Refinancing with Earnest
Refinancing rates from 2.47% APR. Checking your rates won’t affect your credit score.
Student loans default to a standard 10-year schedule when they enter repayment.
Yet, with larger student loan balances, payments on 10-year plans can be high and unaffordable. Even student loan payments on low balances can be too expensive for borrowers struggling with unemployment or low income.
Both options lower monthly student loan payments, but each through different ways. Read on to find out which option is best for your student loans.
Income-driven plans match payments to earnings
Income-driven repayment plans are programs administered by the Department of Education to help ease the burden of student loans. IDRs cap your monthly payments based on a certain percentage of your discretionary income and costs of living.
An IDR is ideal for borrowers struggling with their monthly payments who need something more manageable.
Borrowers can submit forms to enroll in an income-driven repayment plan.
The IDR will reset your monthly payments and lower them to an affordable amount. Monthly payments can be adjusted any time your income changes. So if you become unemployed with no income, your IDR payments will be lowered to $0 to match.
There are several different income-driven plans you can enroll in, so choose carefully.
Important: You must “recertify” your income and family size every year so your payment can be recalculated. Your lender will send you a reminder and you’ll provide updated information on your income and family size.
You will still have to recertify even if nothing has changed.
Refinancing replaces your old loans
Refinancing student loans, on the other hand, changes monthly payments by changing the terms of your debts.
With this method, you will sign an agreement for a new private student loan to replace any former debts. Your lender will fund the payoff of your student debts, and re-amortize your debts over the agreed-upon term.
Monthly payments might be lowered by refinancing, but this will depend on the terms you choose for the new student loan. The longer your repayment period, the smaller your monthly payments will be.
Depending on the types of federal loans you have, you could also refinance to a lower interest rate, which could lower monthly payments. So for some borrowers, refinancing student loans can be a smart option.
Wondering if refinancing is a good idea for you? Answer a few questions below and we’ll help you find the right solution! Otherwise, scroll down to read on.
Important: When you apply to refinance your loans, there are certain requirements that must be met. Most banks and lenders will review your credit score, income, savings, and college degree (certificate of enrollment if still in school).
If you don’t think you meet the requirements, you can apply with a cosigner to increase your chances of approval.
Refinancing student loans vs. IDR: which matches your goals?
So is enrolling in an income-driven repayment plan or trying to refinance student loans a better move for you? Well, that all depends on your student debt goals and financial needs.
Get clear on what you’re hoping to accomplish by restructuring your student debts. Then, properly evaluate the features of each option and choose the one that will get the result you need.
The chart below lays out some common student loan goals and needs — along with whether an IDR plan or refinancing will get your closer to that goal.
|Goal for student debt||IDR||Refinance||Reason|
|Lower monthly payment.||✔||✔||Both income-driven repayment and refinancing can result in lower monthly payments. But if this is your main concern, an IDR might be a simpler way to achieve this goal.|
|Save on student loan interest.||✔||Lenders offer some rates on student loan refinancing that are below even federal student loan interest rates. Refinancing student loans can help you take advantage of lower rates and reap savings. An IDR, on the other hand, doesn’t affect interest rates.|
|Lower the total cost of your student debts.||✔||While an IDR lowers monthly payments, it sets back your payoff date and won’t lower your balance as quickly. This means more interest will accrue. To pay the least amount to get out of student debt, refinancing student loans to cheaper rates or a shorter term is the way to go.|
|Credit isn’t good.||✔||Most private student lenders require good to excellent credit for to qualify and get low rates. Income-driven repayment plans, however, do not even look at your credit and are unaffected by your score. So an IDR makes more sense while you rebuild your credit.|
|Income is low or unstable.||✔||Income-driven repayment plans are based on your income. So if your main problem with student debt is that you don’t earn enough to make monthly payments, stick with an IDR. It will be more affordable, and can be adjusted if your income drops.|
|Take advantage of federal student loan benefits.||✔||On an IDR plan, your student loans will continue to be classified as federal student loans. Choosing an IDR will preserve important protections for federal student loans like deferment, forbearance, and public service loan forgiveness. But refinancing will switch you to private student loans, and you’ll lose access to these options.|
|Temporarily lower student loan payments.||✔||Maybe you want to stay on-track to repay student loans, but just need a temporary relief from this debt. An income-driven repayment plan is a more flexible option for this — you can use it to lower your payment, and then switch back at any point.|
|A clear student debt payoff schedule.||✔||If your ultimate goal is to just get rid of student loans, refinancing is probably the way to go. It will put you on a set repayment plan with a clear payoff date, at which you’ll be free of these loans. IDRs, however, can set debt repayment back and increase the amount of time you’re repaying loans.|
|Student loan forgiveness.||✔||If you don’t see yourself ever being able to realistically pay off your student loans, you might be interested in IDRs for the loan forgiveness. IDRs will forgive any remaining balance after you’ve made consistent payments for at least 20 years. However, this could come with a tax bill on the forgiven amount. But refinancing student loans does not offer the option for forgiveness.|
With this information, you’ll be well-equipped to decide whether refinancing student loans or choosing an income-driven repayment plan is best for you.
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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 5.87%1||Undergrad & Graduate|
|2.47% – 8.03%4||Undergrad & Graduate|
|2.95% – 6.37%2||Undergrad & Graduate|
|2.48% – 6.25%5||Undergrad & Graduate|
|2.72% – 8.32%6||Undergrad & Graduate|