Refinancing with Laurel Road
Refinancing rates from 1.89% APR. Checking your rates won’t affect your credit score.
If you’re juggling multiple student loans, it can be tough to keep track of payments. That’s where federal loan consolidation can help. Direct loan consolidation combines your federal loans into one to simplify repayment. It also lets you choose new repayment terms and, if you wish, switch to a new federal loan servicer.
But while a Direct Consolidation Loan can be a great choice in certain situations, it’s not always the best strategy, nor are all loans eligible. Take the time to review your situation and the benefits and drawbacks of Direct loan consolidation before making a decision.
- When to choose federal loan consolidation
- When to avoid Direct loan consolidation
- Consider all these factors carefully
If the following scenarios ring true for you, using a Direct Consolidation Loan could be a great strategy to help pay down your student loans:
1. You want to simplify your loans into one monthly payment
2. You want access to income-driven repayment options
3. You want to pursue student loan forgiveness
4. You want to convert from a variable interest rate to a fixed one
If tracking all your student loan payments is driving you crazy, Direct loan Consolidation may inject a well-needed dose of sanity into your life and budget.
By consolidating your federal loans, you combine them into one with a single monthly payment. Most federal student loans are eligible for consolidation, including unsubsidized and subsidized Direct loans and PLUS loans made to parents or graduate students.
Federal Direct subsidized and unsubsidized loans are eligible for all income-driven repayment (IDR) plans. However, other types of federal loans typically must be part of a consolidation loan to be eligible for income-driven plans. These loans include:
- Unsubsidized Stafford loans from the FFEL program (in most cases)
- Subsidized Stafford loans from the FFEL program (in most cases)
- Federal PLUS loans made to parents
- FFEL PLUS loans made to graduate students or parents (in most cases)
- FFEL consolidation loans
Parent PLUS loans, for example, are only eligible for the Income-Contingent Repayment plan if you consolidate them first. If you have this or another type of loan on this list and are struggling to make your payments, you may want to consolidate your student loans in order to qualify for an income-driven repayment plan.
IDR plans can not only potentially lower your monthly payments, but they also qualify you for forgiveness of the remaining balance at the end of the repayment term.
Plus, if you are eligible for Public Service Loan Forgiveness (PSLF), which provides tax-free forgiveness after 120 qualifying payments, it could be to your benefit to consolidate so that you’re eligible for income-driven plans.
Just note that consolidating student loans resets the clock on any payments you’ve already made toward PSLF. If you’ve already been paying your student loans for two years, for example, consolidating would erase those two years of progress.
So if you are looking to consolidate and are pursuing PSLF, make sure to apply at the beginning of your loan term so you don’t have to start over from scratch.
If you have federal loans (except Perkins Loans) that were disbursed before July 1, 2006, one or more of your loans may have a variable interest rate.
Because Direct consolidation loans have fixed rates only, you don’t have to worry about your interest rate going up and down over time. And if interest rates are steadily increasing, locking in a fixed rate can save you money over the long run.
While a Direct Consolidation Loan may be beneficial to some, there may be times when it doesn’t make sense for you.
1. You don’t qualify
2. You don’t want to lose your federal repayment options
3. You want to strategically pay off loans with higher interest rates first
4. You want to save money by refinancing with a private lender
5. You want to avoid increased interest charges over the lifetime of the loan
Certain loans, including private student loans, don’t qualify for the Direct loan consolidation program. And keep in mind that if you’re a parent with Parent PLUS loans, you can consolidate through a Direct consolidation loan on your own. You can’t, however, consolidate your loans with loans that the student received.
Because consolidating student loans effectively erases the original loans, any benefits you had under the original loan’s terms will no longer be available to you.
If you consolidate Perkins loans, for example, you’ll no longer qualify for loan forgiveness under the Perkins loan cancellation program. Be sure to talk to your servicer before consolidating to be sure you won’t lose any benefits that you’d prefer to keep.
Consolidating your student loans won’t necessarily lower your interest rates. Instead, the process involves taking the weighted average of the old loans and adding a small percentage on top.
So, if you have a loan or loans with significantly higher interest rates, it may be better to leave those out of a consolidation and focus your early repayment efforts on them to get rid of them more quickly.
This approach is known as the debt avalanche method, and it can be a savvy way to save money on interest while paying down your debt faster.
If you have a solid income and great credit, you may qualify for a lower interest rate, a lower payment or both through refinancing.
Some of the top student loan refinancing lenders offer competitive interest rates to those who qualify. Just keep in mind that you’ll lose your federal loan benefits if you go this route, including eligibility for a federal consolidation loan.
Also, the lowest rates refinancing lenders offer are typically variable rates and come with shorter repayment terms. Before choosing to refinance, make sure you’re really ready to forego all of the benefits associated with your federal loans.
Even if you’re not on an income-driven repayment plan, Direct loan consolidation results in a lower monthly payment if you lengthen your repayment term. But choosing a longer term means you’ll pay more interest over the life of the loan.
If your goal is to pay as little interest as possible, consolidation may still work out. But you’ll need to make extra payments to shorten the repayment period (which you can do without penalty). Use our prepayment calculator to estimate how the math can work in your favor.
Consider the benefits and drawbacks of Direct Consolidation Loans carefully to create a repayment strategy that takes all your goals into account. Remember: Just because a loan is eligible for federal loan consolidation doesn’t mean you have to include it.
Also, know that there’s more to repayment than just math. You likely have other financial goals you want to work toward, so make sure your student loan repayment strategy works with those. For example, if you plan to buy a home, staying in debt longer with a Direct consolidation loan may not be appealing.
If you end up deciding that Direct loan consolidation is the best choice for you, check out our guide to learn more about how to consolidate student loans.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 5.64%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.89% – 6.77%4||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 5.41%5||Undergrad & Graduate|
|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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 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 7/31/2020. 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.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
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. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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 September 10, 2020.
5 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.16% effective August 10, 2020.