Refinancing with Earnest
Refinancing rates from 2.39% APR. Checking your rates won’t affect your credit score.
Refinancing your student loans can be a smart strategy. You may be able to secure a lower student loan rate, reduce your monthly payments or otherwise renegotiate the terms of your debt.
But like most money moves, refinancing needs to be carefully thought out to ensure it’s the best option for you personally. While it might benefit some borrowers, it won’t make sense for everyone.
So if the question “Should I refinance my student loans?” is on your mind, here are 10 other, more specific questions you should ask yourself first to make the best decision.
1. What is my main goal for refinancing student loans?
2. What interest rates can I get?
3. What are my student loan payoff amounts?
4. How much can I afford to pay each month?
5. Will I need federal student loan repayment options in the future?
6. Do I have good enough credit to refinance my student loans?
7. Do I meet lenders’ income requirements?
8. Do I need a cosigner? Is cosigner release an option?
9. Does the refinance lender offer flexible repayment options?
10. What type of support and customer service does the lender provide?
Also: Is refinancing good for your student loan repayment?
The first thing you need to think about is the outcome you’re hoping for by refinancing student loans.
There are some great reasons to refinance student loans: You can lock in lower interest rates, reduce monthly payments or get rid of debt faster.
It’s important to be clear on which benefits are most important to you. Your central student loan refinancing goal will guide your decision and help you choose the loan that will best meet your needs.
You can try consulting our student loan refinance calculator to help you estimate refinance terms and see which gets you closest to what you want.
If you want to get a lower interest rate, first take a look at what your rates are now. Over the past 10 years, interest rates on federal student loans have ranged from 3.40% to 7.90%, depending on the type of loan and the rates offered at the time of origination. Private student loan rates have an even wider range, from about 2% to nearly 15%.
When you refinance your loans, you replace existing student loans with a new one. This gives you a chance to shop for a lower interest rate and get a better deal.
The higher your current interest rate, the more you could potentially benefit from refinancing. But note that you’ll also need to have good credit and to meet the underwriting criteria with some of the best lenders in the market that refinance student loans.
A lower student loan interest rate can save you a good sum of money, since it reduces both your monthly payments and the amount of interest you’re assessed over the life of the loan.
When researching the interest rates on your loans, also note your “loan payoff amount” — the payment you’d need to make to pay off your student loans in full. It will be higher than the balance displayed on your loans because it includes any interest you still owe.
Knowing this number is important because the total payoff amount for all the student loans you hope to combine through refinancing will be the balance of your new loan.
Refinancing student loans can change your loan terms and monthly costs. If you’re considering refinancing student loans, you’ll want to make sure your new payments will be manageable.
Once you have your payoff amounts, you can use our student loan payment calculator to estimate what your monthly costs could look like.
This is an important consideration, since you’ll want to decide on the right student loan repayment period based on your needs. For example:
- A longer student loan term will result in lower monthly payments, which could be important if you have a low income, high living costs, a high student loan payoff amount or a combination of these.
- A shorter repayment term will help you get out of debt faster and often comes with a lower student loan interest rate, helping you get out of debt while paying less.
Of course, borrowers’ abilities to repay will also depend on their own unique circumstances.
The payments you’ve already been making can give you a baseline of what’s affordable for you. If you’re already making extra payments, that’s a good sign you could afford to switch to a shorter repayment period to save even more.
But if it’s been a struggle to make payments, consider refinancing under terms that will lower your monthly payments and give you more breathing room in your budget.
Are you struggling with payments? Does your income vary from month to month? Is your financial situation otherwise uncertain? These could be signs that refinancing isn’t right for you, at least not if you have federal loans.
That’s because refinancing with a private lender pays off federal student loans and replaces them with a new private student loan. This action is irreversible and will mean losing access to several important protections granted to federal student loan borrowers.
If you’re looking to refinance federal student loans, you should know what you’re giving up. Federal student loans offer many protections that won’t be available if you refinance, such as:
- Alternative repayment plans, including affordable income-driven repayment options
- Federal student loan forgiveness programs
- Deferment or forbearance under federal rules
Before refinancing, you should be confident that you can keep up on payments, both now and in the future, before giving up these protections.
Your credit history will be a central factor that lenders will consider when deciding whether to approve or deny your student loan refinance application. Reviewing your own credit can help you see if you have a good credit score to refinance student loans.
As you can imagine, it’ll be much easier to qualify for a refinance loan and get favorable terms if you have good credit. A good-to-excellent credit score is required by most lenders, with minimum score requirements often set at 650 to 680.
Likewise, your score will usually affect which rate you’re offered, as most lenders reserve the lowest rates for borrowers with excellent credit (in the mid-700s and above).
If you know your credit score, you can see the interest rates and terms for which you might qualify. And if you don’t know your score, you can view and track it for free using My LendingTree.
Many refinancing lenders will also provide a free soft credit check in order to provide you with an initial interest rate quote. This is preferable to a hard credit check, which could lower your score by a small margin.
Generally, refinancing lenders will want to see that you have a steady income, so they can feel confident you’ll be able to afford the monthly payments and repay your student loans.
Some lenders have income requirements but don’t publish them, while others list their minimums so you can gauge your eligibility.
|Education Loan Finance||$35,000|
As of May 19, 2020
As a general rule, annual earnings near the national median household income of $63,179 (as reported by the U.S. Census Bureau) should give you a decent chance of qualifying for refinancing, with higher incomes viewed even more favorably.
But income isn’t the only factor that lenders look at to decide if you can afford your student loans. Many will be interested not only in how much you make, but also in how much you owe relative to your pay. This is measured with a debt-to-income (DTI) ratio — the proportion of your monthly income goes toward minimum payments on existing debt.
The lower your DTI ratio, the better. For example, a 43% DTI is typically the highest you can have and still be considered for a home mortgage. For refinancing student loans, you’d also likely need to have a ratio below this level.
Use our DTI calculator to estimate where you stand on this metric.
Debt-to-Income (DTI) Calculator
If you get rejected for student loan refinancing, or if you think that your income or credit score is too low to qualify, don’t give up yet.
Many lenders will allow you to refinance student loans with a cosigner who meets their lending requirements. Adding a cosigner could also help you snag a better student loan refinance rate than what you’d be offered on your own.
Alternatively, you might want to refinance a student loan to release a cosigner from your original student loan, replacing it with a new loan that doesn’t include that person. Perhaps, for instance, your parents cosigned a student loan with you when you first entered college — if you now have a reliable job and a good financial history, it might be a good idea to remove them as a cosigner by refinancing the loan.
Even if you are confident in your ability to repay your student loans, there are no guarantees in life. It could still be wise to consider refinancing with lenders that offer borrower protections, such as deferment and forbearance.
While refinancing student loans means you’ll lose access to federal repayment plans, your lender might still provide flexible payment options of its own.
Check to see if they have policies that allow you to adjust your payments if you’ve hit a rough financial patch. You should also ask about their policies and willingness to work with borrowers who are struggling to repay.
SoFi, for example, provides unemployment protection on its student loans, allowing borrowers to pause payments in the case of a job loss. SoFi even sets you up with a career coach to help you get back on your feet. As for your student debt, you could take a break from repayment in three-month spans — and up to 12 months overall — as long as you lost your employment through no fault of your own. Of course, like other forbearance periods, interest continues to accrue while you’re not making payments.
Many private lenders, such as Laurel Road, will also honor any grace period on your existing loan — which, for federal student debt, covers the first six months after you leave school. So even if you refinance right after graduating, you’ll still have some payment-free time to get on your feet.
It’s important to get the initial terms and interest rates right on your student loan refinance. But you should also consider the kind of experience each lender offers.
As student loan borrowers ourselves, we have dealt with loan servicers or lenders that provide poor customer service. A lender like that will add to your student loan stress and make managing this debt a miserable experience.
But a lender with solid customer service can help you manage your student debt more effectively and quickly resolve any issues that might arise.
You could be working with your new refinancing lender for the next five to 20 years. Be sure to do your research and shop around before refinancing your student loans to ensure that you save money and have no regrets.
Consider your answers to each of the 10 questions above. They’ll help you confirm whether you’re eligible for refinancing and whether you could benefit from a refi loan, as well as ensuring you choose the right lender for your new debt.
One more way to clarify whether refinancing is good for your situation is to review the pros and cons of consolidation. If there are more pros in your favor, then you’ll have your answer.
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 5 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|3.21% – 6.67%2||Undergrad & Graduate|
|1.99% – 7.10%3||Undergrad & Graduate|
|2.39% – 6.43%4||Undergrad & Graduate|
|3.21% – 6.69%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of March 4, 2020 and is subject to change.
2 Important Disclosures for SoFi.
3 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
4 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 3.20% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 2.39% APR (with Auto Pay) to 6.43% 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 June 3, 2020, 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 6/03/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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.
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 0.8100000000000002% effective April 10, 2020.