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Private Student Loans (Blog or Resources)

Should I Pay Student Loans with a Credit Card?

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Paying off student loans can be a challenging process, so it’s natural to look for creative ways to accomplish your goal. One question some student loan borrowers have asked is whether they can use a credit card to pay student loans. 

 

Technically, it is possible, but it’s generally not a good idea. Here’s what you should know before you try it.

 

Can You Use a Credit Card to Pay Student Loans?

Unfortunately, making monthly student loan payments with your credit card isn’t an option. The U.S. Department of the Treasury does not allow federal student loan servicers to accept credit cards as a payment method for monthly loan payments.

 

While that restriction doesn’t extend to private student loan companies, you’ll be hard-pressed to find one that will offer it.

 

That said, paying off student loans with a credit card is technically possible through a balance transfer. Many credit cards offer this feature primarily as a way to transfer one credit card balance to another, and if you’re submitting a request directly to your card issuer, that’s typically the only option.

 

However, some card issuers will send customers blank balance transfer checks, which gives you some more flexibility. For example, you can simply write a check to your student loan servicer or lender and send it as payment. Alternatively, you can write a check to yourself, deposit it into your checking account, and make a payment from there.

 

Balance transfer checks often come with introductory 0% APR promotions, which give you some time to pay off the debt interest-free. That said, here are some reasons why you should generally avoid this option:

 

  • Once the promotional period ends, your interest rate will jump to your card’s regular APR. The full APR will likely be higher than what your student loans charge.
  • Balance transfers come with a fee, typically up to 5% of the transfer amount, which eats into your savings.
  • Credit cards don’t have a set repayment schedule, so it’s easy to get complacent. You may end up paying back that balance at a higher interest rate for years to come.
  • Credit cards have low minimum payments to encourage customers to carry a balance, which could cause more problems. 
  • You won’t earn credit card rewards on a balance transfer, so you can’t count on that feature to help mitigate the costs.

 

So if you’re wondering how to pay student loans with a credit card, it is possible. But you’re better off considering other options to pay down your debt faster.

 

Can You Use a Student Loan to Pay Credit Cards?

If you’re still in school, you may be wondering if it’s possible to use your student loans to pay your credit card bill. Again, technically, yes, it is possible. But there are some things to keep in mind. 

 

The Office of Federal Student Aid lists acceptable uses for federal student loans, and private student lenders typically follow the same guidelines. Your loans must be used for the following:

 

  • Tuition and fees
  • Room and board
  • Textbooks
  • Supplies and equipment necessary for study
  • Transportation to and from school
  • Child care expenses

 

If you incur any of these expenses with your credit card, you can use student loan money to pay your bill. However, if you’re also using your credit card for expenses that aren’t eligible for student loan use, it’s important to separate those so you aren’t using your loans inappropriately.

 

Also, the Office of Federal Student Aid doesn’t list credit card interest as an eligible expense. So if you’re not paying your bill on time every month and incurring interest, be careful to avoid using your student loan money for those expenses.

 

How to Pay Down Your Student Loans More Effectively

If you’re looking for a way to potentially save money while paying down your student loans, consider student loan refinancing

 

This process involves replacing one or more existing student loans with a new one through a private lender like ELFI. Depending on your credit score, income, and other factors, you may be able to qualify for a lower interest rate than what you’re paying on your loans right now. 

 

If that happens, you’d not only save money on interest charges, but you could also get a lower monthly payment. 

 

Refinancing also gives you some flexibility with your monthly payments and repayment goal. For example, if you can afford to pay more and want to eliminate your debt faster, you can opt for a shorter repayment schedule than the standard 10-year repayment plan. 

 

Alternatively, if you’re struggling to keep up with your payments or want to reduce your debt-to-income ratio, you could extend your repayment term to up to 20 or even 25 years, depending on the lender. 

 

Keep in mind, though, that different refinance lenders have varying eligibility requirements. Also, just because you qualify, it doesn’t necessarily mean you can get more favorable terms than what you have now.

 

However, if you’re having a hard time getting approved for qualifying for better terms, most lenders will allow you to apply with a creditworthy cosigner to improve your odds of getting what you’re looking for.

 

Before you start the process, however, note that if you have federal loans, refinancing will cause you to lose access to certain programs, including student loan forgiveness and income-driven repayment plans. But if you don’t anticipate needing either of those benefits, it won’t be an issue.

 

The Bottom Line

If you’re looking for ways to pay off your student loans more effectively, you may have wondered whether you can use your credit cards. While it’s possible, it’s generally not a good idea. Also, if you’re still in school, it’s important to be mindful of how you’re allowed to use your student loan funds, especially when it comes to making credit card payments.

 

A better approach to paying down your student loan debt is through refinancing. Take some time to consider whether refinancing your student loans is right for you, and consider getting prequalified to see whether you can get better terms than what you have on your current loans.

Student Loan Refinancing vs. Income-Driven Repayment Plans   

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Student loans can be a real budget killer, with the average student loan payment being $393 per month. Over time, you may want to lower your monthly payment to make it more manageable or to put your savings toward other financial goals. Depending on the types of loans you have, you may choose to pursue income-driven repayment or student loan refinancing.

 

If you have federal student loans, you may be eligible to select an Income-Driven Repayment plan. Alternatively, for private and federal loans, student loan refinancing could be a better choice. To figure out whether you have federal student loans, check the Federal Student Aid site where all the information on federal loans will be available. To determine whether you have private student loans, request your credit report to see any reported private loans.

 

Once you know the types of loans you have, here are a few options that may reduce your student loan payment:

 

Student Loan Refinancing

When you refinance your student loans, you obtain a new loan with a different lender, often a bank, credit union or third party. You can refinance your private or federal student loans, or a combination of both. Your refinanced loan will have a new interest rate, term length and monthly payment. Here are a few important things to know about student loan refinancing:

 

Eligibility

To qualify for student loan refinancing, you must meet certain eligibility requirements.

 

Most lenders require:

  • A minimum credit score in the high 600s
  • Stable employment with proof of income
  • A minimum student loan amount
  • Debt-to-income ratio of less than 50%

 

Interest Rate

One benefit of refinancing your student loans is that you may earn a reduced interest rate, which can save you thousands of dollars. Here’s how it works:

 

If you have $65,000 in total student loan debt, a 15-year term and an interest rate of 6.8%, your monthly payment will be approximately $577. When you refinance, if you keep the 15-year term and qualify for an interest rate of 3.77%, your payment will be reduced by $104 per month. This results in $18,000 in interest savings over the life of the loan!

 

Loan Terms

In addition to potentially reducing your interest rate, another benefit of refinancing student loans is you have more control over the terms of your repayment. You can select a fixed or variable interest rate, choose the loan provider that best meets your needs, and choose the amount of years of the loan.

 

If you want to pay your loan off more quickly, you can select a shorter student loan repayment term, although this will most likely increase your monthly payment. If you want to reduce your monthly payment, you can lengthen your student loan repayment term, but this may result in paying more in interest over the life of the loan. Try ELFI’s Student Loan Refinance Calculator* to see how much you could save.

 

Income-Driven Repayment Plans

These plans are only available for federal student loans. There are four Income-Driven Repayment (IDR) plans offered, and with each plan, the payment is based on income and family size. Here are a few important things to know about Income-Driven Repayment:

 

Recertification

To select an IDR plan, you must apply through your loan servicer. Once an IDR plan is established, you’ll be required to recertify each year by submitting documents to prove your income and family size.

 

Types of Income-Driven Repayment Plans

Once you recertify the monthly payment can go up or down depending on your income. The IDR plans available are:

 

Revised Pay As You Earn (REPAYE)

The payment is always based on your income and family size. Your payment can increase to be higher than your payment on the standard repayment plan if your income increases significantly. The term length is 20 years for undergraduate loans and 25 for graduate loans.

 

Pay As You Earn (PAYE)

The payment is 10% of your discretionary income but your payment cannot increase to be more than the payment on the standard 10 year repayment plan. The term length is 20 years for all loans.

 

Income-Based Repayment (IBR)

The payment is 10% or 15% of your discretionary income, depending on when you borrowed the loans. Your payment will never be more than the 10-year standard repayment amount. The term length is 20 or 25 years depending on when you borrowed the loans.

 

Income-Contingent Repayment (ICR)

The payment can be up to 20% of your discretionary income and the loan term is 25 years.

 

Student Loan Refinancing vs. Income-Driven Repayment

To determine which option is best for you, it is helpful to evaluate the differences between student loan refinancing and income-driven repayment plans:

 

Interest Rate

Although either option may reduce your monthly student loan payment, the major difference between Income-Driven Repayment and student loan refinancing is the interest rate change.

 

Income-Driven Repayment will not lower your interest rate. Rather, it will remain the same throughout the life of the loan. Student loan refinancing, on the other hand, may reduce your interest rate for the remaining life of the loan.

 

Federal Benefits

With IDR plans, you are still eligible for federal benefits such as deferment, forbearance and forgiveness, although some private lenders also offer deferment and forbearance options.

 

Financial Costs

There is no cost to refinance, and you may even save on interest costs if you qualify for a lower rate. With an IDR plan, there is no cost to apply for a plan, but your loan balance may actually increase on certain plans. This can happen when your minimum payment based on your income is not large enough to cover the interest costs that are accumulating. The interest costs can be added to your loan and your loan amount will actually increase rather than decrease.

 

Payment

When you refinance, you have the option to select a fixed interest rate, as opposed to a variable rate, that will keep the payment the same throughout the life of the loan. On an IDR plan, there is uncertainty to what your payment amount will be each year, since you are required to update your income and family size. Your payment can change each year and your budget must account for it.

 

Bottom Line

When you want to lower your student loan payment, evaluate the options and decide which works best for your financial plans. Both options can make your payment more manageable, but each have different long-term outcomes.

6 Ways to Minimize Grad School Student Loan Debt

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Embarking on your grad school journey can be an exciting time because it puts you one step closer to your dream career. But paying for grad school may cause anxiety if you are borrowing loans to cover the costs.

 

According to the U.S. Department of Education, in 2020 the average student loan debt from a graduate degree was $84,300. However, the cost of school shouldn’t prevent you from achieving your dreams. Here are 6 ways to minimize your grad school student loan debt:

 

Minimizing Graduate School Debt

If you’re looking to graduate debt-free, here are a few tips for reducing your graduate school debt:

 

Apply for a Stipend

If you are trying to decide which school is right for you, do your research and find out which schools provide stipends for graduate students. Certain degree programs will provide a stipend for living expenses, which will help reduce the loans you will need to borrow. The stipends may be provided for conducting research or teaching a class as a graduate assistant.

 

If you are fortunate enough to receive a grad school stipend, make a budget to help maximize the value of it so you can cover most, if not all of your expenses. Use some of these next tips to minimize your expenses.

 

Earn Money Elsewhere

If getting a stipend is not possible, look into internships or a part-time job in your field of study. Although these may be low-paying options, working outside of school will not only bring in income that can help offset your costs, but will also offer you job experience.

 

Reduce School Expenses

Of course you know tuition and living expenses need to be considered when paying for grad school, but be sure to think about the extra expenses too. Textbooks most likely will still be a necessary item for your program but it doesn’t mean you can’t save on the rising costs.

 

Try to buy textbooks secondhand from your school’s bookstore or online. You may also be able to rent your textbooks if you don’t think you will need to refer to them in the future. Although the expense of textbooks can add up, you can find ways to keep more money in your bank account.

 

Your wardrobe may not come into mind when budgeting for the extra expenses, but it should be something to consider. You will most likely need professional clothing for future internships or recruiting interviews. Professional clothing may be stretching your budget but a necessary expense.

 

If you are looking to minimize your grad school debt, you may want to consider shopping for used clothing or see if your school has an option to borrow professional clothing. Some schools, such as the University of Northern Colorado and Manhattan College, offer such options.

 

Reduce Your Living Expenses

You may have thought your roommate days were gone once you graduated college. If you are considering grad school, however, living with a roommate can help lower expenses. A roommate may also be a built-in study partner if you choose to live with a fellow grad student.

 

To further reduce your living expenses, consider eating primarily at home. Although you may not have a lot of time for cooking when you are in grad school, when you consider the savings, it may be worth the effort.

 

Money Under 30 explains that eating out is about three times more expensive than cooking at home. This can add up to hundreds of dollars of savings each month. To help combat the problem of not having time, try meal prepping one day each week.

 

When curbing your eating out, remember a coffee habit can add up, too! If you are used to grabbing a cup of coffee from a shop on your way to class, instead try brewing some at home to save yourself an average of $2.99 each time. Every little bit of savings will help you minimize your grad school expenses.

 

Minimizing Student Debt After Graduation

If you have already finished grad school and it feels like you’re facing a mountain of student loan debt, you still have options to help reduce your debt.

 

Refinance Your Loans

If you have already graduated and are employed, refinancing student loans is a beneficial way to minimize your loan payments. Refinancing is when you obtain a new private student loan to pay off outstanding student loans, whether they are private student loans or federal. You can refinance just one loan or multiple loans.

 

One of the benefits of student loan refinancing is the chance to lower your interest rate, thereby lowering your monthly payment. It also helps reduce interest costs over the life of the loan, which can add up to thousands of dollars. If refinancing sounds like it could be a good fit for you, use the Student Loan Refinance Calculator* for an idea of how much you could save.

 

Research Employer Benefits

Seek out an employer that offers student loan repayment assistance. Some employers may provide you additional money, monthly or yearly, to help repay your loans.

 

If you receive any money from your employer for loan repayment, try to use it for extra payments towards your loan rather than for monthly payments. Making extra payments towards the student loan principal will reduce the balance, helping you pay them your loan off more quickly and save on interest costs.

 

The Bottom Line

Earning a graduate degree is a big accomplishment and something you should be proud of, but it doesn’t have to mean you will be paying for your education the rest of your life. Just using a few of these strategies can help minimize the financial burden of getting your degree and set you on a strong financial path. Good luck!

7 Not-So-Scary Student Loan Repayment Strategies

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Paying off student loans can seem scary, especially when you feel like the balance is not going down fast enough. Luckily, these student loan repayment strategies can help you pay down your debt faster and save money in the long run. Here are 7 not-so-scary repayment strategies you can use to slash your student loan debt balance. 

 

Pay More Than the Minimum

Your student loans accrue interest daily, so your payment covers both principal and interest charges. To pay your loan off more quickly, pay more than the minimum to save on interest costs. Save toward this goal by making small lifestyle changes, for example, eating out one less time per week or cutting a subscription service you no longer use. 

 

Even just a few extra dollars per month can add up to big savings over time. When you do pay more than the minimum, just be sure your payment is attributed to the loan’s principal rather than to future payments. 

 

If you have federal loans on an income-driven repayment plan without loan forgiveness, paying more than the minimum can be especially helpful. Your minimum payment may not cover your monthly principal and interest expenses, meaning your loans could grow every month. 

 

Make Bi-Weekly Payments

Bi-weekly payments are a great way to make an extra student loan payment every year. This strategy will also help you save on interest costs. 

 

To try this method, divide your monthly payment in half and make that half-payment every two weeks. If you make a payment every two weeks, you will end up making 26 half-payments (52 weeks divided by 2) which is 13 full monthly payments in one year. 

 

If you’re using this method, make sure your half-payments are made before your due date so you don’t encounter late fees. Also be sure when you make an extra half-payment that it is applied directly to the principal of your loan. 

 

Enroll in Autopay

You have to pay your student loan payment every month either way, so you might as well save yourself some time and money in the process! Enrolling in autopay is the easiest way to accomplish both. 

 

Autopay allows your loan servicer to withdraw the minimum monthly payment directly from your bank account. If you have federal student loans, you will save 0.25% every month while autopay is set up. Some private lenders also offer a monthly discount, so check with your servicer to see if the option is available. This may not seem like significant savings but it can add up to hundreds of dollars over the life of the loan with no extra work on your part. 

 

Enrolling in autopay also helps you to avoid late fees. Your payment will always be on time as long as you have sufficient funds in your bank account. 

 

Refinance to Lower Your Interest Rate

Another student loan repayment strategy that can result in significant savings is refinancing. You can refinance one or multiple student loans, both federal and private. 

 

When you refinance, you obtain one new student loan to pay off your old loans. Your new loan may have a lower interest rate, which could result in thousands of dollars in savings. When you refinance, you can also change the term of your loan. 

 

By shortening your student loan repayment term, you’ll make larger monthly payments and save on interest over the life of the loan. Alternately, you can lengthen your student loan repayment term to reduce your monthly payments. Use ELFI’s Student Loan Refinance Calculator* to see how refinancing could impact your student loan repayment strategy. 

 

Ask Your Employer About Student Loan Assistance

An increasing number of companies are offering student loan repayment assistance as a benefit. Different employers offer different types of loan assistance. Many, however, make direct monthly payments to lenders or pay an annual lump sum to their employees. A majority of employer programs have a cap on the amount of assistance they will provide. 

 

If you are fortunate to work for a company that provides loan assistance, do your best to continue making your monthly payments. You can then consider employer assistance to be “extra” progress on your loan. This student loan repayment strategy enables you to make progress quickly.

 

Make a Lump Sum Payment with Found Money

Found money is any sum you receive outside of your regular paycheck. Examples include a bonus received at work, gift money you receive during the holidays or cash back from reward credit cards.

 

By now you know that making extra payments can help you pay your loans off more quickly and save on interest. By making extra payments with found money, you don’t have to find extra money in your budget. Applying money you did not expect to receive towards your debt will help you establish a stronger financial future.

 

Diversify Your Income Streams

You can diversify your income streams by starting a side hustle. While it will require some extra time and effort, if repaying your loan quickly is a top priority, this student loan repayment strategy is for you. 

 

A side hustle can take on any form, such as driving for a ride share company, selling items online or providing childcare. If you apply all your earnings from your side hustle towards your student loan debt, you will be able to reach your payoff goal faster.

 

Bottom Line

Implementing just one of these strategies will help you save money and pay your loan off more quickly. Student loan debt doesn’t have to be scary when you have a plan and use different repayment strategies to accomplish your goals.

 


 

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Refinancing Private Student Loans

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Many individuals take out private student loans to finance their undergraduate or graduate school education. Once they have obtained their respective degrees and graduated, student loan payments will begin coming due, typically following a grace period. While many individuals will pay their student loans to their original lender with the same interest rates and terms as when they obtained their loans, many choose to refinance their private student loans to reduce their monthly payment, save on interest, or pay off their loans faster.

 

Refinancing private student loans is the process of taking a new loan out with a private lender, often with a different interest rate and loan term. This page will provide an overview of refinancing private student loans to help you determine whether you should consider it.

 

Should I Refinance Private Student Loans?

Refinancing private student loans is very similar to the process of consolidating student loans, which is when you combine multiple student loans into one loan with a weighted average interest rate. However, there are several potential benefits of refinancing private student loans that student loan consolidation does not offer. Here are a few of the benefits of student loan refinancing.

 

Lower Private Student Loan Refinancing Rates

Above all, the primary benefit of refinancing student loans is the potential to save money by lowering your interest rate. When you graduated from your respective program, the interest rates on your private student loans may have been higher than what private lenders currently offer to refinance student loans.

 

For example, if you took our $50,000 in private student loans at a 6.0% interest rate for a 20-year term, your monthly payment would be $358.22 per month, and you would pay a total of $85,971.73 over your loan term if all payments were made on time, with approximately $35,971.73 of that total being paid on interest alone. If you refinanced your $50,000 private student loans to the 20-year term with a 4.5% interest rate, your monthly payment would drop to $316.32 and you would pay just $75,917.93 over your loan term, with approximately $25,917.93 of that total being paid in interest. You would save $41.90 per month and $10,053.80 in interest costs.

 

The interest rate that is offered to you depends on a variety of factors that are typical when taking out a loan, such as your credit score, credit history, debt-to-income ratio, among other factors. Raising your credit score 50 or 100 points could make a considerable impact on how much you could save by refinancing private student loans. See how much you could potentially save by using our student loan refinancing calculator.*

 

Adjusting Your Repayment Terms

In addition to lowering your interest rate, refinancing private student loans also allows you to adjust the length of your loan term to fit your goals and budget. Typically, shorter loan terms come with lower interest rates, allowing you to save on interest over your loan term, while longer loan terms come with slightly higher rates, but allow you to save on your monthly payments. Here are three ways that adjusting your repayment can help you better manage your student loans.

  • Simplify repayment by combining loans. When you refinance your private student loans, you can consolidate or combine multiple loans into a single loan with a single monthly payment. This can help you better track your total loan balance and get a clearer look at your repayment timeline.
  • Extend your loan term to save on monthly payments. By extending your loan term, you can spread out your payments over a longer period of time, often allowing you to reduce the amount you pay monthly. Having this extra cash can allow you to use that money for other financial goals, such as saving for retirement or purchasing a home.
  • Shorten your loan term to save on interest and pay off your loan faster. Oppositely of extending your loan term, shortening your loan term can often allow you to lower your interest rate and will shorten the amount of time that interest accrues, allowing you to save on interest and pay off your loans faster.

 

Choosing a New Lender

Another benefit of refinancing private student loans is the opportunity to switch to a new lender who may have additional benefits, such as forbearance options in the case of financial hardship or superior customer service. For example, with Education Loan Finance, if you are unable to repay your loan because of financial hardship or medical difficulty, Education Loan Finance may grant forbearance for up to 12 months. Additionally, Education Loan Finance offers superior customer service in the form of readily available Personal Loan Advisors who can help you through each step of the refinancing process and guide you toward the right repayment plan. Keep in mind that refinancing student loans for the sole purpose of switching lenders may not be the best decision, especially if it costs you money. If you’re interested in refinancing student loans, learn more about Education Loan Finance.

 

Reasons Not to Refinance Private Student Loans

Refinancing private student loans can be beneficial to many people, however, there are certain circumstances in which this may not be the case. It’s important to understand whether refinancing private student loans will help you save on your student loans or pay them off faster.

 

For example, if you attempt to refinance private student loans and the interest rate you qualify for doesn’t either help you save in total interest paid, nor helps you lower your monthly payments, you may want to wait some time and improve your borrowing credentials before refinancing. In some situations, even if you are able to lower your monthly payments, but will be paying a significant amount more in total interest costs, you may want to consider if it’s the best solution. Likewise, if you are saving in total interest, but your monthly payment will be unmanageable, you may be at risk of missing payments or, even worse, defaulting on your loan. Additionally, refinancing with a new lender may cost you certain benefits that your current lender offers.

 

Consolidating Private Student Loans vs Refinancing

When you are attempting to adjust your student loan repayment terms, you may come across student loan consolidation options. While student loan refinancing and consolidation are similar in that you are combining multiple loans into one loan with a single lender, the two are not exactly the same. Learn more about the difference between student loan consolidation vs. refinancing.

 

Can I Refinance My Private Student Loans?

Anyone with private student loans can refinance them as long as they qualify by meeting a private lender’s specific eligibility requirements for refinancing student loans.

 

For example, in order to refinance with Education Loan Finance*, you must meet the following criteria at a minimum:

  • be a U.S. citizen or permanent resident alien without conditions and with proper evidence of eligibility.
  • be at the age of majority or older at the time of loan application.
  • have a minimum loan amount of $15,000.
  • have earned a Bachelor’s degree or higher.
  • have a minimum income of $35,000.
  • have a minimum credit score of 680.
  • have a minimum credit history of 36 months.
  • have received a degree from an approved post-secondary institution and program of study.

 

In conclusion, refinancing private student loans can be very helpful to individuals who qualify and are interested in saving money in interest or lowering their monthly payments. Learn more about student loan refinancing with ELFI to see if it’s right for you.

What to do When Your Student Loan Payment is Overwhelming   

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Having student loans is not unusual. In fact, 45 million people have them. It’s also incredibly common to feel overwhelmed by your student loan payments.

 

A survey of student loan borrowers found that almost 65% of respondents said they lose sleep because of the stress caused by their loans. If you find yourself overwhelmed by your monthly student loan payment, there are some options you should consider to lessen the burden.

 

Before you can explore alternatives, however, you need to know the types of loans you have. Certain options are only available for federal loans as opposed to private loans. Check the Federal Student Aid website to determine any federal loans you may have, and request your free credit report to see any private loans. Once you’re familiar with your loans, you can consider new courses of action.

 

Create a Budget

If you don’t already have a budget, create one! This will allow you to see if you can afford your current student loan payment. It will also show you areas where you’re spending unnecessarily. If you find there just isn’t enough income to cover all your necessary expenses, then you can begin working on different ways to reduce your student loan payment.

 

Research Different Payment Plans

If your federal student loan payment is overwhelming, consider switching to a different payment plan. When you initially begin repayment, your loans are automatically put on the standard repayment plan. On this plan, your payments are based on a ten-year repayment term.

 

A Direct Consolidation Loan can help you change your payment plan to help make your payment more affordable. It can also help consolidate multiple federal loans into one loan. (Note: Consolidating your federal loans is different from student loan refinancing, discussed below.)

 

This will help you qualify for certain longer repayment plans, resulting in a lower monthly payment. One of the drawbacks of extending your payment term is you will end up paying more in interest costs over time.

 

Income-Driven Student Loan Repayment

Certain loans are eligible for income-driven repayment plans. They can help make your payments more affordable and are based on your income and family size.

 

Graduated Student Loan Repayment

If an income-driven repayment plan does not work for you, you can change to a graduated repayment plan. Your payment will begin low and increase over time for a ten-year term.

 

Extended Student Loan Repayment

Another option is an extended repayment plan. To qualify, you must have certain loans over at least $30,000. Your payment may be fixed or may increase over time for a 25-year term.

 

Look Into Refinancing

If you have overwhelming private or federal student loan payments, consider student loan refinancing. Refinancing may lower your interest rate and reduce your monthly payment. This is a good option even if your current payment fits your budget.

 

Refinancing can help lower your monthly payment, and can also save you thousands of dollars in interest over the life of the loan. Refinancing means obtaining a private loan to pay off your existing student loan or multiple loans.

 

Student loan refinancing differs from consolidation, which is only for federal student loans and may not necessarily reduce your interest rate. You can refinance private or federal loans, or both, and can also change your student loan repayment term to better fit your needs.

 

Here is an example of how refinancing can save you money:

 

If you have $65,000 of student loans with a 6% interest rate and have 10 years remaining on your loans, you will pay approximately $722 per month. If you refinance and qualify for a lower interest of 3.61%, your monthly payment would be reduced to approximately $646 per month. This equals savings $76 per month in savings. You will also save more than $9,000 in interest over the life of the loan.

 

To see how much you could save, try ELFI’s Student Loan Refinance Calculator.*

 

Increase Your Income

Of course, increasing your income is easier said than done. If your student loans payments are becoming overwhelming, however, it may be a necessary step. Increasing your income through overtime hours or a side hustle can make your payments more manageable. A side hustle can be as easy as babysitting or dog walking, or more involved like starting a side business based on a passion.

 

If you haven’t begun repayment on your loans, but know you will face a significant loan payment after graduation, consider these steps:

 

Build a Budget Early

Start a budget before repayment begins that includes your future student loan payment. This will allow you to see if you will be able to comfortably afford your payment. It will also help you build an emergency fund and a strong financial foundation.

 

Seek Employer Student Loan Benefits

Look for an employer that offers student loan assistance. The number of companies that are offering student loan benefits is increasing, although the benefit is still rare. Some offer monthly benefits that can help you pay your loans off faster. Others offer a yearly benefit amount for a certain number of years. Either way, extra money from an employer to help pay loans will help you reduce your loan amount faster.

 

Work Toward Public Service Loan Forgiveness

Apply for employment that may qualify for forgiveness. If you have federal loans, certain employment can qualify for forgiveness under the Public Service Loan Forgiveness program. Certain loans and types of employment are required so be sure to pay close attention to the requirements.

 

Bottom Line

If you have an overwhelming student loan payment, explore your options to reduce your payment while furthering your debt-free journey.

 


 

*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.

Glossary of Student Loan Refinancing Terms

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There are so many terms that borrower’s encounter in the student loan application process, most borrowers may not be exactly sure what each means. If you’re getting ready to apply or just want to know what the documents are talking about, here’s our glossary of common student loan terms that you should know.

 

Adjusted Gross Income (AGI) and Gross Income

Gross income is the total amount you earn in a year before deductions for federal or state taxes, credits, and so on. Adjusted gross income is the income you earn in a year that is eligible to be taxed after accounting for deductions. AGI is usually lower than your gross income. It’s what many institutions use to determine if you can get perks like loan tax benefits or financial aid, grants, etc. The easiest place to find these are on your official tax return.

 

Adverse Action Letter

If you’re denied for a loan due to something negative on your credit report, the lender might be required to send you one of these. It explains why you were turned down, and it’s important because it enables you to see if something is wrong on your credit report.

 

Amortization

This term describes how the principal is paid over the course of a loan.  Most student loans are fully amortized, meaning that if all payments are made as scheduled, the principal balance will be fully repaid at the maturity date.

 

Other types of loans, including some types of mortgage loans, have a feature known as a balloon payment.  With a balloon payment, regularly scheduled payments do not fully repay the principal amount borrowed. When the loan matures, the final payment contains a larger, or balloon, payment of all remaining principal.

 

Annual Loan Limit

This is the maximum loan amount you can borrow for an academic year. Loan limits can vary by facts like grade level and loan type.

 

Award Letter

If you received financial aid, expect to see an award letter that explains the different types of aid for which you are eligible. The document will also include information about your loans, grants, or scholarships, and you’ll see a new one each year that you’re in school.

 

Borrower

The person who is responsible for paying back a student loan. You may not be the only one responsible, like if you signed with a cosigner, but the loan is for you and your academic fees and tuition.

 

Capitalized Interest

When unpaid interest is added to the principal balance (increasing your overall balance and future interest), this is called capitalization. This is why it’s important to pay interest whenever possible. Capitalization might happen at the end of a grace period or deferment, or after forbearance, depending on whether it’s a federal or private loan. Capitalization may occur when a loan is consolidated or if it enters default.

 

Cosigner

A cosigner is someone who can apply with you for a loan and who is also legally responsible for the loan. If you do not meet the minimum requirements for refinancing or want to qualify for a better interest rate, you may choose to apply with a cosigner.

 

For the best chance of receiving competitive rates, your cosigner should be someone with a strong credit history and score. If you already have a cosigner on a loan and are able to afford the loan without them, refinancing is one way to release your cosigner from further financial obligation.

 

Consolidation

When you refinance your student loans, you essentially consolidate them into one loan. By refinancing and consolidating multiple loans into one, you can lower your interest rate, save money and enjoy the ease of only making one student loan payment.

 

If you have only federal student loans, you can consolidate multiple federal loans into one federal loan. However, this process does not lower your interest rate and will not save you money.

 

Debt-to-Income Ratio

Debt-to-Income ratio is an extremely important student loan term that many people are unfamiliar with. Your debt-to-income ratio is a formula lenders use to determine if your income can cover all of your debts, including the new loan you are applying for. The lower the ratio the better because it shows you have enough income to pay your debts.

 

Typically lenders require a ratio of less than 50%, however, to qualify for the best interest rates, you’ll need an even lower ratio. To determine your debt-to-income ratio, divide your monthly debt payments by your monthly income. The debt-to-income ratio includes mortgage or rent payments, credit card payments, car loans, child support and alimony obligations, and personal loans.

 

Default/Delinquent

A loan is considered delinquent when a scheduled payment is not made in a timely manner.  Delinquency can result in the imposition of late charges, collection calls or letters, and negative information being placed on a credit report.

 

Default is when the lender determines that the borrower has failed to honor the terms of the loan agreement. In cases of default, the lender can declare the entire loan balance due and payable, even if the loan has not yet reached its maturity date.  Serious delinquency is very often the reason for a loan being declared in default. Before entering into a loan agreement, always read the loan agreement carefully to understand what constitutes a default under that loan.

 

Deferment

A period of time when payments are not required on federal student loans. To receive a deferment, you must receive special permission from your loan servicer and meet certain qualifications. You may qualify for a deferment if you are unemployed or enrolled in school at least part-time. The loan will continue to accrue interest unless it is subsidized. Some private lenders may allow you to defer payments, but you have to check with your provider to find out whether that is an option.

 

Disbursement

This is when your school receives funds like financial aid money or student loan funds. The institution then applies it to your bill for tuition and school-related fees. If you consolidate, the disbursement happens when money is sent to pay off your old loans.

 

Discharge

When some or all of your student loan debt is canceled, this is called discharge.

 

Entrance/Exit Interview or Counseling

Schools provide entrance or exit counseling to help students understand important financial topics like how to repay student loans. This can happen during enrollment or after graduation.

 

Expected Family Contribution (EFC)

This amount is an estimate based on how much money you, your spouse, and/or family can contribute to your tuition for the academic year. It’s calculated with the information provided on your FAFSA and helps determine your financial need. Financial need is calculated as the cost of attendance minus your EFC. This determines your eligibility for aid including Stafford loans, Perkins loans, scholarships, and grants.

 

Fixed or Variable Interest Rate

If an interest rate cannot change over time, it is fixed. A variable interest rate can change over the life of the loan.  Variable rates can move up or down based upon changes to an identified index, such a prime rate, a particular U.S. Treasury note, or LIBOR.  LIBOR stands for the London Interbank Offered Rate, and is an index commonly used with student loans.  Some variable rate loans may have a “cap” and/or a “floor.”  A cap is the maximum rate that can be applied to the loan, regardless of changes to the index.  A floor is just the opposite – the minimum rate for the loan regardless of changes to the index.

 

Forbearance

Like deferment, forbearance is when no student loan payments are due for a specified amount of time. You do not need to have a qualifying event for forbearance, but you do need to contact your servicer to request forbearance.

 

In forbearance, all loans will continue to accrue interest, so the amount you owe will increase. If your payments are too high to fit your budget, you may want to consider refinancing your loans rather than relying on forbearance.

 

Free Application for Federal Student Aid (FAFSA)

FAFSA is the application a student must complete to apply for any type of federal student aid including loans, grants, or scholarships.

 

Full-Time/Part-Time Enrollment

The amount of hours you’re taking in school, which can affect different aspects of student loan financing and repayment. Part-time is usually six credit hours and full-time is twelve, but this can vary.

 

Grace Period

Most student lenders offer a grace period, a specified amount of time that you are not required to make student loan payments, immediately after you graduate from school. For federal student loans the grace period is usually six months. For private student loans, it varies based on the lender. Some lenders offer a six-month grace period and others require immediate payment.

 

During the grace period, interest will continue to accrue on your federal student loan. If you are thinking of refinancing your loans and do not have a job yet, it may be advantageous to use the grace period to start earning a stable income so you will be able to qualify for refinancing. If you have a job and are ready to start paying down your loans, refinancing before your grace period ends may help you save more, so you can start taking advantage of a lower interest rate.

 

In-School Deferment

While actively enrolled in school, you might be able to postpone your federal or private student loan payments until you graduate or drop below half-time.

 

Interest Rate

The interest rate is the additional amount you pay to borrow the loan. An interest rate can be a variable rate or a fixed rate. A variable interest rate can change throughout the life of the loan. A variable interest rate is usually based on the LIBOR rate. If if the LIBOR rate rises, your interest rate will rise too. Most loans, however, have a limit on how high the interest rate can rise. A fixed interest rate stays the same throughout the entire student loan term. When you refinance your loan, you will be obtaining a new interest rate which can lead to significant savings.

 

Loan Forgiveness

When you qualify for certain programs, you may be able to have the final balance of your loans forgiven after a certain period of time. There are specific criteria for eligibility and usually a detailed application process.

 

Master Promissory Note (MPN)

This document states the terms of repayment for your student loans. It is the official document proving your commitment to repay the money you borrowed with interest. To receive federal loans, all borrowers must sign an MPN.

 

Principal Balance

The principal balance is the original amount of money borrowed from the lender. It doesn’t include interest or fees that are either unpaid or yet to accrue.

 

Private Student Loan

You can borrow private student loans through banks, credit unions or other private lenders. This is in contrast to federal loans, which the U.S. Department of Education manages. Private student loans usually have lower interest rates than federal student loans. They are not, however, eligible for certain federal student loan benefits like loan forgiveness.

 

Repayment Period

This amount of time is what you have to repay your student loans. The standard repayment period for Stafford loans is ten years but can be extended with reduced repayment plans. The longer you take to pay your loans, usually, the more you end up paying in interest. A repayment plan is a formal agreement you have with a servicer that details how you plan to repay your loans each month.

 

Repayment Terms

These terms represent all of your rights and responsibilities for the student loan, including what you’ll pay for monthly payments. Lenders must disclose the repayment terms to you before you commit to borrowing a loan.

 

Right to Cancel

Once the borrower accepts an approved application, the federal Truth in Lending Act requires the lender to provide a Final Truth in Lending disclosure statement.  This final disclosure statement includes a three business day right to cancel. During that time, the borrower can change their mind and cancel the loan.  To protect borrowers, the lender cannot disburse the loan proceeds until the right to cancel period has expired.

 

Servicer

The loan servicer handles your student loan billing, including collecting payments and assisting with customer service questions.

 

Student Aid Report (SAR)

The SAR is a detailed list of all of the financial and personal information you submitted for your FAFSA, including financial info for your family. Your school receives a copy of this and you should receive one as well.

 

Student Loan Refinancing

Student loan refinancing is when you borrow a new private student loan to pay off federal or private student loans, or a combination of both. This will essentially consolidate many loans into one. The only way to refinance is with a private student loan. Refinancing can help obtain a lower interest rate and is a great way to save money on your loans. You could see monthly savings and save thousands of dollars in interest costs over the life of the loan. You can also shorten or extend your repayment term to better fit your financial situation.

 

Subsidized and Unsubsidized Loans

While in school and during your grace period, the government pays the interest on your subsidized loans so you don’t have to. Federal loans that are not based on financial need are unsubsidized, meaning you’re responsible for paying the interest that accrues.

 

Hopefully, learning these student loan terms helps you feel more confident and guides you in making sound financial decisions. To see how refinancing your student loans with ELFI could help you earn a better interest rate, try our Student Loan Refinancing 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.

5 Things to Know Before Cosigning a Loan

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With interest rates on student loans at historical lows, 2020 offers the opportunity to obtain student loans at desirable interest rates, along with the ability to refinance student loans to a lower interest rate. Receiving a lower interest rate allows you to save money when repaying student loans by decreasing the amount of interest that you will have to pay over your loan term.

 

While it is appealing to take advantage of these lower interest rates, meeting the eligibility requirements to obtain a student loan or refinance student loans can be a barrier to obtaining these lower rates. One option for individuals who don’t meet the credit score or income requirements for obtaining a loan is adding a cosigner who does meet the requirements to guarantee the loan. However, consigning a loan comes with responsibilities. Here are several things to know before consigning a student loan or a refinanced loan.

 

You are held responsible for the entire loan

While cosigning a loan can seem like a simple favor to help a friend or family member, it actually means that you are held responsible for the entire loan amount. Cosigning a loan means that you are obligated to make payments on the loan if the primary borrower is unable to do so. While the borrower may be financially able to make consistent payments now, it’s important to keep in mind that their situation can change for the worse, whether it be through losing employment, unwise financial decisions, or simply being irresponsible.

 

Before cosigning a loan, be sure to take stock of your current and potential future financial situation to ensure you will be able to make payments if the primary borrower cannot.

 

Your credit is at stake

When you cosign a loan, the loan and payment history shows up on your credit report as if the loan is your own. When you first cosign, the lender will conduct a hard credit pull, making an immediate impact on your credit score. The overall amount of debt will also be added to your credit report, which can also affect your credit score.

 

This means that any missed payments will affect your credit score negatively. Since payment history is one of the biggest factors in your credit score, it’s important to make sure the primary borrower is making their payments and that they are aware that a missed payment affects your financial future as well.

 

Additionally, since cosigning a loan adds to your total debt, cosigning a loan may affect your access to credit in the future. Creditors will take this debt into consideration before approving you for additional credit. It’s recommended to keep an eye on your credit report after cosigning a loan to make sure it’s still in good shape.

 

You can be subject to legal action by the lender

Depending on the state you live in, lenders can pursue legal action against you on debt that goes unpaid for a significant period of time. If several missed payments occur, you may be liable to be sued for nonpayment. This typically occurs when the debt goes unpaid for 90 to 180 days, but the law varies in different states, and protocol varies by lender.

 

If legal action commences, the cosigner will be responsible for any and all costs, including but not limited to lawyer fees. While this doesn’t typically occur, keeping in mind the worst-case scenario is still important.

 

Removing yourself as the cosigner can be difficult

Another consideration to have when cosigning a loan is that it’s not always easy to remove yourself as a cosigner down the road. If you need to eliminate the liability of the cosigned debt in order to receive a personal loan, mortgage, or another type of credit later on, you may find yourself wanting to be released as the cosigner.

 

Refinancing a loan is one way to remove a cosigner, however, the primary borrower will have to qualify for the new loan in order to do so. Typically, lenders will require the primary borrower to establish a history of on-time payments before they assess whether the borrower can responsibly take on the loan themselves.

 

Your relationship could be at risk

While not a major financial risk, cosigning a loan can cause a divide in your relationship with the primary borrower if repayment doesn’t go according to plan. While the primary borrower may have all plans to responsibly manage the loan, if things worsen and you as the cosigner aren’t made aware, you may be fairly bothered by how the borrower’s actions have affected you. It’s important to establish a trust that the primary borrower will be transparent with you so that the loan doesn’t cause a problem with your relationship with them down the road.

 

Bottom Line

When it comes down to it, cosigning a loan comes with risk, and should only be done when necessary and if you fully understand the consequences if things don’t go according to plan. If you’re looking to release yourself as the cosigner of a loan, read our blog, Cosigners and Cosigner Release: What You Need to Know

 


 

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.

 

 

 

10 Pros and Cons of Refinancing Private Student Loans

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This year we have seen record low refinancing rates for student loans. If you have private student loans and have been thinking about whether you should refinance them, we hope this post will help you make a decision. We will run through the essentials and the pros and cons of refinancing your private student loans.

 

6 Benefits of Refinancing Private Student Loans

Private student loans are loans borrowed through banks, credit unions or other private lenders and can consist of original private loans or a loan that you already refinanced. When you refinance, there are many benefits you can experience. Here are the pros of refinancing your private student loans:

 

1. Obtain a Lower Interest Rate

When you refinance a private loan, you are paying the loan off with the new loan you borrow.  The new loan can have a lower interest rate than the rate you previously had on your old loan. A lower interest rate can lead to thousands of dollars in savings depending on the amount of the loan, your old interest rate and your new rate. A lower rate can help reduce your monthly payment and save you money in interest cost over the loan term.

 

2. Make Your Repayment More Manageable

If your monthly payment is becoming difficult to pay, refinancing is a good way to help make your payment more manageable. This can be done by obtaining a lower interest rate, as previously mentioned, that can help lower your payment. You can also lengthen the loan term when you refinance. When you extend the loan term it makes the monthly payment lower, but will increase the amount of interest charges you will pay.

 

3. Pay Debt Off Faster

Ready to pay your loan off faster? This can be achieved through refinancing in multiple ways. If you have 10 years remaining on your loan term and refinance to a 7 year loan term or shorter , you will have a higher payment but will have the loan paid off 3 years earlier. Another way to pay off your loan faster is if you refinance and obtain a lower interest rate, your payment will be lower monthly. But if you continue to pay your old monthly payment or more towards the new loan you will be able to knock out your debt quicker.

 

4. Release a Cosigner

When you refinance your private student loan you can use the opportunity to release a cosigner from your previous loan. As long as you have a strong credit history and credit score, along with stable income, you can qualify for the new loan on your own. To qualify for the best interest rates available most lenders look for a credit score at least in the high 700s. At ELFI a minimum credit score of 680 is needed for refinancing.*

 

5. Combine Multiple Loans

If you have multiple student loans, refinancing is a great way to simplify your finances. You are able to pay off all the previous loans and focus on paying off just one loan. It’s also easier to keep track of your due date so you never miss a payment. Having only one loan may also help keep you motivated on your debt paying journey instead of seeing multiple student loan debts you have to pay.

 

6. Choose a Different Lender

If you are not happy with your current student loan lender, refinancing allows you to change to a different refinancing lender by refinancing with whichever lender is the best fit for you. So if you have questions about your loan but can never seem to get answers from your lender, refinancing can help you fix that. At ELFI we pride ourselves on providing a simple and easy process for refinancing along with award-winning customer service loan advisors.

However, just like there are benefits to refinancing private student loans, there are also some cons to consider.

 

1. Lose Benefits with Your Current Lender

If you refinance your student loan with a different lender, you may lose benefits you have with your current lender. Some benefits that lenders may provide are an interest rate deduction for setting up auto-pay for your payment, forbearance options, or career coaching. Before you look to refinance with a different lender, weigh whether a new interest rate from a different lender outweighs any benefits you may be giving up.

2. Get a Higher Interest Rate

If you are refinancing to extend your loan term to make the payment more manageable, you may end up with a higher interest rate then the previous rate you had. This would make refinancing your loan more costly in the long term because of the additional interest you will end up paying. In order to avoid this, make sure to get personalized rate quotes from multiple lenders so you know your options and how it will affect your monthly payment and the total amount of interest you will pay.

3. Raise Monthly Payments

When you refinance you have the ability to choose a new loan term. Selecting a shorter loan term then the amount of time you had left on your loan can increase your monthly payments. Typically refinancing lenders provide loan terms of 5, 7, 10, 15, or 20 years. If you had 8 years remaining on the loan you want to refinance and select a loan term of 7 years you may see an increase in your monthly payment unless you are qualifying for a significantly lower interest rate.

4. May Extend Time to Repay

When selecting your loan term when you refinance, if you choose a longer loan term then the amount of time you had remaining on your loan, you will be stuck paying the debt off longer. However, this can be beneficial if you need to lower your payment to fit within your current budget. You can also combat this issue by paying more than the required monthly payment when you can afford it, to help pay the loan off quicker.

The Bottom Line

Every financial situation is unique so it’s best to determine what is right for your circumstances. When you weigh the pros and cons of refinancing private student loans, you will most likely find it is advantageous for you because of all the different potential benefits.

 


 

*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.

Should You Refinance Student Loans to a Longer Term?

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If your student loan payments are becoming overwhelming, it could be time to consider refinancing. When you refinance your student loans, you’ll not only have the option of consolidating multiple loans into one monthly payment; you’ll also have the chance to change your student loan repayment term.

 

When you take out private loans, you have the option of choosing to repay them over a short period of time or a longer period. We’ve compiled the pros and cons of both, as well as some situations in which a longer student loan repayment term might be the right fit for you.

 

Is it time to refinance your student loans?

Refinancing your student loans is a great way to lower your interest rate and earn financial freedom more quickly. You can refinance both private and federal loans, and if you’re tracking a multitude of payment dates and timelines, consolidating your loans through refinancing can be a great way to simplify your financial life and work toward becoming debt-free.

 

You can refinance your loans as many times as you’d like, so even if you’ve already refinanced once, it never hurts to explore new lenders! Now is an especially good time to refinance your student loans, as interest rates have recently dropped as a result of the COVID-19 pandemic. As of September 18, 2020, student loan refinancing rates are as low as 2.39% for variable interest rate loans and 2.79% for fixed interest rate loans.

 

If you think now is the right time to refinance your student loans but you’re not sure, keep reading for more insights. We’re here to support your journey toward financial freedom and applaud your researching smart money moves!

 

Signs it might be time to refinance your student loans:

  • You think you could earn a better interest rate. If interest rates recently dropped or your credit score has gone up, research your options to see if refinancing could be the right choice for you.
  • You have mostly private student loans. If your loans are through private lenders, now could be the time to consider refinancing, as you won’t risk losing any federal benefits.
  • You need more financial flexibility. If your student loan payments are keeping you from accomplishing other financial goals, refinancing could help by lowering your interest rate and extending your student loan repayment term. To learn more about the pros and cons of a long student loan repayment term, read on.

 

What happens when you change your student loan term?

A student loan repayment term calculates how long you have to pay back your loans in full. ELFI, for example, offers varying repayment terms for student loan refinancing.

 

When you consolidate and refinance your student loans, you’ll have the opportunity to change your student loan repayment term. This is especially useful if you’ve taken out several loans with different amounts and timelines.

 

Choosing a longer term for your student loans

Opting for a longer student loan repayment term means you will pay more in interest over time. Each monthly student loan payment, however, will have a lower balance than if you had opted for a short repayment term.

 

If you’re looking to accomplish several financial goals, like saving for a down payment on a house or purchasing a new car, lengthening your student loan repayment term may give you the flexibility you need to work toward those goals. Be advised, however, that if you do opt for a long student loan repayment term, the total amount you’ll pay in interest will go up. At the end of the day, the right student loan repayment term for you depends primarily on your long-term financial goals.

It might be time to refinance your student loans to a longer term if:

  • You want the financial flexibility of a lower monthly student loan payment
  • You’re expecting a drop in income and need to lower your monthly expenses
  • You’re having difficulties keeping up with your current student loan payments

 

What about shortening my student loan repayment term?

If none of the above scenarios apply to you and your most pressing question is “how can I pay off my student loans faster?” then a short student loan repayment term could be right for you.

 

Unlike a long student loan repayment term, you’ll make larger monthly payments but will pay less in total interest. Opting for a short student loan repayment term is the right choice for borrowers who have the financial flexibility to make larger monthly payments for a short period of time.

 

Learn more about short student loan repayment terms in our recent blog, “Choosing the Right Student Loan Repayment Term.”

 

Refinancing student loans with ELFI

Ready to explore your student loan refinancing options with ELFI? Great! We’re excited to help. In addition to potentially lowering your interest rate and choosing a new student loan repayment term, when you refinance with ELFI, you’ll also work directly with a Personal Loan Advisor who will help provide a seamless, personalized refinancing experience.

 

Don’t take our word for it. Check out recent customer reviews on Trustpilot! If you’re ready to explore potential interest rates by refinancing with ELFI, check out our 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.