondering how they’ll ever become debt free.
We at Student Loan Hero fully support and advocate the many benefits of student loan refinancing as a solution for managing burdensome debt – for the right borrowers. While refinancing could mean a lower interest rate, better repayment terms, and faster debt payoff, it’s definitely not the best option for 100 percent of borrowers.
There are some inherent drawbacks to refinancing that might make you reconsider – the last thing you’ll want is wishing you stuck with your original repayment plan.
When to reconsider student loan refinancing
First, ask yourself why you want to refinance your student loans. Some popular reasons include:
- You want to pay off your student loans faster.
- You’re trying to save money by lowering your interest rate.
- You want a lower monthly payment.
- You need to release a co-signer.
Student loan refinancing can impart a lot of financial benefits. But these benefits don’t come without tradeoffs. Here’s what student loan refinancing can take away:
1. Loss of federal repayment benefits
When you refinance federal student loans (including subsidized and unsubsidized Direct Loans, PLUS, Perkins, etc.), you replace them with a new, private loan. That means you’ll no longer be eligible to receive any of the benefits that come with a federal loan; that can spell an inflexible repayment structure for many borrowers.
The biggest loss may come in the form of losing the option to sign up for an income-driven repayment plan, which limits monthly payments as a percentage of your income.
Additionally, deferment, forbearance, and loan forgiveness programs through the federal government also become inaccessible once you go through with student loan refinancing. So despite owing money to Uncle Sam, you’ll lose his financial assistance when going from federal to private. Consider if this is a risk you’d like to take.
2. Fixed to fluctuating interest rates
Variable interest rates can be alluring – a low initial APR can mean a lot of savings in the first few years of repayment. The only problem is that the interest rate is bound to fluctuate; in a rising interest rate environment, this can pose a risk if you’re looking to save money over the life of your loans.
When it comes to refinancing your student loans, be aware of whether you’re giving up fixed interest rates for variable ones. It’s a gamble, for sure – one that might end up saving you some big bucks if rates stay low. But they may also rise, costing you in the long run.
3. Savings are reserved for top applicants
When it comes to federal student loans, borrowers receive the same interest rate, regardless of income, job status, college major, or creditworthiness.
Refinance to a private student loan and that equality goes out the window. Now, the interest rate you’re offered is based on your credit score (or similar measurement of creditworthiness).
High-income earners and those with excellent credit will get the best interest rates and repayment terms. Student loan refinancing probably won’t end up saving you money if your credit score and income aren’t great.
When student loan refinancing is the right choice
Refinancing one private loan to another private loan is a less drastic decision, since it’s more or less a switch from one set of interest rates and conditions to another, with no loss of federal benefits or other factors.
It also opens up the opportunity to work with lenders that have a reputation for being at the forefront of the industry, like SoFi and Earnest. These lenders may also back you with added perks such as career coaching, budget counseling, and unemployment protection.
If you’re on the right career path and confident that your financial status can only go up from here, refinancing may be the right choice for you.
Like all major life and financial decisions, it’s up to you and your own individual situation to see if refinancing your student loans is the most viable option. Whatever your decision, with timely loan payments and a strategic approach to repayment, you’ll avert debt and be on your way to financial freedom faster than you can say, “refinance.”
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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
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|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|