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This Week in Student Loans: January 31

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

American’s Average Spend on Subscription Services Rises 7% from 2017

An analysis from Mint found that Americans spent an average of $640 on digital subscriptions such as video and music streaming, cloud storage, productivity tools, and dating apps in 2019. This is a 7% increase over $598 in 2017.

 

Source: New York Times

 


Average Monthly Student Loan Payments by State

Ever wonder how much the average monthly student loan payment is in your state? Yahoo Finance is providing that information via a study from Truebill. The article reveals that the average monthly student loan payment varies heavily based on region, with the Northeast states making the highest monthly student loan payments.

 

Source: Yahoo Finance

 


DOE Simplifies Process for Public Service Loan Forgiveness

The Department of Education revealed Thursday that they will simplify the process for borrowers to apply for an expansion of the Public Service Loan Forgiveness Program (PSLF). The change comes after much controversy over the revelation that 71% of denials were “essentially due to a paperwork technicality,” the article states.

 

Source: NPR

 


Young Americans Avoiding Marriage Until Student Loans Are Paid Off

A survey of 1,037 college adults in the U.S. found that one third of individuals 18-34 said they might postpone marriage, or have already done so, until their student debt it paid off. The survey also found that student debt can affect their choice in a partner, with just over a third of millenials and Gen Z respondents saying that their potential partner’s student or credit debt could affect their choice of a spouse.

 

Source: USA Today

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Student Loan Refinancing Requirements Explained

By Caroline Farhat

 

If you have student loan debt, you probably have thought about ways you can lower your monthly payment or save money over the life of the loan. Maybe you have heard about student loan refinancing, but you are not sure what it entails and how to get started. Read on to learn more about student loan refinancing to see if it’s a good option for you.

 

What is Student Loan Refinancing?

When you refinance student loans, you are borrowing a new loan in order to pay off your old loan(s). Refinancing is possible through your current lender or from another private lender or bank. When you refinance, your new student loan has a new interest rate (presumably lower), a new payment amount, and, if you choose, a new term length. 

 

Some reasons you may want to consider student loan refinancing are:

  1. Consolidate Loans: If you have multiple student loans, you can consolidate them into one new loan for ease of payment. Keeping track of just one loan as opposed to multiple loans can help you remember to make on-time payments and never be stuck paying a late fee.
  2. Lower Interest Rate: If you have a high interest rate and can qualify for a lower interest rate, it may be beneficial to refinance so you can save money over the life of the loan and lower your monthly payment.
  3. Lower Monthly Payment: You can refinance your loans to extend the term length of the loan. Although this may cause you to pay more interest over time, if your monthly budget is squeezed and you are finding it hard to make payments, extending the term of the loan can help lower the amount you have to pay each month.
  4. You Have a Variable Rate: If you have a variable interest rate on your student loan and are concerned it could rise, it may be beneficial to refinance to a fixed interest rate. This would eliminate any worries about rising interest rates and will also give you a stable monthly payment to work into your budget each month.

If you want to see your potential savings, check out our Student Loan Refinance Calculator1.

 

Student Loan Refinancing Requirements

For many borrowers, student loan refinancing is a simple way to save their hard-earned money. Before you submit your application, read the below requirements to make sure you qualify.

 

  • Good credit score: In order to refinance, some lenders may require a minimum credit score in the 600s. At ELFI, we require a minimum of 680. The higher your credit score, think 700s or higher, the better chance of scoring a lower interest rate. If your credit score is an issue, you can work on raising it or find a qualified co-signer to apply with you.

*Need tips on increasing your credit score? Check out these credit score boosting strategies.

  • Low debt-to-income ratio: Lenders will want to be sure your income can cover all your debt payments, including your potential new student loan payment. This is determined by calculating your debt-to-income ratio. The lower the ratio the better. Most lenders will look for a ratio of 50% or less to qualify for student loan refinancing. The debt considered includes mortgage, credit card, and auto loans.
  • For example: if you have a $1,200 mortgage payment, $300 car loan payment, and $400 student loan debt, your total monthly debt payments are $1,900. If your monthly income is $4,000 your debt-to-income ratio is $1900/$4000 = 47.5%.

 

Related Video >> What is Debt-to-Income Ratio?

 

Note: In addition to a low debt-to-income ratio, some lenders may still require a minimum amount of income.

  • Employment History: Some lenders may refinance your loans while you are still in school but may want to see a written job offer. But most lenders will want to see that you are currently gainfully employed.
  • Minimum loan amount: Some lenders will not be able to help with refinancing if you do not have a minimum loan amount remaining. The minimum loan amount required could be as low as $15,000. 
  • Minimum length of credit history: Lenders want to see a reliable credit history and may require a credit history of a certain number of years, such as 3 years. If you do not meet the credit history requirement, a co-signer with a good credit history and length may be helpful to refinance.
  • Degree requirement: Some lenders will require that you earned a Bachelor’s degree or higher.
  • Required Documents: You will need to be able to provide pay stubs and your most recent W-2, in addition to any other documents lenders request. 

 

Here is a full look at ELFI’s student loan refinancing requirements.

 

What to Look for When Refinancing

There are a lot of choices in companies when you are looking to refinance your student loans. Here are some things to look for when comparing lenders:

  1. No application fees – You do not want to have to pay money to apply for refinancing when you are trying to save. Find a reputable lender with a free application. At ELFI, you won’t pay application or prepayment fees.
  2. A low interest rate – You’re likely refinancing to save money, so of course you want the lowest rate you can qualify for, otherwise you won’t be saving! Just be sure not to get lured in by a suspiciously low rate. Research all aspects of the lender before giving out any of your information.
  3. No prepayment penalty – Be sure your new lender doesn’t apply a penalty if you try to pay your loan off early.
  4. Great customer service – If you have questions during the refinancing process, you want to be able to have them easily answered by someone you can trust. It’s usually a good idea to read customer reviews and see what type of customer assistance opportunities the lender offers. ELFI stands out as a leader in customer service and was even awarded the NerdWallet’s Best Refi for Customer Service in 2019.

 

Bottom Line

Student loan refinancing may be a good choice for you that could save you thousands of dollars over the life of the loan. Now that you know the requirements and what to look for in a lender, you will be better equipped to begin the process and start crushing your student loans.

 


 

1Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Helping Your Child Refinance Their Student Loans

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

As a parent, it can be frustrating to watch your child pay so much toward their student loans each month rather than use their money to buy a home or invest for their futures. One strategy your children can use to accelerate their debt repayment and reach their goals faster is student loan refinancing. With this approach, they can get a lower interest rate and save money over the length of their loan.

 

If they don’t know where to start or how to go about refinancing student loans, there are several ways parents can help.

 

1. Research different lenders

There are dozens of student loan refinancing companies out there, but they’re very different from one another. Help your child find the best lender for them by considering the following factors:

  • Fixed and variable interest rates: Not all lenders offer refinancing loans with fixed and variable interest rates. If your child wants to pay off their debt as quickly as possible, opting for a variable-rate loan can be a smart idea. Variable-rate loans tend to have lower interest rates at first than fixed-rate loans, helping them save money.
  • Competitive rates: The rate your child can qualify for can vary widely from lender to lender. Get quotes from multiple lenders to get the best rate possible. With Education Loan Finance, your child can get a rate quote without affecting their credit score*.
  • Forbearance options: Most student loan refinancing lenders don’t offer forbearance in cases of financial hardship, but there are a few that do. That perk can be a significant benefit if your child loses their job or becomes ill.

 

2. Look up their student loans

To pay for school, your child likely took out several different student loans. Over time, those loans can be transferred and sold, making it easy to lose track of them. To help your child refinance their student loan debt, help them locate their loans and identify their loan servicers.

  • For federal student loans: Have your child log in to the National Student Loan Data System (NSLDS) with their Federal Student Aid (FSA) ID. Once they’re signed in, they can see what federal loans are under their name and who is currently servicing the debt. Remember, the NSLDS contains sensitive information, so make sure your child never shares their FSA ID or other account details.
  • For private student loans: Private student loans won’t show up on the NSLDS. Instead, your child will have to review their credit report to find their loans. They can do so for free at AnnualCreditReport.com. The credit report will list all active accounts under their name, including student loans.

 

3. Create a monthly budget with your child

Even if your child earns a good salary and has excellent future earning potential, it’s a good idea for them to come up with a budget before moving forward with the student loan refinancing process. By seeing how much they have coming in and how much they spend each month, they can better come up with a plan to repay their loans.

 

You can sit down with your child and make a budget together. While you can use paper and pen, your child may find programs like Mint or You Need a Budget — which automatically sync with their financial accounts — more intuitive.

 

Make sure your child considers all of their expenses, including rent, utilities, student loan payments, and extras for entertainment. A portion of the money left over after covering their set expenses can be put toward additional student loan payments, reducing the interest that accrues over the length of the loan.

 

If your child wants to pay off their debt as quickly as possible, there are a few lifestyle changes you can suggest to help them reach their goals: 

  • Get a roommate: While it may not sound glamorous, getting a roommate can cut your child’s living expenses in half. If your child puts the money saved toward their student loan balances, they can cut months or even years off their loan term.
  • Increase income: Boosting income is key to your child’s financial success. If they’ve been working for a while and have been performing well, encourage them to ask for a raise at their next review. Or, they can work additional overtime hours or freelance on the side to earn extra money.
  • Cut back: Review your child’s bank and credit card statements with them and look for areas where your child may be able to cut back. For example, maybe they can skip dining out so often and cook more at home. Over time, the savings can be substantial.

 

4. Show them how to check their credit report

When your child applies for a refinancing loan, the lenders will review their credit report. Before your child submits an application, help them check their credit.

 

Your child can view their credit report from each of the three major credit bureaus — Experian, Equifax, and TransUnion — once a year at AnnualCreditReport.com. Review it alongside your child and look for errors, such as accounts that don’t belong to your child. If there are any issues, help your child dispute them with each credit bureau to improve their credit report.

 

5. Co-sign their student loan refinancing application

If your child recently graduated, they may have insufficient credit to qualify for a student loan refinancing by themselves. If that’s the case, you can help them manage their debt by acting as a co-signer on the loan.

 

As a co-signer, you’re applying for the loan along with your child. If your child can’t keep up with the payments, you’ll be liable for them, instead. Because you share responsibility for the loan, there’s less risk to the lender. Having a co-signer makes it more likely that a lender will approve your child for a loan, and give them a competitive interest rate.

 

Refinancing student loans

Student loan refinancing can be a smart way for your child to tackle their debt. However, recent graduates may not be aware of refinancing or how to proceed. As a parent, you can help your child tackle their debt by walking them through the refinancing process. With your help, they can refinance their education loans and become debt-free years earlier than expected.

 

Looking for more tips as a parent of a college graduate? If you took out student loans in your own name to help pay for your child’s education, parent student loan refinancing can be a smart strategy for you, too. With Education Loan Finance, you can refinance as little as $15,000 in parent loans and have up to 10 years to repay the loan.*

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

FAFSA Deadlines for 2020

Congratulations! You are graduating high school and taking the next step into college. You may have been accepted into different schools and still deciding where you will attend or you have already been admitted into your dream school and are now wondering how you will pay for it. Whether you’re already committed to a school or still planning your future, it’s important to know what the FAFSA is and the deadlines associated with it when you are figuring out how to pay for college.

 

What is the FAFSA?

FAFSA stands for Free Application for Federal Student Aid. You should complete the FAFSA in order to be eligible to receive federal, state financial aid, and aid from your school. The aid can be in the form of grants, scholarships, work study, and federal student loans. The application is easy to complete online or by paper. The application provides the necessary information to calculate your financial need to see what aid you would be eligible for. There are no income limitations so it’s smart to fill out FAFSA regardless of your financial situation. Even if you think you and/or your family may not qualify for financial aid, you will not know for sure until your university’s financial aid office reviews your application.

 

Note: As the name states it is a free application, so be aware of any websites that charge you to fill out the application to avoid any scams!

 

Who Should File the FAFSA?

If you are a senior in high school and will be attending college you should fill out the form. Also, returning college students who previously filled out the FAFSA must fill out the FAFSA every year while in school. The information allows financial aid offices to determine your financial need.

  • Your financial need is determined by taking the Cost of Attendance (COA) and subtracting your Expected Family Contribution (EFC).  COA – EFC = Financial Need.
  • The COA is different for each school and includes tuition, books, supplies, transportation, and room and board.
  • Your EFC is calculated by a formula established by law based on the information provided on the FAFSA. The formula takes into account your family’s income, assets, and family size, among other factors for a dependent student.
  • If your EFC is low you may be eligible for more financial aid.

 

So how does all this work? Here is an example:

  • You plan to attend a school with a COA of $25,000.
  • Your EFC is $10,000.
  • $25,000 – $10,000 = $15,000 is your financial need. This amount could be awarded to you in grants by the school, state or federal grants or by subsidized federal student loans.

 

Preparing to File the FAFSA

Ready to file? Here is the information you will need to complete the application.

  • If you are a dependent student (receiving financial help from parents) you will need the following for both you and your parents:
    • Social Security Number
    • Tax returns
    • Bank statements
  •  You will also need to apply for a FSA ID. This is a username and password that will allow you to access the Federal Student Aid’s system to complete and sign the FAFSA electronically.

 

Important Dates to Know

The earlier you file the FAFSA, the better because you will be eligible for more aid. It is also important to file before the federal deadline because some states set their own deadlines that may be earlier than the federal deadline. Your state may also require an additional form, so be sure to check the Federal Student Aid website to see what your state requires. In addition, some schools have an earlier deadline then the federal deadline so you should check with your school’s financial aid office to ensure that you don’t miss their deadline.

 

The important federal dates to know are:

  • October 1 – the application becomes available
  • June 30 – the deadline to file each year

The application becomes available on October 1, the year before you would start school. While you have until June 30 after the school year to submit the application, it’s advantageous for you to apply as early as possible.

 

This means for the 2019-2020 school year the application became available on October 1, 2018 and the deadline is June 30, 2020. For the 2020-2021 school year the application became available on October 1, 2019 and must be submitted by June 30, 2021. On October 1, 2020 the application for the 2021-2022 school year will become available.

 

Other Options: Private Student Loans and Student Loan Refinancing

Maybe you didn’t know about the financial aid process and the deadline passed or didn’t receive enough aid and are looking to cover the gap in education expenses. Luckily, there are other options to help you pay for school.

 

Private student loans are a great resource to help you pay for higher education. Private student loans are from a private lending company or bank that you can use to pay for your school expenses included in the cost of attendance. You can apply for private student loans at any time. Just like with the FAFSA, you will need to provide some financial information and documents, such as your most recent W-2 and paystub. If you do not have these items you may need a co-signer, such as a parent, who will have these documents.

 

There are many private lenders so it’s best to do your research and compare. You want a lender that is reputable and offers a good rate on your loan. It’s also important to compare the terms of any loan offers. For example, you should check if there is a prepayment penalty on the loan or any fees associated with the loan.

 

A private student loan company should make the process easy. At ELFI there are no fees to apply, no origination fees and no prepayment penalties*. There are also flexible repayment options. The online application is a simple process that allows you to see personal rates within minutes and you receive a dedicated Personal Loan Advisor to help you through the loan process.

 

Private student loan companies can also help if you have already taken out loans. Through student loan refinancing*, you can reduce the interest you are paying on your student loans and as a result, reduce your monthly payments and the amount you pay over the lifetime of the loan. To see how much you could save by refinancing, check out our student loan refinance calculator.

 

Bottom Line

Mark the dates in your calendar and be sure to fill out the FAFSA early. Paying for school can be one less worry if you plan ahead!

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

This Week in Student Loans: January 24

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

A Zero Based Budget Helped This Woman Pay Off $215k Worth of Student Loan Debt in 4 Years

When Cindy Zuniga accomplished a major milestone when she graduated from law school in 2015, however, she also came out with $215,000 in student loan debt. See how she managed to eliminate her debt in just four years by both refinancing her student loans and using a zero based budget.

 

Source: ABC News

 


signing legislation

Court Cites Student Loans As Reason To Deny Bar Admission To New Lawyer

Student loan debt can sometimes be a barrier to obtaining professional licensure, specifically for teachers, doctors, and nurses. For one recent graduate of law school, her student loan debt played a significant role in her being denied a license to practice law.

 

Source: Forbes

 


Student Loan Debt Is a Key Factor for Gen Z When Making Career Decisions

A recent survey found that Gen Z’s concern over student loan debt is a key factor in their career decisions, causing many to prioritize finances over passion when it comes to their fields of study. The study found that an overwhelming 61% of college students would take a job they’re not passionate about due to the pressure to pay off their student loans.

 

Source: Yahoo News

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Current LIBOR Rate Update: January 2020

This blog provides the most current LIBOR rate data as of January 15, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 1 month LIBOR rate is 1.67%. If the lender sets their margin at 3%, your new rate would be 4.67% (1.67% + 3.00%=4.67%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

 

Chart displaying current 1 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 3 month LIBOR rate is 1.84%. If the lender sets their margin at 3%, your new rate would be 4.84% (1.84% + 3.00%=4.84%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

 

Chart displaying current 3 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 3 month LIBOR rate is 1.87%. If the lender sets their margin at 3%, your new rate would be 4.87% (1.87% + 3.00%=4.87%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

 

Chart displaying current 6 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 1 year LIBOR rate is 1.95%. If the lender sets their margin at 3%, your new rate would be 4.95% (1.95% + 3.00%=4.95%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

 

Chart displaying current 1 year LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

How to Use a Pay Raise Responsibly

By Tracey Suhr

 

Getting called into the boss’ office for the first time can feel a little reminiscent of getting called into the principal’s office. You immediately start sweating and wondering what you did wrong. But just like the principal’s office, it’s not always bad news. In fact, sometimes it’s the best news of all: you just got a raise. Congrats! Take yourself out for a celebratory dinner and maybe even splurge on brunch this weekend. But come Monday morning, it’s time to get down to business and determine how to use your raise. 

 

You could just enjoy the extra cash coming into your checking account, yes. But, that little financial angel on your shoulder might also nag you about being smarter with that money. Unfortunately, most high school and college classes don’t teach us how to be responsible with our money. We learn all sorts of questionably-practical information like the Pythagorean Theorem but not how to file taxes or how to use a raise responsibly. 

 

To cover that gap in information, we’re here with three actually practical suggestions to use that raise in a way both your principal and your boss would be proud of. 

 

3 Practical Tips to Use a Raise Responsibly

 

1. Boost Your Retirement Savings

If your employer has a 401(k) plan, you should already be allocating 3–5% of each paycheck toward a retirement account, especially if your employer offers a 401(k) match. This means they’ll contribute as much to your savings as you do, up to a certain amount. Many employers match contributions up to 6% of your salary, and this is, literally, free money. If you contribute 3% of your $50,000 salary, that’s $1,500 a year from you and $1,500 a year from your employer for retirement savings. 

 

When you get a raise, you should adjust your paycheck to dedicate a portion or the full amount of that raise to your 401(k) contributions. This is an easy way to save more without much thought or effort needed. If you do this right away, you don’t get used to the extra money, and you just continue living and paying bills as you did before the raise. 

 

If you’re young, this type of contribution can be especially rewarding because of a concept called compounding interest. This means the interest on your investment earns interest, not just the principal (or original) balance. If you invest $1,500 with a 10% interest rate, your balance would be $3,890 in 10 years. With a simple interest rate that only builds on the initial investment amount, your 10-year balance would be only $3,000. 

 

2. Pay Off Debts

Another savvy way to use your raise is to allocate a portion or the full amount to your debts. This can be credit card debt, student loan debt, or even repaying a personal loan from mom and dad. But debt isn’t necessarily a bad thing. Certain debts like student loans carry low interest rates so when you consider how to use your raise, consider that other accounts or investments with higher interest rates might make or save you more in the long run. For example, if your student loan has an interest rate of just 8%, it makes more sense to pay off a credit card with a 24.5% interest rate or invest in a stock with a 10% return rate. 

 

>> Related: Should I Save or Pay Down Student Loan Debt?

 

3. Allocate the Rest to An Emergency Fund

We alluded to this before, but you don’t have to put all your extra cash in one place. If you get a 5% raise, you can direct 4% toward your student loans and put even 1% in an emergency fund. You should build the emergency fund until you have at least six months of your salary in the account to help you cover bills and general living expenses in case you find yourself suddenly out of work. If six months seems unattainable, aim for at least one or two months to give you four to eight weeks to find work. This emergency fund can also come in handy if unexpected medical bills or car repairs pop up. 

 

If you haven’t been lucky enough to get a raise from your employer, or if you’re looking to boost your savings even more, you can give yourself a raise by refinancing student loans. 

 

If you meet the eligibility requirements, student loan refinancing through companies like ELFI can get you a lower interest rate*, which means you could pay less each month and, subsequently, less over the life of the loan. Use the difference between your previous and current monthly payments as a raise. Then allocate that money to your retirement funds and toward paying off debts. ELFI customers reported saving an average of $272 every month and should see an average of $13,940 in total savings after refinancing student loans with Education Loan Finance.1 That’s a 7.4% raise, which is far above the predicted average 2020 cost-of-living raise of 1.6%. You can refinance both private and federal student loans. 

 

Deciding how to use a raise responsibility is a big decision. Hopefully, with these tips, you can find ways to use those funds in a way that will give you even more play money in the future. The average raise is 4.6%, and with a little knowledge and discipline, you can turn 4.6% into thousands of dollars if you make the right choices on how to use a raise responsibly.

 


 

*Subject to credit approval. Terms and conditions apply.

 

1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 2/7/2020 and 2/21/2020. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

5 Things to Do Immediately After Graduation

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

If you’re in your senior year and preparing for graduation — congratulations! Graduating from college is a huge accomplishment.

 

But after the hat toss, you have to start worrying about things like finding a job. And, if you’re like most college students, you probably have student loan debt to manage, too. As you start preparing for graduation, here are five things you should do to handle your student loans.

 

1. Find Your Loan Details

You likely needed to take out several loans to pay for school. It’s common for graduates to have as many as 12 different student loans when they graduate from college. Worse, your loans can be sold and transferred to different servicers, making it difficult to keep track of your debt.

 

After you graduate, look up all of your student loans and figure out who your loan servicers are, what your monthly payment is, and your due dates.

 

Federal Student Loans

To find your federal loans, use the National Student Loan Data System. Just enter your Federal Student Aid ID and password and you can view all of the federal loans under your name. The site will list your loan servicer and loan balance. Once you have that information, you can go to the loan servicer’s website and create an account and start making payments.

 

Private Student Loans

For private loans, you can identify the different loans and lenders by looking up your credit report at AnnualCreditReport.com, which allows you to get one free credit report per year. Your credit report will show what company currently manages your loan. When you find your loan servicer, you can contact the company directly to find out how to open an online account and make payments.

 

2. Create a Budget

Your student loan payments will likely eat up a significant part of your monthly income, especially when you’re just starting out in your career. To make sure you can afford the payments and your other living expenses, spend some time creating a monthly budget.

 

While you can use software like You Need a Budget (YNAB), you can also make a budget with just a simple pen and paper. List all of your monthly income, including earnings from your job and side gigs. Next, list all of your expenses, such as rent, utilities, internet service, student loan payments, car payments, and insurance.

 

Hopefully, your income exceeds your spending. If that’s not the case, you’ll have to look for areas to cut to give you some more breathing room in your monthly budget. Or, you can boost your income by freelancing or launching a side gig.

 

3. Sign Up for an Income-Driven Repayment Plan

If your starting salary is too low, or if you can’t afford the payments on your federal student loans, consider signing up for an income-driven repayment (IDR) plan.

 

There are four different IDR plans. While the specifics of each plan vary, the general concept is the same: the loan servicer extends your repayment term and caps your monthly payments at a percentage of your discretionary income. Depending on your income and family size, you can dramatically reduce your monthly bill. In fact, some people qualify for payments as low as $0.

 

After 20 to 25 years of making payments, the loan servicer will forgive your remaining loan balance. While the forgiven amount is taxable as income, IDR plan forgiveness can still help you save thousands.

 

You can apply for an IDR plan online.

 

4. Refinance Student Loans

If you have private student loans or a mix of both federal and private loans and want to pay off your debt as quickly as possible, look into student loan refinancing. By working with a private lender to take out a loan for the amount of your existing debt, you could potentially lower your interest rate, helping you save money. Or, you could get a longer repayment term and reduce your monthly payments, making them more affordable.

 

How effective is student loan refinancing? The savings can be significant. According to The Institute for College Access & Success, the average graduate has $29,200 in student loan debt. If you had that much debt with a 10-year repayment term and a 6% interest rate, your monthly payment would be $324. By the end of your loan term, you’d pay a total of $38,902.

 

But if you refinanced your debt and qualified for a 10-year loan at 4% interest, your monthly payment would drop to $296 per month. Over the course of your loan, you’d repay just $35,476. Refinancing your student loans would allow you to save over $3,400.

 

chart showing the difference between refinances student loan and original loan


While there are some drawbacks to refinancing your education debt, refinancing can be a smart way to manage your loans. If you decide that student loan refinancing is right for you, use ELFI’s Student Loan Refinancing Calculator
to get an idea of what your repayment plan could look like. Prequalification is 100% online, free, and won’t affect your credit score*.

 

5. Sign Up for Automatic Payments

Managing your different loans and their various payment due dates can be overwhelming. But missing a payment can hurt your credit, and you could be subject to costly fees and penalties.

 

Signing up for automatic payments is a great way to ensure you never miss a payment and improve your credit history.

 

The Bottom Line

Your college graduation may feel far off, but it’ll be here before you know it. When it comes to preparing for graduation, developing a student loan repayment strategy is essential. By creating a plan now, you can ensure you’re ready to handle your student loan debt when your payments are due.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Minternship: A New Trend for Middle-Aged Adults

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

In decades past, you would enter an industry and then spend your entire working career in the same field, often with the same employer. However, today’s economy is quite different. According to the Bureau of Labor Statistics, people have 12 different jobs over the length of their careers, on average. Not only that, but they also may switch fields during the course of their lives. 

 

In a 2019 Indeed survey, 49 percent of U.S. workers reported a dramatic career change. For example, they may have switched from marketing to engineering, or from teaching to finance. 

 

If you’re feeling burned out in your current field, switching to a new career can help reenergize you. And while switching careers can be challenging, completing a “minternship” — an internship you complete after already starting your career — can help bridge the gap. 

 

What is a Minternship?

In August of 2019, BBC reported on the growing trend of minternships. Many millennial workers, frustrated in their current jobs, are using internships to relaunch their careers or completely switch their professional plans. 

 

You can complete a minternship when you’re already advanced in your career, often when you’re in your 30s, 40s, or 50s. At this age, an internship can help you gain experience and test out a new field. And, it can provide essential networking opportunities so you can land a full-time job once you’re done. 

 

During a minternship, you get hands-on experience in your selected field. You’ll work alongside professionals and learn the ins and outs of the business, completing projects and building your portfolio. Depending on the opportunity, minternships can be part-time or full-time commitments. 

 

Where to Find a Minternship

If a minternship is appealing to you, there are several different ways to find an internship that matches your interests: 

 

  1. Consider returning to school: In some fields, you may need to return to school to complete a certificate program, get an MBA degree, or earn a master’s degree to get a job. Many schools require students to complete internships, and will even help connect you with companies that are hiring. 
  2. Search job boards: Some companies post their internships on job boards like Indeed, Monster, and Internships.com. You can search by location, company, or field to find an opportunity that suits your needs. 
  3. Connect with your network: If you’re switching careers, consider reaching out to your network on LinkedIn or via email to share your goals and ask for help. 
  4. Ask your employer: Some companies — especially large ones — will help facilitate employees’ transitions to a new department. They may provide student loan repayment assistance for employees who go back to school, or they may offer on-the-job training programs. Talk to your human resources department to discuss your options. 

 

How to Prepare for a Minternship

While a minternship can be a great way to gain necessary experience, it may require you to make some lifestyle changes. To take on a minternship and leave your full-time job, you will likely need to adjust to a pay cut. To prepare for that and minimize its impact, follow these steps: 

  1. Explore financial aid: If you’re returning to school and completing a minternship, make sure you apply for financial aid, including grants, scholarships, federal student loans, and private student loans*. You may qualify for aid and loans to cover your living expenses so you can focus on your education and budding career. 
  2. Create a budget: Make a budget detailing how much money you’ll have coming in while you’re interning and how much you’ll spend each month. Account for regular expenses like rent or mortgage payments, utilities, groceries, and transportation. 
  3. Cut expenses: Once your budget is complete, look for areas where you can cut back. Perhaps you can add a roommate while you’re an intern, or you can use public transportation. 
  4. Find additional income sources: As an intern, you may need to be creative about how you earn money. While paid internships are possible, unpaid internships are common in certain fields. If that’s the case, consider launching a side hustle or freelancing or consulting in your old field to earn income. Or, you can take on a part-time job. 
  5. Refinance student loans: To reduce your student loan payments while you’re interning, you can refinance your student loans*. If you extend your repayment term, you could dramatically lower your monthly payments. You may pay more over time in interest thanks to the longer loan term, but it can be worth it to free up more money in your budget each month. 

 

Changing Careers

If your current job no longer excites or challenges you, it may be time for a change. Completing a minternship gives you an opportunity to learn new skills so you can successfully switch fields. While it will take some sacrifices and time to do, finishing a minternship can prepare you for a successful career change. 

 

Do you need to borrow money to pay for school, or do you want to refinance your existing debt to lower your payments? 

 

ELFI offers private student loans and student loan refinancing loans with competitive interest rates. There are no application fees, origination fees, or prepayment penalties. And, it offers a variety of repayment options and loan terms to suit your needs. You can use ELFI’s Student Loan Refinancing Calculator* to get a rate quote without affecting your credit score.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

This Week in Student Loans: January 17

Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

House of representatives

House Democrats Overturn DeVos on Student Loan Forgiveness

This Thursday, the Democrat-controlled House voted to overturn regulations introduced by Education Secretary Betsy Devos that eliminate the “borrower defense” rules introduced by the Obama administration. Critics have said the new regulations make it more difficult to get student loan forgiveness if a college suddenly closes. Sources say that the move to overturn Devos’ new regulations won’t pass the GOP-controlled Senate, however – and Trump is likely to veto the bill even if it does.

 

Source: USA Today

 


signing legislation

Could Elizabeth Warren Really Wipe Out $1 Trillion in Student Loans in a Single Stroke?

Democratic Presidential Candidate Elizabeth Warren recently vowed to eliminate hundreds of billions of dollars in student loans on her first day in office if elected president. Her plan was released just before Tuesday night’s Democratic primary debate. While the ability to erase debt is typically a decision left to Congress, student loans may be a different story due to a loophole involving the “Higher Education Act” passed in 1965.

 

Source: CBS News

 


can't pay student loans

Study: Barely Anyone is Paying Off Their Student Loans

A recent study revealed that very few people are making progress on paying off their student loans, along with shifting factors in the nation’s rising student loan debt. The study found that 51 percent of students who took out loans from 2010-12 haven’t made any progress in paying them off. Additionally, it showed that while in the past higher enrollment and rising tuition costs were the main drivers in the rising debt, slow repayments and amassing interest have now become the primary drivers.

 

Source: NY Daily News

 


IRS building

IRS Issues Tax Guidance On Discharged Student Loans

The Internal Revenue Service recently issued guidance for some taxpayers who took out federal or private student loans and qualified to have their loans discharged. Typically, having loans discharged is treated as a taxable event, in which the forgiven amount is treated as income – but the tax break from the IRS allows the discharged amount to not be recognized as taxable income.

 

Source: Forbes

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.