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Student Loan Refinancing

6 Actions to Take Before Applying for Student Loan Refinancing

July 12, 2016
Updated December 12, 2019

 

Student loan refinancing options are growing at a historic pace, offering more opportunities to lower monthly payments and interest rates and reduce the cost of education debt. With an increasing desire to find a smarter way to pay off student loans, borrowers will undoubtedly embark upon the process with different needs and goals. Whether you are just now beginning to think about student loan refinancing, have done some research, or are ready to contact a student loan refinancing lender, being prepared at the outset will go a long way towards streamlining the application process.

 

As education loan repayment options increase, choosing the right program can become somewhat daunting, so we have outlined the basics for you. Improve the likelihood of an efficient process — and approval with better rates and terms— by addressing these six items BEFORE applying:

 

1. Do the Math

When comparing refinancing options, the first step involves gathering and making yourself aware of the interest rates and monthly payment amounts of your current loans. This is an important first step in the process, as it will help determine how much money you could save per month and over the life of your loan(s), especially if your loan were to be refinanced through a private lender, such as Education Loan Finance. Review the current interest rates on all of your education loans before refinancing, and consider whether excluding loans that already have low-interest rates, or consolidating your entire student loan debt into one loan with one monthly payment, makes sense for you. Fortunately, Education Loan Finance offers a convenient education loan payment estimator that easily calculates this information for each of its repayment options, allowing you to choose which loan term best meets your budget goals.

 

2. Ensure Eligibility

Some lenders only work with borrowers who have a minimum amount of debt, attended a certain school, hold a particular degree, work within a specific career field, or reside in a particular state. Before you invest time preparing an application, review each lender’s requirements to ensure that you have met the basic criteria. For instance, to be eligible to refinance a student loan with Education Loan Finance, you must have:

  • A minimum of $15,000 in student loan debt.
  • Earned a bachelor’s degree or higher from an approved post-secondary institution.
  • A debt-to-income ratio that indicates a borrower’s capacity to repay the loan.
  • U.S. citizenship or permanent resident status at the age of majority or older.

 

3. Review Credit Scores

Before applying, you should access (and save) your credit report to ensure that there are no errors or issues that may negatively impact your score. Doing this will help eliminate any surprises during the application process, but most importantly, a credit score review will help you determine if you need to start establishing better credit. Higher credit scores increase the likelihood of getting approved and receiving lower interest rates because lenders view borrowers with higher scores as a better investment. Under federal law, you are entitled to one free copy of your credit report from each of the three nationwide consumer reporting agencies every 12 months. For more information, visit www.annualcreditreport.com.

 

In order to review your credit score effectively, you probably need to know what credit score is considered good, as well as the typical credit score requirements from lenders. Remember, the better your credit score, the lower your new interest rate will likely be when refinancing your student loans.

4. Pay Down Other Debt

Reducing your debt-to-income ratio is a key element in receiving better interest rates and loan terms. For many individuals, simply reducing credit card debt before applying for student loan refinancing is a great way to improve credit scores and credit utilization possibilities. In addition, lowering your debt-to-income ratio may help you receive better interest rates and terms on a refinanced student loan. When lenders review your credit report, they are not only reviewing your repayment habits but also how much you owe and what types of debt you have accumulated.  Be sure to pay down any credit card debt — and any other non-student loan debt — as much as practical.

5. Gather Financial Documents

A fundamental part of the loan application process involves proving that you, the borrower, are able to repay your loans and hold true to your financial commitments. To do so, gather all pertinent information that proves payment history. While different lenders will ask for different documents, most loan applicants will have to provide some or all of the following documents:

  • Recent Pay Stub or proof of employment from within the last 30 days.
  • W-2 Form from the most recent tax year.
  • Tax Returns only if self-employed.
  • Government-issued Identification
  • Account Information because all borrowers are required to make payments electronically. If making payments with auto debit, you must submit billing account for setup.
  • Current Billing Statement or Payoff Letter for each eligible loan.
  • Student loan servicer’s information on current loans.

6. Understand Federal Loan Details

Federal student loans offer certain options and benefits that many private lenders do not, such as deferments or forbearances that allow the borrower to temporarily reduce or defer payments if they enroll in school or experience financial hardship. When these federal loans are refinanced through a private lender, the borrower may forfeit some special benefits associated with them and should carefully weigh the pros and cons of each program before applying. Individuals who maintain established careers, with reliable income for the foreseeable future, are great candidates for private loan refinancing. On the other hand, someone intending to pursue a full-time, advanced degree may want to postpone refinancing while still in school in order to preserve the benefits of the Federal Loan Program, such as income-based repayment.

 

The Next Step

Borrowers who have worked through the above steps are one step closer to an easier, smarter financial path– as well as a smoother application process! If you are now ready to apply for student loan refinancing, we want you to know we are here to help. The education loan experts at Education Loan Finance aim to be the leaders in educational financing support for financially-responsible college graduates, and we offer comprehensive options for consolidating and refinancing student loans. Best of all, our application process is streamlined, simple, and ready to help you with your financial future.*

Click for Tips on Finding the Perfect Lender to Refinance Student Loans

 


 

*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.

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college student refinancing student loans
2020-05-26
Can You Refinance Student Loans While in School?

If you have student loans you probably have wondered what’s the best way to handle them. Should you wait to pay them after graduation or start paying them while in school? Or maybe you have heard about student loan refinancing and are wondering if it is right for you. Read on to find out one way you can manage your student loans that will benefit you right now.  

What is Student Loan Refinancing?

When you refinance student loans you take out a new loan to pay off one or multiple federal or private student loans. You will have a new loan term and presumably a lower interest rate. You can refinance to a new loan with the same amount of years left as your old loan or stretch out the term to allow a longer time for repayment. If you increase the amount of time to repay this will lower your monthly payment but likely will cause you to pay more interest over the loan term.   

Can You Refinance Student Loans While in School?  

The short answer is yes, but it may be difficult to find a lender that you can refinance with if you are still in college. Many lenders require a Bachelor’s degree as an eligibility requirement for refinancing. The other
requirements to refinance* with ELFI include: 
  • You must have a credit score of at least 680 and a minimum yearly income of $35,000. 
  • Must have a minimum credit history of 36 months.
  • Must be a U.S. citizen, the age of majority. 
  If you cannot currently meet these requirements, you can have a cosigner that fits these requirements.     If you have federal student loans some may argue you should wait to refinance them until you graduate because they offer more flexibility with deferment and forbearance. However, some private lenders also offer deferment and forbearance options. Some other things to consider are:
  • If you think you will get a job in the public sector that would qualify for Public Service Loan Forgiveness, you may not want to refinance because you would lose the benefit of having your federal student loans forgiven under the program. 
  • If you think you will want to take advantage of an income-driven repayment plan when you graduate, you may not want to refinance because this is only offered for federal student loans. Tip: Be aware that when you take advantage of income-driven repayment plans, your monthly payment is lower, but you will end up paying more for the loan in interest costs.   
  There are many benefits to refinancing while in school to put you on a better financial path when you graduate. The average college graduate has $31,172 in student loans. However, you can work to reduce that amount by refinancing. Student loan refinancing can be beneficial for many reasons: 
  • Consolidate - Refinancing allows you to consolidate multiple federal and private student loans into one new loan. You can refinance some or all of your loans. Consolidation makes it easier to manage one loan as opposed to multiple loans. With only one loan you will be less likely to miss a due date, and avoid any associated late fees. 
  • Lowers Interest Rate - When you refinance you can potentially qualify for a lower interest rate. A lower interest rate saves you in interest costs over the life of the loan. 
    • If you have unsubsidized federal student loans (the ones where interest accrues while you are in school) your loans could be growing by an average of 4.53%. But if you refinance you may qualify for a lower rate, as low as 3.86%, and less interest would be accruing. 
  • Lower Monthly Payment - If you score a lower interest rate when you refinance you will be paying a lower monthly payment. To find out how much you could potentially save, use our Student Loan Refinance Calculator.*  
  • New Lender - Do you always have trouble with customer service when you want to ask a question about your loan? When you refinance, you can get a new lender if you choose. It’s great to find a lender with high customer reviews. At ELFI we pride ourselves on providing award-winning customer service. 
  • Fixed Interest Rate - if you have a loan with a variable interest rate it may be more advantageous to refinance and lock in a fixed interest rate. With a variable interest rate your payment can increase when interest rates increase, which could put a financial strain on your budget. 
  Important tip: if you refinance while in school and after graduation your credit score and income increase, you can always try refinancing your loan again to possibly get an even lower rate.*   

Conclusion

Researching how to handle your student loans while still in school is a great initiative to set yourself up for a strong financial future after graduation. Student loans may seem like a heavy burden, but utilizing resources available to you will make the monthly payments easier on your budget.  
  *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.
Person reading news about student loans in coffee shop
2020-05-15
This Week in Student Loans: May 15

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:
person calculating the savings when refinancing

Consumers are refinancing loans as a form of personal stimulus

Despite the economic callout due to the coronavirus pandemic, Americans are using historically low interest rates to refinance their loans as a form of personal stimulus during the pandemic. The article explains how mortgage refinancing volume has skyrocketed and how the low-interest rate environment is also applying to student loan refinancing.  

Source: Yahoo Finance

 

Government building

House Democrats scale back $10,000 student-loan-forgiveness measure

On Thursday, House Democrats introduced an amendment to their $3 trillion coronavirus relief spending package that significantly scaled back a student-debt provision, also known as the HEROES Act, because of its higher-than-expected cost.  

Source: Business Insider

 

Government proposing HEROES Act

HEROES Act promises 5 ways to help your student loans

As mentioned above, House Democrats proposed a new $3 trillion stimulus bill called the HEROES Act to provide financial assistance to Americans due to the coronavirus pandemic. Read about the five changes this act includes in the Forbes article.  

Source: Forbes

 

millennial debating whether to pay student loans during CARES Act suspension of loan payments

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

The CARES Act put a pause on all student loan payments through September 30 – but should you pay anyway? This Fox Business article argues that if you have the financial means to do so, you might consider continuing to repay your school loans or even refinance your student loans in a low interest rate environment.  

Source: Fox Business

    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.

Nurse's guide to student loan refinancing
2020-05-14
A Nurse’s Guide to Student Loan Refinancing

As the COVID-19 pandemic has highlighted, nurses play a critical role in our healthcare system, caring for patients, coordinating treatments, and keeping detailed records.   
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 demand for skilled nurses is only going to grow. According to the
U.S. Bureau of Labor Statistics, the job outlook for registered nurses is projected to increase by 12% by 2028, much faster than average. And, nurses can command high salaries. As of 2019, the median salary for registered nurses was $73,300 per year, significantly higher than the median wage for all occupations, which is just $39,810.    While you likely had to take out student loans to pay for your nursing education, your higher-than-average income makes you a strong candidate for student loan refinancing. Consolidating your debt can allow you to save money and pay off your loans sooner so that you can focus on your other financial goals.   

Why you should refinance student loans after nursing school

Becoming a registered nurse typically requires only a bachelor’s degree. But if you want to become an Advanced Practice Nurse, nurse administrator, or nurse educator, you’ll need a master’s degree   Graduate student loans tend to have higher interest rates than other types of education loans, causing more interest to accrue and your loan balances to grow over time. For example, the interest rate on federal Grad PLUS Loans disbursed between July 1, 2019, and July 1, 2020, is 7.08%.    If you have high-interest debt, refinancing can help you tackle your loans and lower your interest rate. With a solid income as a nurse and a good credit history — or a cosigner willing to apply for a loan with you — you can qualify for a lower rate and save money over the life of your repayment term. In fact, our customers reported that they saved an average of $272 every month and should see an average of $13,940 in total savings after refinancing their student loans with ELFI.   

How to refinance nursing school loans

You can refinance your nursing school loans in just five steps:   

1. See if you meet the lender’s eligibility requirements

Refinancing lenders all have their own borrower criteria, so it’s a good idea to review their requirements ahead of time to ensure you’re eligible for a loan. At Education Loan Finance, you must meet the following conditions: 
  • 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
  • You must a bachelor’s degree or higher from an approved college or university
  • You must be a U.S. citizen or permanent resident
  • You must be the age of majority — 18 years old, in most states — or older 
  • You must have a debt-to-income ratio low enough that you can afford your monthly loan payments
 

2. Consider asking a cosigner for help

When you apply for a refinancing loan, the lender will perform a credit check. If you don’t have an extensive credit history, or if your credit score is too low, you may not be able to qualify for a loan on your own, or you may not qualify for a competitive interest rate.    However, there is a workaround — you can add a cosigner to your loan application. A cosigner is a parent, relative, or friend with good credit who signs the loan application and assumes responsibility for the loan if you fall behind on the payments. Having a cosigner increases your odds of the lender approving you for a loan and qualifying for a lower rate.   

3. Get a rate quote

To find out what kind of loan terms you can get, use ELFI’s Find My Rate tool. By entering basic information about yourself, you’ll get an estimated rate in just a few minutes without affecting your credit score.*    You can see how different factors, like loan term and choosing a variable or fixed interest rate, can affect your monthly payment and total repayment amount.   

4. Gather documentation

Once you find a loan that works for your budget, you can move forward with the loan documentation. To speed up the process, make sure you have the following documents on hand: 
  • Recent pay stub or proof of employment
  • W-2 forms
  • Tax returns (if self-employed)
  • Government-issued ID, such as a driver’s license
  • Loan account information, such as loan servicer name and account number
  • Current loan billing statement or payoff letter
 

5. Submit your loan application

To complete the application, you’ll have to enter personal information about yourself, including your address, birthdate, and Social Security number. You’ll also have to include information about your employer and income.    Once you submit the application, ELFI’s team will review the form and contact you with either an approval or denial. Until the loan is approved and disbursed, continue making payments to avoid late fees and penalties.   

6 other options for managing your loans

While student loan refinancing can be a smart way to pay down your loan balance and save money, it may not be right for you. If you decide against refinancing your education debt, there are alternative strategies for managing your loans.   

1. Nurse Corps Loan Repayment Program

Under the Nurse Corps Loan Repayment Program, the Health Resources and Services Administration (HRSA) will pay up to 85% of your unpaid nursing education debt. In exchange, you must commit to working for at least two years in a critical shortage facility or serve as nurse faculty in an eligible school of nursing. For more information, visit the HRSA website  

2. Public Service Loan Forgiveness (PSLF)

If you work for the government or a non-profit organization, such as some hospitals, you may be eligible for loan forgiveness through PSLF. Under PSLF, the government will forgive your federal loans after you work for an eligible employer for ten years while making 120 qualifying monthly payments.    To find out if your employment and loans are eligible for loan forgiveness, use the PSLF Help Tool  

3. State student loan repayment assistance programs

To recruit nurses to work in areas with shortages of healthcare workers, some states offer student loan repayment assistance programs in return for work commitments.    For example, registered nurses in Kentucky can receive up to $20,000 in tax-free loan repayment assistance if they agree to work for two years at a location in a rural and underserved area.    In Florida, nurses can receive up to $4,000 for every year they work at a designated employment site or facility. Eligible nurses can participate in the program for up to four years, and get up to $16,000 in loan repayment assistance.    To find out if your state offers a similar program, visit your state’s department of health or education websites.   

4. Income-driven repayment plans

If you took out federal student loans to pay for your undergraduate or graduate degrees and can’t afford your current monthly payments, you might be eligible for an income-driven repayment (IDR) plan. With an IDR plan, your loan servicer will extend your repayment term and base your payment on your family size and discretionary income.    Federal loan borrowers can apply for an IDR plan online.   

5. Use your sign-on bonus to make extra payments

Depending on your location, you may be eligible for a sign-on bonus. In some areas, nurses are in high demand, and understaffed hospitals and healthcare companies offer sign-on bonuses to attract talented nurses to work for them. You could qualify for a bonus of $10,000 or more on top of your regular salary.    According to AdventHealth, a major hospital network, sign-on bonuses for nurses aren’t usually issued as upfront payments. Instead, they’re broken up into installments over a service period, such as four payments over two years. But if you use those payments to make extra payments on your student loans, you can save money on interest and pay off your debt early.    You can find nursing jobs that offer sign-on bonuses on Indeed  

6. The Student Loan Forgiveness for Frontline Health Workers Act

On May 5, 2020, Rep. Carolyn Maloney, a Democrat in New York,introduced the Student Loan Forgiveness for Frontline Health Workers Act. If passed, this bill would discharge all federal and private loans belonging to healthcare workers who interacted with COVID-19 patients, including doctors, nurses, and technicians.    The bill’s future is unclear, but it does signal that there is growing pressure on lawmakers to help healthcare workers — especially those on the frontlines of the pandemic — pay down their student loan debt.   

Repaying your student loans

As a nurse, your career is taxing enough; don’t let your student loans weigh you down. Student loan refinancing can give you significant relief from your debt. You can save money, pay off your debt, and even lower your monthly payment.    To find out how much you can save, use the student loan refinance calculator.*  
  *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.