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Should I Refinance Student Loans in an Economic Downturn?

The COVID-19 outbreak has had a significant impact on the economy, causing many people to lose their jobs and struggle to make ends meet. 

 

By Kat Tretina

 

While the Coronavirus Aid, Relief, and Economic Security (CARES) Act gave some relief to federal student loan borrowers — including suspending loan payments and waiving interest charges for six months — those provisions won’t last forever. Under the current legislation, the CARES Act protections will expire on September 30, 2020

 

If you’re looking for a long-term solution for managing your debt, student loan refinancing is a popular strategy. But does it make sense during an economic downturn? Here’s what to consider. 

 

Should I refinance student loans? 5 questions to ask first

Before moving forward with your refinancing application, ask yourself these five questions. 

 

1. What kind of loans do you have? 

What kind of loans you have will impact what protections and benefits are available to you. 

 

If you have federal student loans, you may be eligible for protections under the CARES Act, meaning your payments are suspended until September 30, and interest charges are waived. 

 

Since you don’t have to make payments and interest isn’t accruing, it may not make sense to refinance right now. Instead, it may be wiser to wait until the CARES Act provisions expire to refinance your debt. 

 

However, not all student loans are eligible for the CARES Act benefits. Private student loans and some federal loans, such as Perkins Loans and commercially-owned FFEL Loans, don’t qualify for payment suspensions or interest waivers. If you have that kind of debt, refinancing right away can help you save money and pay down your loans. 

 

2. How secure is your job? 

During an economic downturn, the job market can become volatile. If you’re at risk of losing your job, it’s important to keep your federal loans where they are so you can take advantage of the CARES Act and federal forbearance and deferment protections. 

 

If you have private loans, refinancing can actually be a good idea. When you refinance, you can move your loans to a new lender that offers more generous repayment options, such as longer repayment terms and financial hardship forbearance. For example, if you are unable to repay your loans because of a financial hardship or medical issue, ELFI may grant you forbearance for up to 12 months. 

 

If your company is relatively secure, you can also encourage your employer to offer student loan repayment assistance to recruit and retain top talent. With ELFI for Business, companies can offer this benefit as part of their compensation packages and take advantage of the tax provisions in the CARES Act that benefit employers. 

 

3. Do you have an emergency fund? 

Refinancing your student loan debt can accelerate your debt repayment. If you make extra payments toward your loans, more of your payment will go toward the principal rather than interest, cutting months or even years off of your loan term. 

 

However, putting extra cash toward your debt during a recession may not be the best course of action. If you don’t have a substantial emergency fund, you’re likely better off stashing your money into a savings account until you have at least three to six months’ worth of expenses saved. 

 

Once you have a fully-funded emergency fund, then you can focus on paying down your debt. 

 

4. Do you have good credit or a cosigner? 

Refinancing rates are rapidly dropping, so you can dramatically reduce your interest rate when you refinance your student loans. 

 

However, to qualify for the lowest rates, you’ll need to have excellent credit. If your credit is less-than-stellar, or if you don’t have an established credit history, you can still qualify for a loan and get a competitive interest rate by adding a cosigner to your loan application. 

 

A cosigner can be a parent, relative, or even a good friend with a good credit score and stable income. They apply for the loan with you and agree to make payments if you fall behind. Because they’re backing you on the loan, there’s less risk to the lender, allowing you to get a lower interest rate than you’d get on your own. 

 

5. What are your goals for refinancing? 

When the economy is in decline, it’s essential that you’re very clear about your financial goals. Before refinancing your debt, think about what you want to accomplish. There are three main benefits of student loan refinancing: 

 

  • You can pay off your debt earlier: With a lower interest rate, more of your payments go toward the principal. If you stay consistent with your payments, you can pay off your student loans ahead of schedule, becoming debt-free sooner. During a recession, not having any debt is a major advantage. 
  • You can save money over the life of your loan: When you refinance your debt and qualify for a lower interest rate, you can save thousands over the length of your repayment term. You can use the money you save to pursue other financial goals, like investing or buying a home. Use the student loan refinance calculator to find out how much you can save.* 
  • You can reduce your minimum monthly payments: If your monthly payments are too high right now, refinancing can make them more manageable. By getting a lower interest rate or extending your repayment term, you can significantly reduce your minimum monthly payment and get more breathing room in your monthly budget. 

 

 

Refinancing your student loans

Even though the country is going through a significant economic crisis, student loan refinancing can still be an effective way to manage your debt in certain situations. Before refinancing, carefully evaluate your situation and what protections are available for your loans to ensure it’s the right decision for you. 

 

If you decide that refinancing makes sense, use the Find My Rate tool to get a rate quote.*

 


 

*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.

A Psychologist’s Guide to Student Loan Refinancing

As the coronavirus outbreak highlighted, trained mental health professionals are essential. It’s no surprise that the Bureau of Labor Statistics reported that the job outlook for psychologists is much higher than the national average for all occupations, as demand for psychologists continues to grow. Becoming a psychologist can ensure you have a secure and rewarding career. 

 

However, most clinical, counseling, and research psychologists need a doctoral degree, so you may need to borrow a lot of money to pay for advanced degrees. According to the American Psychological Association, the expected median debt for psychologists is $110,000. 

 

While you may leave school with a substantial student loan balance, psychologists tend to earn a higher-than-average salary. If you have a lot of student loan debt, you can take advantage of student loan refinancing to manage your loans.  

 

Why refinancing is a good idea for psychologists

To refinance student loans, you apply for a loan from a private lender like Education Loan Finance for the amount of your current loans.* Your new loan will have different terms, including a new interest rate, monthly payment, and repayment term. 

 

While student loan refinancing can be an effective strategy for managing debt for many borrowers, it’s especially useful for psychologists. 

 

According to the American Psychological Association, more than half of psychologists who deliver health services are independent practitioners. If you work in the private sector, such as in a private counseling practice, you’re ineligible for loan forgiveness through Public Service Loan Forgiveness. Since you can’t qualify for loan forgiveness, refinancing your debt can be an alternative way to get some relief. 

 

Psychologist student loan refinance benefits

As a psychologist, there are three main benefits to student loan refinancing:

 

1. Lower your interest rate and save money

To pay for your education, you likely took out several different federal and private loans. While federal loans are touted for their relatively low rates and benefits, federal loans for graduate and professional degrees can have very high interest rates — some as high as 7.08%. When you refinance your debt, you can qualify for a lower interest rate and save money over the life of your loan. 

 

For example, if you had $110,000 in student loans at 7.08% interest and a 10-year repayment term, you’d pay $43,808 in interest charges over the course of your repayment term. 

 

But if you refinanced your loans and qualified for a 10-year loan at 5.5% interest, you’d pay just $33,255 in interest charges. By refinancing your debt, you’d save over $10,500. 

 

Original Loan Refinanced Loan
Loan Balance $110,000 $110,000
Loan Term 10 Years 10 Years
Interest Rate 7.08% 5.5%
Monthly Payment $1,282 $1,194
Total Interest $43,808 $33,255
Total Repaid $153,808 $143,255

2. Pay off your loans earlier

If you refinance and qualify for a lower interest rate, you can also get a smaller monthly payment. But if you keep making the same monthly payment that you had before, you can put more toward the principal. By continuing to pay the same amount that you had before refinancing, you can pay off your loan months or even years ahead of schedule. 

 

3. Reduce your monthly payment

When you refinance your loans, you can qualify for a lower interest rate. But you can also decide to extend your repayment term. Opting for a longer term can allow you to get a lower monthly payment, giving you more breathing room in your budget. 

 

How to refinance your psychologist student loans

Refinancing your loans is very easy; you can complete the process in three simple steps.

 

1. Review your eligibility

Each refinancing lender will have their own requirements, so make sure you meet their criteria before applying. 

 

At ELFI, you must meet the following standards

  • You must be a U.S. citizen or permanent resident
  • You must be the age of majority or older (18 in most states)
  • You must have at least $15,000 in student loans
  • You must earn at least $35,000 per year
  • Your credit score must be 680 or higher
  • Your credit history must be at least 36 months old
  • Your degree must come from an approved post-secondary institution

 

If you don’t meet the requirements on your own, you may be able to qualify for a loan by adding a cosigner to your application.

 

2. Get a rate quote

Before applying, get a rate quote to see what student loan refinance rates are available to you. With ELFI, you can use the Find My Rate tool to get a rate estimate without undergoing a credit check.*

 

3. Complete the online application

Once you find a loan with a rate and terms that work for you, you can submit your loan application online. 

 

To complete the application, you need to have the following documentation handy: 

  • A recent pay stub or proof of employment
  • W-2 from the past tax year
  • Tax return (if self-employed)
  • Government-issued ID (such as a driver’s license)
  • Current loan account information, including account number and loan balance

 

6 alternative student loan repayment options for psychologists

While refinancing can help you manage your debt, it’s not an effective tool for everyone. If you decide that refinancing isn’t right for you, consider these alternative loan repayment options. 

 

1. Income-driven repayment plans

If you have federal student loans, you may be eligible for an income-driven repayment (IDR) plan. With an IDR plan, your loan servicer will extend your repayment term and adjust your monthly payment based on your income. 

 

You can apply for an IDR plan online.

 

2. Public Service Loan Forgiveness

If you have federal loans and work for a non-profit counseling organization, non-profit hospital, or government agency, you could be eligible for PSLF. Under this program, you can qualify for loan forgiveness after making 120 payments while working for an eligible employer for ten years.

 

3. National Health Service Corps Loan Repayment Program

Health service psychologists who work at sites approved by the National Health Service Corps (NHSC) for at least two years are eligible for this program. In exchange for their work, psychologists can receive up to $50,000 in student loan repayment assistance.

 

4. Indian Health Services Loan Repayment Program

Healthcare professionals, including psychologists, who agree to two-year service commitments at facilities that serve American Indian and Alaska Native communities can receive up to $40,000 in student loan repayment assistance through the Indian Health Services Loan Repayment Program.

 

5. State loan repayment assistance programs

Some states offer loan repayment assistance programs to attract and retain trained healthcare professionals. 

 

For example, Delaware operates the State Loan Repayment Program. Health service psychologists can receive up to $60,000 per year in loan repayment assistance in return for a service commitment.

 

To find out if your state has a similar program, visit the Health Resources & Administration website.  

 

Tackling your student loans

For psychologists with high-interest student loans, student loan refinancing can be an effective way to pay down your debt and save money. Not sure if it’s right for you? Use the student loan refinance calculator to find out how much you could save.*

 


 

*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: April 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:

CARES Act Bill

New Student Loan Proposal Helps Borrowers Left Out Of The CARES Act

Rep. Elise Stefanik (R-NY) introduced new congressional legislation that would expand protections for student loan borrowers who do not benefit under the CARES Act. The bi-partisan bill proposal, known as the Equity in Student Loan Relief Act, would make student loan borrowers with Federal Family Education Loan (FFEL) loans eligible for the benefits afforded under the CARES Act.

 

Source: Forbes

 


Government building

Government is Still Garnishing Wages From Student Loan Borrowers

On March 25, the Trump administration announced that during the coronavirus pandemic it would stop garnishing the wages of struggling student loan borrowers. But after a month has passed, there are still borrowers who say they’re not getting their entire paychecks, due to a past-due student loan. Read the CNBC article to learn more.

 

Source: CNBC

 


 parent-and-child-looking-for-financial-aid-options

Student Loan Options for Parents to Fill a College Tuition Gap

Obtaining enough funding to finance college tuition is a challenge that many families face. Filing the FAFSA early can help, however sometimes families still face a gap between the amount of financial aid and loans offered and the cost of attending school. This Yahoo Finance article explains how private student loans may help bridge the gap.

 

Source: Yahoo Finance

 

 

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.

4 Options if Your Student Loans are Ineligible for the CARES Act Protections

If you’re like a lot of recent graduates, you’re living paycheck to paycheck. And chances are, your monthly student loan payments eat up a significant portion of your income. According to the Federal Reserve, the average student loan payment is $393 per month. Any disruption to your paycheck can leave you scrambling to make ends meet, and you could be at risk of defaulting on your loans. 

 

By Kat Tretina

Kat Tretina is a 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.

 

The COVID-19 pandemic has caused many people to lose their jobs or a substantial part of their earnings. If that’s the case for you and you can’t keep up with your student loan payments, the CARES Act could help. However, not all loans are eligible for the CARES Act protections. If you have a student loan that doesn’t qualify for the benefits outlined by the CARES Act, here’s what you can do to manage your debt. 

 

What is the CARES Act?

President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27 and it went into effect immediately. As part of its efforts to bolster the economy, the CARES Act introduced new changes for some student loan borrowers. 

 

From March 13, 2020, until September 30, 2020, the government will completely suspend federal student loan payments, meaning you won’t have to make any payments until October. The payment suspension is automatic, so there’s no need to do anything at all; your loan servicer will adjust your account for you. 

 

In addition, the interest rate on eligible student loans is reduced to 0% until September 30, 2020. During that time, no new interest will accrue on your loans. 

 

Not all student loans qualify for the CARES Act’s protections. You qualify for the payment suspension and interest rate reduction if you have one of the following loan types: 

  • Direct Subsidized or Unsubsidized Loans
  • Direct PLUS Loans, including Parent PLUS Loans and Grad PLUS Loans
  • Direct Consolidation Loans
  • Some FFEL program loans
  • Some Perkins loans

 

However, not all FFEL and Perkins loans are eligible. Only FFEL and Perkins Loans issued by the federal government qualify for the CARES Act’s benefits. If your FFEL or Perkins Loan is owned by a commercial lender or your school, you can’t take advantage of these perks. 

 

If you have private student loans, they don’t fall under the CARES Act at all, and your payments and interest rate will remain the same. Your regularly scheduled payments are still due each month, unless you can make an alternative arrangement with your lender. 

 

4 other options if your loans aren’t eligible for CARES Act

If you have private student loans, FFEL program loans, or Perkins Loans that are ineligible for the CARES Act’s benefits, there are other ways to manage your debt if your income has been affected by the coronavirus pandemic. 

 

1. Apply for administrative forbearance

If you have FFEL Program Loans or Perkins Loans, you may be eligible for an administrative forbearance. With this approach, you can temporarily postpone your payments without becoming delinquent or entering default. 

 

During the forbearance, unpaid interest will capitalize on FFEL program loans, but unpaid interest is never capitalized on Perkins Loans. 

 

Depending on your situation, you could postpone your payments for up to 12 months at a time. 

 

To request a forbearance, contact your loan servicer directly. 

 

2. Consolidate with a Direct Consolidation Loan

Some FFEL Program Loans and Perkins Loans aren’t eligible for the CARES Act benefits, but there is a loophole: you can consolidate your loans with a federal Direct Consolidation Loan. When you do so, your loans will fall under the Direct Loan program and will then be eligible for the CARES Act payment suspension and interest rate reduction. 

 

When the CARES Act’s payment suspension is over, the Direct Consolidation Loan can still be beneficial. With a Direct Consolidation Loan, you can extend your repayment term to 30 years. And, you can apply for an income-driven repayment plan, reducing your monthly payment. It can be a useful alternative if you need long-term financial relief. 

 

You can apply for a Direct Consolidation Loan online

 

3. Consider student loan refinancing

If you have private loans or a mix of federal or private loans, another option is student loan refinancing, where you take out a loan for the amount of your existing debt. The new loan will have different terms, including the interest rate and loan length. 

 

If you can’t afford your current payments, you can choose a longer loan term when you refinance. With a longer term, you may be able to get a much smaller monthly payment. 

 

To get a rate quote and find out how student loan refinancing would affect your payments, use ELFI’s “Find My Rate” tool.* You can get an interest rate estimate and view loan terms without affecting your credit score. 

 

4. Contact your lender

If you have private student loans, make sure you contact your lender as soon as possible if you’re having financial issues. Some lenders offer forbearance and hardship policies to help borrowers get back on their feet. 

 

If you need help with your Education Loan Finance student loans, contact the customer care center by calling 1-844-601-ELFI. 

 

Managing your loans while going through financial difficulties

The coronavirus outbreak has had a major impact on the entire globe, as well as the economy. If you’ve lost your job or had your income cut, there are different ways to get some relief from your student loan payments. If you’re not sure where to start, contact your lender right away and ask what kind of repayment options are available. 

 


 

*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.

Current LIBOR Rate Update: April 2020

This blog provides the most current LIBOR rate data as of April 9, 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 – April 2020

As of Thursday, April 9, 2020, the 1 month LIBOR rate is 0.81%. If the lender sets their margin at 3%, your new rate would be 3.81% (0.81% + 3.00%=3.81%). The chart below displays fluctuations in the 1 month LIBOR rate over time.

 

Chart of 1 Month LIBOR April 2020

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – April 2020

As of Thursday, April 9, 2020, the 3 month LIBOR rate is 1.22%. If the lender sets their margin at 3%, your new rate would be 4.22% (1.22% + 3.00%=4.22%). The chart below displays fluctuations in the 3 month LIBOR rate over time.

 

Chart of 3 Month LIBOR April 2020

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – April 2020

As of Thursday, April 9, 2020, the 6 month LIBOR rate is 1.23%%. If the lender sets their margin at 3%, your new rate would be 4.23% (1.23% + 3.00%=4.23%). The chart below displays fluctuations in the 6 month LIBOR rate over time.

 

Chart of 6 Month LIBOR April 2020

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – April 2020

As of Thursday, April 9, 2020,, the 1 year LIBOR rate is 1.05%. If the lender sets their margin at 3%, your new rate would be 4.05% (1.05% + 3.00%=4.05%). The chart below displays fluctuations in the 1 year LIBOR rate over time.

 

Chart of 1 Year LIBOR April 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.

Important Details on Employer Student Loan Assistance Programs

For student loan borrowers whose incomes have been affected by the coronavirus pandemic, the new CARES Act promises some much-needed relief. But beyond benefits like payment suspensions and interest waivers, the CARES Act delivers additional help in the form of employer-offered student loan benefits.

 

By Kat Tretina

Kat Tretina is a 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.

 

For companies looking to attract top talent, it makes sense to pay attention to issues that affect employees’ lives. For young workers, one of the most significant problems is student loans. According to the Brookings Institute, over 42 million Americans have student debt.

 

To stand out from other employers, offering student loan repayment assistance is a desirable benefit. In fact, one survey found that 60% of adults with student loans said they would think about switching to an employer that offers student loan repayment aid. Now, thanks to the CARES Act, employers can take advantage of tax breaks to help their employees deal with their debt during this difficult time.

 

Challenges in Hiring

In the Society for Human Resources Management’s 2019 State of the Workplace report, the organization found that companies struggled to find workers to fill high-skilled positions. Employers in different sectors are experiencing a talent shortage, unable to find workers with specialized education and experience.

 

The industries hardest hit by this phenomenon are healthcare and technology, particularly in data analysis, science, and engineering.

 

The biggest reason companies said they struggled to hire suitable candidates? Competition from other employers. With a limited pool of skilled workers, companies have to work hard to stand out from other employers to get the best employees.

 

For skilled workers with student loan debt, one way employers can improve their compensation package is by offering student loan repayment assistance. And thanks to the CARES Act, that’s easier than ever for employers.

 

What is the CARES Act?

The COVID-19 virus pandemic devastated the United States’ economy, causing millions of people to lose their jobs or to experience reductions in income. With so many people struggling to make ends meet, the government created the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide economic assistance.

 

On March 27, 2020, President Trump signed the CARES Act into law. As part of the CARES Act, the following changes were made:

    • Stimulus checks up to $1,200: Individuals will receive up to $1,200 based on their 2019 tax returns, if they have already filed their returns. If not, the amount of the check will be based on their 2018 tax returns.
    • Extended unemployment protection: Eligible workers who are now unemployed can receive an additional $600 per week for up to four months.
    • Waivers of penalties for early withdrawals from retirement accounts: If people tap into their retirement accounts to make ends meet, the 10% early withdrawal penalty is waived. 
    • Federal student loan payments suspended until September 30, 2020: Federal student loan payments on Direct loans and federally-held FFEL loans and Perkins Loans are suspended for six months. During that time, no interest will accrue on the loan, and borrowers will still get payment credits toward loan forgiveness and loan rehabilitation programs.

 

How Does the CARES Act Affect Employer Student Debt Programs?

However, another benefit that is commonly overlooked is the expansion of employer student loan repayment assistance programs. 

 

Under the CARES Act, employers can contribute up to $5,250 toward an employee’s student loans from March 27 until December 31, 2020, and the payment is excluded from the employee’s income. It is also tax-free for the employer, since it’s not subject to payroll taxes up to the contribution threshold.

 

The CARES Act amended the tax code to incorporate provisions of yet-to-be-passed Employer Participation in Repayment Act, allowing employers to pay off up to $5,250 of an employee’s debt tax-free.

 

Currently, approximately eight percent of employers offer student loan repayment assistance and can take advantage of this benefit. However, it’s available to more companies if they wish to use it.

 

Previously, the tax treatment of employer student loan repayment assistance programs created a burden on both employees and companies, so this is a substantial benefit that may encourage more employers to offer this perk to their workers.

 

ELFI for Business

If you are a business owner or a human resources manager looking to improve your recruitment and retention efforts, offering student loan repayment benefits can be a powerful tool. If the idea of building your own program seems overwhelming, consider taking advantage of the ELFI for Business program.

 

The ELFI for Business program is designed to help employers recruit and retain top talent. In one survey, 86% of workers reported that they would commit to an employer for five years if they received help with their student loan payments. And, three in five survey respondents said paying off student loans is a priority over saving for retirement.

 

Employer contributions can make a dramatic difference on your employees’ debt. For example, let’s say your employee had $30,000 in student loans at 6% interest and a 10-year repayment term. If you contributed $100 per month toward the loan’s repayment, the repayment term would be reduced by three years. And, the employee would save $11,363.

 

ELFI for Business also gives your employees other tools to manage their debt, including:

  • Newsletters
  • New hire onboarding booklets
  • Webinars
  • Onsite consultations

 

Customized Student Loan Refinancing Advice

Employers that participate in the ELFI for Business program will also have access to loan advisors to help employees considering student loan refinancing.*

 

If your employees have student loans with high interest rates, refinancing can help them reduce their rate and save money over the length of their loan. And, by lowering their interest rate, more of their payment will go toward their principal instead of interest charges, so they can get out of debt faster.

 

ELFI customers have reported that they are saving an average of $272 every month and should see an average of $13,940 in total savings after refinancing their student loans1. When combined with employer contributions, refinancing can be an effective tool to pay off student loan debt.

 

Helping Employees During COVID-19

During these difficult times when so many are reeling from the coronavirus outbreak, offering benefits like student loan repayment assistance can make a major impact on your employees’ lives. Not only can it help recruit and retain good employees, but it can also build your company’s reputation and brand.

 

If you’re interested in introducing student loan repayment benefits in your workplace, contact ELFI for Business.

 


 

*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.

 

I’ve Been Denied for Student Loan Refinancing, Now What?

Did you apply for student loan refinancing and get denied? First, don’t panic! You may still be able to reap the benefits of student loan refinancing in the future. Here is what you can do now to set yourself up for future success.

 

By Caroline Farhat

 

Find Out Why You Were Denied

It’s important to find out why your application was denied so that you can know what to do differently in the future. Did you not meet the minimum required credit score? Was your credit history length not long enough? While each student loan refinancing provider has its own specific criteria, there are some general requirements that are common among nearly all of them. 

 

Most lenders require:

  • A minimum credit score in the 600s
  • A debt-to-income ratio of 50% or less
  • A credit history of at least 3 years. 
  • Some providers want to see verification of employment, while others will allow refinancing while you are in school.  

 

At ELFI the requirements for refinancing include: 

  • A minimum credit score of 680
  • A minimum credit history of 36 months
  • A minimum income of $35,000
  • Check here to see the full list of eligibility requirements for student loan refinancing.

 

1. Fix the Problem 

After you have been turned down for refinancing, it is a good idea to obtain your free credit report to get an idea of any negative credit history you have. Once you have obtained your credit report, be on the lookout for any suspicious items or mistakes (they do happen!) and look for areas where you can improve. For example, if your credit utilization rate is always around 50%, you will want to work to lower that to 30% or less. 

 

If you were denied because your credit score was too low or you have a negative credit history, having a cosigner apply with you may allow you to meet the minimum requirements.

 

Need help improving your credit score? Here’s our full guide on how to get a winning credit score.

 

2. Side Hustle in the Meantime

If you need to take time to improve your credit score before applying to refinance again, try starting a side hustle. A side hustle could be a part-time job at a retail store, babysitting, selling items that you make, or anything in between. The extra money you earn from your side hustle could make your current student loan payments more manageable in the meantime. 

 

In addition, the extra income may help in meeting the refinancing qualifications in a few ways: 

  • If you did not have the minimum income with your day job, extra income can help you satisfy that requirement.  
  • Extra income will improve your debt-to-income ratio. The debt-to-income ratio is calculated by adding all your monthly debt obligations, including car payment, student loan payment, and mortgage payment and dividing the total payments by your income. For example: if your total monthly debt payments are $1,800 and your income from your job is $3,500 your debt-to-income ratio is 51%. If you are able to earn an extra $200 per month from your side hustle, your income would increase to $3,700 and your debt-to-income ratio would drop to 49%, which would allow you to meet the general requirement of a ratio under 50% for most lenders. 
  • The extra income will allow you to pay other debt down faster, which is another way you can lower your debt-to-income ratio. 

 

3. Wait and Apply Again 

If you figured out why you were denied and it is a credit problem you can improve, it’s a good idea to wait and apply again after you have raised your score. Refinancing student loans is a smart decision for a lot of people because of the amount you can save on your monthly payment and in the amount of interest over the life of the loan. 

 

For example: If your student loan debt is $75,000 with a 7% interest rate and 10 years remaining on the loan, if you refinance and qualify for a 4.99% interest rate with the same 10-year loan you could save up to $76 per month and $9,083 in interest over the 10 years. 

 

Clearly, refinancing can be incredibly advantageous. To get an estimate of how much you could save check out our Student Loan Refinance Calculator.* 

 

4. Apply Around

 

Since companies set their own requirements for refinancing, one denial does not mean that all companies will deny you. However, before you go on an application spree, keep these things in mind: 

  • Applying too often could negatively impact your credit score. Each time a lender processes your application and requests your credit report this can lower your score. Tip: If you apply to multiple lenders in a small time frame, the requests for your credit report may only count as one request and therefore affect your score less.  
  • Find a reputable company. You want to be sure that the lender you are applying with is well established, has good reviews and makes the process easy. At ELFI we pride ourselves on great customer service and making the refinancing process simple.* When you refinance, you are assigned a personal loan advisor that walks you through the process and is available to answer your questions. 
  • Waiting to apply with a higher credit score could save you more money. If a low credit score is holding you back, it may actually work in your favor to improve your financial situation before applying again. By doing so, you will likely qualify for a lower interest rate and save more money. With that said, if you’re eager to refinance now and are approved by a reputable lender, you can always refinance your student loans again if it is financially beneficial. 

 

Bottom Line

Just because you have been turned down for student loan refinancing doesn’t mean you will never be able to refinance your student loans. With these options in mind, you can plan out your best course of action so that you can qualify in the future.

 


 

*Subject to credit approval. Terms and conditions apply.

Tax Deadline Extended Until July: How This Affects You

The deadline to file your taxes rolls around every year on or about April 15. If you fall into the group of individuals who wait until the deadline to file, you may be relieved to hear that the tax deadline has been extended this year. Read on to see when the new deadline is and how this extension affects you, whether you like to file early or later. 

 

By Caroline Farhat

 

Tax Deadline Extended

Due to the COVID-19 pandemic currently affecting the United States, the tax deadline to file and pay your 2019 federal income taxes is extended to July 15, 2020. It’s important to note that this is for both filing and paying. Originally the IRS announced the deadline extension was only for payments due, but now it includes filing. This is an extra three months to file federal taxes only. The extension until July 15 is automatic and you do not need to file anything to take advantage of it. If you will owe money you will not incur any interest or penalties until after the July 15 deadline. 

 

If you live in a state with state income tax you will need to verify the deadline for state income tax returns with your state. A majority of the states have extended their deadlines to match the federal deadline, however some are sooner. Check with your state’s Department of Revenue to verify the deadline. 

 

How the Tax Deadline Extension Affects You 

Longer Time to File

Are you a healthcare worker who is spending extra hours at work and you do not have the time to focus on filing taxes? Or maybe you are working from home and juggling homeschooling your children during this pandemic. Now that the deadline has been extended you have extra time to gather all the documents you need to file your taxes and take the time to complete the filing. Tip: To make gathering documents less of a pain next year, label a folder Taxes and the year and stick any receipts and tax documents you receive throughout the year in it.  

 

The extension is also beneficial for many people who use tax services to complete their returns. It’s estimated that 37% of filers use a tax preparer to file their taxes. If you are not able to leave your home, it may not be possible at this time to meet with a tax preparer to complete your return. This extension will allow you to meet with a tax preparer at a more appropriate time.  

 

Longer Time to Pay

If you think you will owe taxes, you will have a longer time to pay. For people that may be unemployed at this time or receiving reduced income, this is a major benefit. But if you expect to receive a refund, try to file earlier so you can collect the money you are owed. If you file electronically you can expect your refund within 3 weeks. Note: Any tax refund owed to you is different from the government stimulus check eligible individuals are expected to receive in 2020. 

 

Extension Still Allowed

In any given tax year you can file for an extension to file your taxes later. This still applies in 2020 for the 2019 tax year even though the tax deadline has been extended. You must file for an extension by July 15, 2020 and then you would be able to file your tax return by October 15, 2020. However, this does not give you additional time to pay. In order to get the extension, you must estimate any amount of taxes you owe and pay them by July 15. Failing to pay the estimated taxes could result in penalties.

 

Extra Time to Save

IRA and Health Savings Accounts have maximum contribution amounts each year. The deadline to have contributions count for the previous year is normally April 15. However, since the tax deadline has been extended, the deadline to save in these accounts has been extended as well to July 15. So if you have the goal to max out your account each year, but did not quite make it for 2019 the extension allows you to use the extra time to save up to the maximum amount. 

 

For example, the 2019 contribution limits for IRAs is $6,000 if you are under 50 years of age and $7,000 if you are over 50 years old. If you are under the age of 50 and have only saved $5,000 in your IRA in 2019, you can contribute an extra $1,000 by July 15 and add it as a contribution for 2019. This would allow you to still add up to the maximum amount for 2020 in your IRA as well. Note: Just make sure when you are making a contribution for 2019 that it is marked as a contribution for that year. You can do this through an online portal or by calling your plan administrator. 

 

Self-Employment Taxes

If you are self-employed or have a side hustle as a freelancer you should be used to paying estimated quarterly taxes. This is when you send tax payments in quarterly for income that does not have taxes withheld. It may come as a nice benefit this year that the deadline for estimated quarterly taxes has also been extended. The deadline for the first quarter, normally due on April 15 is now extended to July 15, 2020. The deadline for the second quarter, normally due on June 15 is also extended to July 15.

 

Bottom Line

Although the deadline to file federal income taxes has been extended, if you are expecting a refund it may be more advantageous to file earlier so you can receive the money that is due to you. The sooner you get the money, the sooner you can use it to pay down your student loan debt or pad your emergency fund. No matter when you decide to file, just remember you must file a return or request for extension by July 15, 2020!

 


 

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.

8 Legitimate Work-From-Home Jobs

With the recent happenings surrounding the COVID-19 pandemic, many of us are either working from home or staying at home for a greater portion of our time due to stay-at-home orders or to practice social distancing. Unfortunately, some of us may be out of a job altogether. Spending this unusual amount of time at home may have you starting to wonder whether you’d like to actually work from home full-time or part-time. 

 

By Caroline Farhat

 

Working from home comes with some great benefits, but it may not be for everyone. We’ve outlined some of the benefits and things you should know before making the leap. Sold on getting a work-from-home job? Keep reading to find out how you can snag one that you’ll love.

 

Is Working from Home Right for You?

Before you start looking at work-from-home jobs, you need to decide if skipping office life and working from home is right for you. You may like working from home if:

  1. You are self-motivated – When you are working from home it’s up to you to get the work done in a timely manner. Sure, you may have the occasional video conference meeting or phone call, but in general, there is nobody looking over your shoulder to check that you are completing the work. 
  2. You can stay focused – Of course, office life comes with distractions. We all know that one coworker that turns a 5-minute coffee break into a 20 minute one. But at home, there may be even more time-sucking distractions. Pets, household chores, and your Netflix account may be some of the distractions you would have to contend with and overcome to stay focused on work.  
  3. Working alone doesn’t bother you – Just as co-workers can serve as a distraction, they can also be built-in friendships. Would the camaraderie be something you miss or do you work better alone? If working alone sounds a bit lonely, working from home may not be the right fit for you.  
  4. You are organized – Working from home requires you to stay on top of deadlines and work tasks in a non-traditional office environment. If you prefer being managed closely on a day-to-day basis, working from home may have a learning curve.

 

The Benefits of Working from Home

  1. No commute – The average American spends a little over four hours per week commuting to work. In many major cities across the country, that number is much higher. Still, even four hours is a sizable chunk of time and can be better spent on yourself or with your family. 
  2. Office attire is more relaxed – Although it may help your productivity to change out of your pajamas, your attire can likely be more relaxed than if you were in an office. If you have video conferencing calls, just be sure to dress appropriately. 
  3. Save money – By working from home, you may be less tempted to go out for lunch or stop for daily morning coffee. Depending on how often you go out, that could mean over $200 in savings each month. Plus, you will also save on your commuting costs, whether that is gas or public transportation.

 

Legitimate Work-From-Home Jobs

Ready to start your work-from-home job hunt? Here are some of the best work-from-home jobs to consider:

 

1. Website or App Tester

Although this job may not provide a full-time income, it’s a great way to earn extra money on the side. For these types of jobs, you will be testing a website or application and providing feedback on it. For example, you might be required to complete certain tasks on the site. One company that has these types of jobs is UserTesting

 

2. Virtual Call Centers

With call center jobs, you may be considered an employee or contractor depending on the company. Most will require certain equipment, like a dedicated phone line and minimum internet speed. A call center job will require you to interact with customers by phone or possibly online chat to help fix problems they may have or answer questions. Some companies that often have openings for virtual call center jobs are: Alorica@Home and Liveops.  

 

3. Freelance Writing

As the title suggests, freelance writing is a contract position where you will be writing for all sorts of different mediums, from blogs to magazines. If you like writing, freelance work can be a great job for you and has unlimited income potential. A great resource to find freelance writing opportunities is FreelanceWriting

 

4. Teach English Online

Have a knack for teaching kids? If you have a patient and upbeat personality, you may enjoy teaching English online. Some companies do not require teaching experience but do require a college degree. The major ones to apply to are: VIPKID and Qkids.  

 

5. Amazon

The retail giant has a vast array of remote jobs from Human Resources to Software Development. Some positions require you to live in certain cities, so read the requirements closely. Check out the listings to see if any would be a good fit. 

 

6. Data Entry

These types of jobs can be good for beginners, although the pay is not high. Data entry can include transcribing audio files or entering data into a system. One site with different opportunities is Clickworker.   

 

7. Insurance

The industry has a number of remote jobs that would make great careers, including sales and underwriting. Two major health companies offering work from home positions include Humana and Aetna.  

 

8. Virtual Assistant

Are you organized, a team player and like assisting others? Being a virtual assistant may be a great fit for you. A VA can help bloggers with their sites or help companies in an assistant role. A great place to look for VA work is on Boldly. With Boldly, you are considered an employee of theirs and do work for companies looking for assistants.  

 

If you aren’t sure what industry you would be interested in working for there are some resources that provide legitimate work from home job listings. Check out KellyServices or Indeed to see all the work from home positions.  

 

Tip: Remember there are work-from-home job scams. Be aware of any “jobs” that require you to buy anything or that sound too good to be true. 

 

If you are dealing with student loan debt but don’t think working from home is right for you, there are other ways you can tackle your student debt. Student loan refinancing is one great option because it can help you save money on your monthly payment, as well as the overall loan amount. Curious how much you can save? Use our student loan refinancing calculator to find out how student loan refinancing can help in your unique situation.*

 


 

*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.

The Best Ways to Use Your 2020 Stimulus Check

Have you heard about the government stimulus check coming in 2020? Do you know how much money you expect to receive? Maybe you already have some ideas of how you can use the money. When you get newfound money, you should always consider the best ways you can spend so that it will pay off for you now and in the future. Here are a few tips for how to spend your 2020 stimulus check. 

 

By Caroline Farhat

 

What is the Stimulus Check?

The COVID-19 pandemic has caused a major financial impact. Experts say we’re heading towards a recession, if not already experiencing one. In an effort to stabilize the economy, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March. This provides, among other benefits, a stimulus check. Here is the information you need to know about the government stimulus check: 

 

Who will receive a check?

  • Eligible adults earning up to $75,000 will receive a check for $1,200. 
  • Couples earning up to $150,000 will receive $2,400.
  • Families will receive $500 for each child under the age of 17, if they meet the income requirements.
  • The check amount is reduced for earners making over $75,000 and disappears completely for individuals earning $99,000 or more. 
  • For couples earning between $150,000 to $197,000, they will receive a reduced amount. Couples earning $198,000 or more will not receive a check. 

 

What income is this based on?

  • The income thresholds to determine eligibility for the stimulus check is based on your 2019 adjusted gross income, or 2018 if you have not yet filed your 2019 taxes. 
  • When can you expect the money?
  • Although it is technically called a check, if the IRS has your banking information from your tax return, you may receive a direct deposit as early as mid-April 2020. However, if a paper check has to be mailed, you may not receive the money until May or later. As of April 13, 2020, the IRS is preparing to provide a tool on their website to track the status of your stimulus check. 

 

The Best Ways to Use Your Stimulus Check

Once you receive the money, here are some of the best ways to use it to help you financially:

 

1. Pay bills

A Pew Research Center study predicts 38.1 million U.S. workers are working in an industry that will most likely feel an immediate impact from the pandemic, including layoffs or reduced hours. If you have been laid off or if you’re uncertain how your job may be impacted, it is time to look at your emergency fund to examine how many months of basic living expenses you have saved. If you do not have an emergency fund, you should use the stimulus money for your basic living expenses, including rent or mortgage, food, or necessary household items.

 

2. Start or Add to Your Emergency Fund 

If your job is safe from layoffs and you have a healthy stream of income still coming in, you should consider using the stimulus money to start or add to your emergency fund. Financial experts suggest it’s best to have six to eight months of living expenses in your emergency fund. It can come in handy if you are dealing with a sudden job loss or an unexpected expense, like a car repair. To determine the amount you need for your emergency fund, do the following:

  1. Add up your living expenses for a month, including your mortgage or rent, car payment, money for food and gas, and any other necessary monthly expenses you pay.
  2. Multiply your monthly amount by 6 (or 8 if you’d like to aim higher).

 

For example, if your monthly expenses are $3,500 and you want to save a six month emergency fund, you will need to save $21,000 in a savings account. The stimulus check you receive can be a great foundation for a healthy emergency fund. 

 

3. Pay Down Debt

If you feel secure in your job and have an emergency fund, using your check to pay down debt may be a wise option for you. Look to see what debts have the highest interest rates and tackle those first. If you have student loan debt, research whether refinancing your student loans makes financial sense for you. In many cases, you may be able to lock in a lower interest rate and save on your monthly payment, as well as the total amount you spend on the loan. To see what you may be able to save, check out our student loan refinance calculator.* Lowering your expenses, especially in this uncertain economic time, is always a good financial decision. 

 

4. Invest

If you have a stable paycheck, a strong emergency fund, and no debt or at least a plan to tackle your debt, spending some of your check on investing in a retirement account is not a bad idea. Stock prices are low so your money will go further if you invest now. Note: This option is only recommended if you are able to live without the money you invest for many years.  

 

5. Donate and Support Local Businesses

If you are in a good financial situation with a stable paycheck and have the ability to help, think about donating some or all of your government stimulus check. You can donate to charities that are helping others that have been negatively impacted during this pandemic. Tip: Be sure to verify the charity is legitimate as unfortunately scams do happen! Another great use is to support local businesses in your neighborhood. Use some of the money to order takeout from local restaurants that are undergoing a large economic loss. Or consider buying gift cards from local stores or restaurants that may not be open at this time.

 

The government stimulus check may be helpful during this difficult time to help pay basic necessities or start you on a good financial path. Use your check for one or more of these uses and a brighter future will be 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.