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Student Loan Refinancing

5 Common Questions About Student Loan Refinancing

September 22, 2019

Deciding to refinance your student loans is a big step in your financial journey. As with any big step, there are often questions that arise. We’re sharing some of the most common questions our Personal Loan Advisors hear from borrowers looking to refinance their student loans. 

1. Will my refinanced student loan have a variable or fixed interest rate?

Either! Education Loan Finance offers both fixed and variable interest rates, giving you the freedom to choose.  Fixed interest rates will not change from year to year, but variable interest rates will fluctuate based on the LIBOR index and may increase or decrease over the life of the loan. Read our blog about variable and fixed interest rates to learn more.  

2. How long will the application process take?

You’ll be done before you know it! The application process is quick and easy. After providing some information about yourself and your student loans, you’ll upload documents and submit the application. If you refinance your student loans with ELFI, you’ll receive a Personal Loan Advisor who will be your point of contact throughout the process – one person who’ll be with you step-by-step.

3. Can I consolidate both federal and private student loans?

Yes! ELFI allows you to consolidate federal student loans as well as private student loans from multiple lenders. As long as they are student loans, ELFI can consolidate them. However, only student loan debt can be consolidated – no other consumer debt, such as credit card, auto, or mortgage can be included, even if it was used to pay education expenses. 

4. Can I consolidate my student loans with my spouse’s student loans?

While spouses are eligible to serve as a cosigner on an application, we cannot consolidate student loan debt among multiple borrowers – even if they are hitched! 

5. Will the application process affect my credit score?

We’ll run a “soft credit inquiry” during the pre-qualification phase of refinancing in order to provide you with preliminary rates that you may qualify for. A Soft credit inquiry won’t affect your credit score. However, once you choose your loan product and submit your application, we’ll need to view your full credit report – this will show up as a hard credit inquiry. These inquiries are common among student loan refinancing lenders.

 

Hopefully this short Q&A gave you some helpful insight about what to expect when refinancing your student loans. If you have questions about the student loan refinancing process, you can check out our full list of frequently asked questions or contact ELFI at 1-844-601-3534 to speak with a Personal Loan Advisor. 

 

Learn More About Student Loan Refinancing

 

 

Subject to credit approval. Terms & Conditions apply.

 

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young woman researching student loan refinancing requirements
2020-08-03
Income, Credit Score, and Credit History: Which is Keeping You From Refinancing?

If your goal is to become debt-free as quickly as possible, student loan refinancing can be a powerful tool for managing your loans. ELFI customers reported that they save an average of $272 per month, and should see an average of $13,940 in total savings after refinancing their loans with Education Loan Finance.1   By Kat Tretina   Unfortunately, not everyone qualifies for refinancing the first time they apply. When you submit your loan application, refinancing lenders look at your income, credit score, and credit history to determine whether to issue you a loan. If you don’t meet their requirements in just one area, the lenders will deny your application.    If you aren’t quite eligible for refinancing quite yet, here’s what you can do to improve your application so you can get approved in a few months — and qualify for a lower interest rate.  

Student Loan Refinancing Requirements

Borrower requirements can vary from lender to lender, and some lenders are very vague about their refinancing criteria. However, ELFI is different and has transparent eligibility guidelines.    To qualify for student loan refinancing with ELFI, you must meet the following
student loan refinancing* requirements:
    • You must be a U.S. citizen or permanent resident
    • You must be the age of majority or older 
    • You must have at least $15,000 in student loans to refinance
    • You must have a bachelor’s degree or higher
    • You must have a minimum income of $35,000
    • You must have a minimum credit score of 680
    • You must have a minimum credit history of 36 months
    • Your degree must come from an approved post-secondary institution and program of study
 

Tips for Improving Credit Score

ELFI’s minimum credit score for refinancing applicants is 680. If your score is less than that, you’re not alone. According to Experian, about 33% of Americans have a credit score under 670. However, that doesn’t mean you’re stuck with a poor credit score. By making some changes, you can boost your credit.    To improve your score, use these tips:   
  • Make all of your monthly payments on time: Your payment history makes up 35% of your credit score. To raise your credit, pay all of your bills and minimum loan payments on time. When possible, sign up for automatic payments to minimize the risk of missing payments. 
  • Sign up for Experian Boost: Experian Boost is a free service you can use to get credit for your cell phone and utility payments. On average, users who sign up improve their credit scores by 13 points. 
  • Keep your credit card balances low: Your credit utilization — or how much of your available debt you use — accounts for 30% of your credit score. Pay down existing debt and use your credit cards sparingly to bring up your score. 
  • Don’t open new credit accounts: Every time you open up new accounts, your credit score will drop. New credit makes up 10% of your credit score, so only open up a new account when you really need it. 
  • Review your credit report and dispute errors: Review your credit report for free at AnnualCreditReport.com and look for errors, such as fraudulent accounts opened under your name. If you see any issues, dispute them with the credit bureaus and have them removed from your credit report. 
   

How to Increase Income

If you’re a recent college graduate, your income may be less than the minimum required for student loan refinancing. To boost your earnings, consider these strategies:   
  • Ask for a raise: If you’ve been at your job for over a year or more and have done good work and received positive feedback, it may be time to ask for a raise. The average raise is 3.3%, which could give you the additional income you need to qualify for a loan. 
  • Learn new skills: If a raise isn’t possible due to the economy or because your company isn’t performing well, try to learn new skills that would allow you to secure a promotion or a new position at another company. 
  • Take on consulting work: If you have some extra time, consult or freelance on a part-time basis for additional income. For example, you could lend your social media expertise to startups, design marketing plans for entrepreneurs, or do graphic design work for local businesses. 
   

How to Build Credit History

If you don’t have a lengthy credit history, it can be difficult to qualify for a loan. To start building your credit history, follow these steps:   
  • Ask a friend or relative to add you as an authorized user to their credit card account: If you have a parent, relative, or friend with good to excellent credit, ask them if they will add you as an authorized user to their credit card account. When you become an authorized user, you get access to their credit history and credit line, instantly lengthening your own credit history. Just make sure you set guidelines on how the credit card should be used and how you’ll repay them for any purchases. 
  • Apply for a credit builder loan: With credit builder loans, you take out a loan, and it’s held for you in a savings account. You make payments toward the loan each month. After the loan is paid off, the lender releases the money to you, so it can help you build your savings, as well. Many financial institutions offer credit builder loans.
  • Open a secured credit card account: Without an established credit history, you may not qualify for a traditional credit card, but you can get a secured credit card account. With a secured card, you put down a security deposit that serves as your credit limit. As you make payments, your payment history is reported to the credit bureaus, establishing your credit and improving your credit score. 
   

Refinancing Your Student Loans

Improving your credit history, boosting your credit scores, and increasing your income can take time. But within six to 12 months, you can see results and meet ELFI’s refinancing requirements. By refinancing your loans, you can save money and pay off your debt ahead of schedule.    When you’re ready, you can get a rate quote without affecting your credit score.*  
  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.   *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.
woman reading new about student loans
2020-07-31
This Week in Student Loans: July 31, 2020

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:
white house

Trump: Student Loans May Be Suspended For “Additional Periods Of Time”

With a second stimulus package on the way, Trump has stated that student loan suspensions may be extended past the already in place deadline.  

Source: Forbes

 

GOP Coronavirus Relief Proposal

Here’s How the Latest GOP Coronavirus Relief Proposal Would Impact Student Loans

The GOP has released their coronavirus relief proposal, but experts claim that it is largely ineffective in helping student loan borrowers.  

Source: CNBC

 

student loan servicers

What to Know About Changes Coming to Student Loan Servicing

In an attempt to streamline student loan servicing, the US government has signed contracts with five companies to provide customer service and back-office support to federal student loan borrowers.  

Source: U.S. News & World Report

 

man researching whether to refinance student loans

Should You Refinance Student Loans? What to Consider as Legislators Debate New Stimulus Package

Refinancing rates are incredibly low, but due to the second stimulus package not yet being put in place, student loan borrowers are unsure of when the best time to refinance will be.  

Source: Newsweek

  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.

2020-07-30
A Physical Therapist’s Guide to Student Loan Refinancing

As a physical therapist, you play a critical role in people’s lives. You help them manage their pain, improve their range of motion, and recover from serious injuries. It’s a serious profession that requires specialized education, so it’s no wonder that its job outlook is expected to grow much faster than the typical career.    By Kat Tretina   According to the U.S. Bureau of Labor Statistics, physical therapists' median salary is $89,440, far higher than the national median wage for all occupations. However, debt is a major problem for new physical therapists since the field requires advanced degrees and professional licenses.    The American Physical Therapy Association reported that nine out of ten physical therapy graduates have education-related debt, with an average balance of $116,000. Graduate and professional degree loans tend to have high interest rates. But since you have a higher-than-average income, you’re a prime candidate for student loan refinancing.   

Why student loan refinancing makes sense for physical therapists

While student loan refinancing* can be an effective tool for managing debt for many borrowers, it can be especially useful for physical therapists for the following reasons.   

1. You may not qualify for loan forgiveness

With Public Service Loan Forgiveness (PSLF), federal loan borrowers can qualify for loan forgiveness if they work for an eligible non-profit for 10 years while making 120 monthly payments under a qualifying payment plan.   While some physical therapists work for non-profit organizations or hospitals, many choose to work in private practice because it may offer more earning potential.    If you work for a private practice, you aren’t eligible for PSLF. Refinancing your loans would cause you to lose your eligibility for PSLF, but if you’re in private practice and ineligible for it anyway, that’s not a drawback you have to consider.   

2. You likely had to take out private student loans

With such an expensive degree, you likely hit the borrowing cap on Direct Unsubsidized Loans and had to take out PLUS Loans, which have higher interest rates, or you used private student loans to finance your education.    With private loans, you don’t have access to benefits like loan forgiveness or income-driven repayment plans. When you refinance private loans, you won’t lose any federal benefits. In fact, you may even get a servicer that offers more benefits. For example, ELFI offers forbearance for up to 12 months for borrowers facing financial hardships.   

3. You may have high-interest debt

Graduate and professional degree loans tend to have the highest interest rates. For example, Grad PLUS Loans issued before July 1, 2020, had an interest rate of 7.08%. Over time, that high rate can cause you to pay thousands more than you initially borrowed.   

Benefits of refinancing your debt

As a physical therapist, there are many advantages to refinancing your student loans.   

1. You can save money

Since you likely have a substantial amount of student loan debt, you can save a significant amount of money by refinancing your loans. If you have good credit, or a cosigner willing to apply for a loan with you, you can qualify for a loan with a lower interest rate. Over time, that lower rate will allow you to save thousands of dollars.    For example, let’s say you graduated with $116,000 in PLUS Loans at 7.08% interest and a 10-year repayment term. By the end of your repayment term, you will repay $46,198 in interest charges on top of what you originally borrowed.    If you refinanced your loans and qualified for a 10-year loan at 4.75% interest, you’d pay just $29,948 in interest charges. By refinancing your student loans, you’d save $16,249 over the life of your loans.    chart displaying original vs. refinanced loan   Use the student loan refinance calculator to find out how much you could save by refinancing your loans with ELFI.*   

2. You can pay off your student loans sooner

When you refinance your loans, you can choose a new loan term. In general, the lowest interest rates are reserved for shorter loan terms. If you want the lowest rate possible, opt for a rate of five or seven years rather than ten, 15, or 20 years.    With a shorter term and a lower rate, you’ll save more money over your repayment term. And, you’ll be out of debt years earlier. With your loans paid off, you’ll be free to pursue your other financial goals, like saving for a house or boosting your retirement nest egg.   

3. You can reduce your monthly payments

If you refinance your loans and qualify for a lower interest rate or extend your repayment term, you can significantly reduce your minimum monthly payment. If you’re struggling to make ends meet right now, especially when you’re just starting out in your career, the ability to get a smaller payment can be a significant relief. It can give you some breathing room in your budget for rent or other necessities.   As your career progresses and you get more financially secure, you make extra payments on your loans. Or, you can even pay them off early without a prepayment penalty.   

Managing your student loan debt

For a physical therapist, student loan refinancing can be a smart strategy for tackling debt. You likely had to take on six-figures of student loan debt to pay for school, so refinancing your loans can help you secure a lower rate and save money over time. You can use ELFI’s Find My Rate tool to get a quote without affecting your credit score.*  
  *Subject to credit approval.   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.