Private Student Loans (Blog or Resources)

Should You Refinance Student Loans to a Longer Term?

Posted on September 23, 2020September 23, 2020

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.

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7 Actions to Take Before Your Grace Period Ends

Posted on September 8, 2020September 8, 2020

Congratulations! You graduated from college and have hopefully settled into the start of your career. If it has been almost 6 months since your graduation, it’s most likely your student loan grace period is nearing the end if you have federal student loans. Are you prepared for when your grace period ends? Luckily we have some actions you can take to prepare.

If you have federal student loans, there is a six month grace period before you have to begin making payments after you graduate, leave school or drop below a half-time student. Not all federal student loans have a grace period. The loans that do include: direct subsidized and direct unsubsidized. PLUS loans for graduate school have a six month deferment period after graduation where payments are not required. Some private student loans also have a grace period but it may not be six months. Be sure to check with your lender to determine if any grace period exists.

Actions to Take

Here are a few actions you should take before your grace period ends to ensure you are prepared.

Determine Your Debts

First, it’s important to understand the types of student loans you have. For example, do you have private or federal loans? If you have federal student loans, you’ll need to determine whether you have subsidized or unsubsidized loans. Subsidized loans mean the U.S. Department of Education will pay the interest on the loan during the grace period for most loans. (Note: If you have a direct subsidized loan that was disbursed between July 1, 2012, and July 1, 2014, you are responsible for the interest during the grace period.) If you have a Direct Unsubsidized loan you will always be responsible for the interest, even the interest accruing during the grace period. This means that if you don’t need the grace period you may want to think about at least paying the interest on the loan.

Be sure to take stock of your other debts, such as a car loan or credit card payments, and their minimum payments.

Make a Budget

Determine a budget that includes your new student loan payment and all other debt payments. Once you determine your budget, start following it before your grace period ends. The money budgeted for your student loan can be put aside to use as an emergency fund. Or use the money you saved during the grace period to make a principal-only payment to get ahead on your repayment.

Set Up Auto-Pay

Another great action to take during your grace period is setting up auto-pay through your loan servicer. Setting up auto-pay will ensure your student loan payment is always made on time. Another great benefit of using the auto-pay feature is that federal student loans are given a 0.25% interest rate reduction. Some private student loan lenders also provide a discount for auto-pay so check with your lender if any discount is available.

Establish a Debt Repayment Plan

Your grace period is a great time to establish a student loan debt repayment plan. A debt repayment plan will help you decide exactly how you will pay off your debts. There are two main types of student loan debt repayment plans, the snowball method, and the avalanche method. You have to decide which method would work better for your financial situation and motivation. Either method will be helpful if you have multiple student loans or other debts to pay off. Once you decide on your method, you will know how to allocate any extra money you have in your budget for debt repayment. When it comes time for your grace period to end you will be more than ready to start paying down your loans efficiently!

Research Repayment Options

If you have multiple student loans you can pay each loan, keeping track of each loan individually and their due dates.
Another option is to consolidate your federal loans into one loan. The average interest rate of the consolidated loans becomes the fixed interest rate on the new consolidated loan. This is consolidating your federal loans into a Direct Consolidation Loan through the U.S. Department of Education.
Refinance student loans. Once you start getting your finances in order you may realize your student loan payment is not going to fit in your budget or has a much higher interest rate then what is available now. That’s where refinancing your student loans can help. Refinancing your student loans means you will borrow a new private student loan to pay off any previous student loans (including federal and other private student loans). Refinancing can save you money because interest rates can be much lower than for federal loans. A lower interest rate means you are saving money in interest costs monthly and over the life of the loan. To find out how much you could save use our Student Loan Refinance Calculator.*

Learn About Borrower Protections and Programs

When you have federal student loans you are provided benefits that are not always provided by private student loan lenders. The grace period of your loans is a good time to find out about any federal borrower protections you may want to use in the future, such as deferment and forbearance for your loans. Also, if you work for a non-profit or government agency, your loans may qualify for forgiveness under the Public Service Loan Forgiveness (PSLF) program. During the grace period, it is helpful to learn about the requirements for the program so when your payments begin you can be sure they qualify under the specific rules of the program.

Learn About the Repayment Plans

If you are shocked by what your monthly payment will be on the standard repayment plan, check into the other student loan repayment plans provided for by the U.S. Department of Education. Certain loans are eligible for an Income-Driven Repayment Plan, where your payment will be based on your income. Or you can elect to have your loans on the Graduated Repayment Plan that will extend your loan term to provide for a smaller monthly payment. However, keep in mind that you will end up paying more interest over the loan term.

The Bottom Line

Taking these actions will help you be prepared for the end of your grace period. You are already a step ahead by thinking about this now. This preparation will start you off on a bright financial future knocking out your student loans. Good luck!

*Subject to credit approval. Terms and conditions apply.

Establishing Your ‘Why’ for Paying Off Student Debt

Posted on August 31, 2020

If you are working to pay off student loan debt, you are not alone. Approximately 45 million Americans have student loan debt, with the average borrower facing almost $33,000 to pay back. This could take ten years or longer to get rid of the debt. If you are on a mission to pay off your student loans, or any debt, establishing your ‘why’ can be a big help to pay them faster.

Establishing Your ‘Why’

Studies have shown that writing down your goals makes you more likely to achieve them. This can easily be applied to the goal of paying down debt. Determining your ‘why’ and writing it down can help keep you motivated to knock out your student loans.

Knowing your motivation will also help you when the debt-paying journey gets hard. The process to pay off debt, especially large student loans, can be stressful and seem never-ending. You will inevitably encounter setbacks to your payoff goal or hard times that make you question whether you should stay on track. For example, you may have budgeted one month you were going to pay an extra $200 to your student loans, then a few days later an unexpected car repair or medical emergency occurs and now the $200 has to be spent on the emergency instead of your student loans. This may be a setback that makes paying down the debt a little tougher that month. But having your motivation, your ‘why’, can help you see the big picture and stay focused on your debt crushing goal.

Every person will have a different reason for wanting to get out student debt now, but some ideas you may want to consider when establishing your ‘why’ are:

Desire to Start a Family

Most everyone has heard how expensive kids can be, and if you are paying student loans off, you may not have much room left in your budget to cover all the costs associated with having a baby. Although you shouldn’t put off starting a family because you have debt, use it as motivation to pay it off quickly so you won’t have to feel stressed about finances when you have a little one. Make a goal to have a portion or all of your student debt paid before your family grows. Try to meet your goal by budgeting for extra payments to your student debt. It also might be helpful to start budgeting and saving for baby expenses before the newest addition arrives.

Retiring Early

If you want to focus less on your 9 to 5 and more on a passion project, retiring early may be on your radar. This could be a great motivator to use extra money to eliminate your student loan debt. Having fewer expenses, like debt payments, allows you to live off of less income during retirement, which may allow you to retire earlier than expected.

Buying a House

If you dream of buying your own home you may encounter hurdles being approved for a mortgage if your debts compared to your income are too high. But every dollar towards your student loans can help you get closer to the dream of owning a home by decreasing your debt totals.

Freedom

Being debt-free provides many opportunities that may not be sustainable when you are facing debt payments each month. You are free to accept a dream job that may pay less. You have the opportunity to have more experiences, like travel and music festivals, that may not have previously fit in your budget. Freedom from student debt payments can be a great motivator when you are trying to establish your why because it can lead to many more goals you want to accomplish.

How to Stay Motivated

Once you have established your ‘why,’ try some different techniques to stay motivated to actually achieve the goals. Besides just writing down your goals, here are some other techniques to try:

Visualize Your Goal

This can be as simple as putting up a picture of your dream house to remind you that homeownership is in your future or creating a whole board of how you envision your life after paying off your debt. However you do it, actually seeing pictures and representations of your goal can help “keep your eye on the prize”.

Debt Payment Charts

If you are more motivated by the amount of debt paid, use a debt-payment chart to show your progress. You can do this by drawing out boxes to represent amounts of your debt and shading in when you reach that milestone. You can also do a simple search online to find free debt-free charts to use.

Reward Yourself

Be sure to reward yourself, but do it in moderation so you don’t undo your progress. When you meet a milestone of paying off your debt, reward yourself with a little something special. For example: Set a goal that every time you pay down your debt by 20% you buy a purchase you’ve been eyeing under $100. This will help you feel like you are still able to buy things you enjoy while making progress on your debt paying journey.

Are you looking to pay your student loan debt off quicker? Check into refinancing your student loans. Refinancing can be beneficial for many borrowers because it can help you save in interest costs and pay your loans off faster. Use our Student Loan Refinance Calculator to see what you could be saving.*

Bottom Line

Paying off student loan debt may be a stressful journey at times, but once you establish your why for wanting to pay off the debt, you will feel motivated to keep going during the tough times. Accomplishing your goal of paying off student loans will allow you to feel free from the debt and help you get closer to the other goals you have planned. You can do it!

*Subject to credit approval. Terms and conditions apply.

How College Graduates Can Still Take Advantage of Low Student Loan Rates

Posted on August 28, 2020

If you went to college before the 2020-2021 school year and took out student loans, you, unfortunately, have terrible luck.

In May, the U.S. Department of Education announced it was slashing federal student loan interest rates to their lowest rates in decades. The changes aren’t retroactive, so if you took out student loans before July 1, 2020, you’re stuck with the higher rate you agreed to when you signed your promissory note.

If that feels unfair, there is a workaround: student loan refinancing.* By refinancing your loans, you can secure a lower interest rate and save money over the life of your loans.

Current federal student loan interest rates

As of July 1, 2020, the following federal loan interest rates apply:

Direct Subsidized and Unsubsidized Loans: Interest rates on Direct loans for undergraduate students went from 4.53% to just 2.75%.
Direct Unsubsidized Loans for graduate students: The interest rate on graduate loans decreased from 6.08% to 4.30%.
PLUS Loans: The interest rate on Parent PLUS Loans and Grad PLUS Loans went from 7.08% to 5.30%.

If you took out loans even a day before July 1, 2020, you have a much higher rate, and the federal government doesn’t offer any way to take advantage of the lower interest rates.

The impact of these rate differences can be significant.

For example, let’s say Laura went to college during the 2019-2020 school year and took our Direct Unsubsidized undergraduate loans. She borrowed $15,000 and had a 10-year term at 4.54% interest. By the end of her repayment term, she’d pay $3,681 in interest charges.

Laura’s friend Jennifer is going to college during the 2020-2021 academic year. She also will take out $15,000 in student loans, but she qualifies for a 10-year loan at a reduced rate of 2.75%. At the end of her repayment period, she’ll pay just $2,174 in interest charges. The reduced interest rate allows Laura to save over $1,500.

How to lower your interest rate with student loan refinancing

If you have an older federal student loan and want to lower your rate, student loan refinancing may be a solution for you.

With the Federal Reserve slashing rates and the London Interbank Offered Rate (LIBOR) at a record low, you can get a low variable or fixed-rate loan. Fixed-rate loans tend to follow the trend of the Federal Reserve. As interest rates are reduced, fixed-rate loans usually follow suit.

With variable-rate loans, private lenders typically use LIBOR to set their rates. Private lenders will base their rates on the LIBOR plus their margin. Since the LIBOR can fluctuate over time, your variable interest rate can change, too.

Right now, the LIBOR rate is much lower than it was even six months ago. If you refinance and opt for a variable-rate loan, you could dramatically lower your interest rate.

Refinancing interest rates are at historic lows for fixed and variable-rate loans, so now is a great time to refinance your debt if you want to get rid of high-interest debt.

How student loan refinancing works

When you refinance, you apply for a loan from a private lender like Education Loan Finance. Unlike federal loans, which typically don’t require a credit check, private refinancing lenders base their decisions off of your creditworthiness and income.

If you have good credit, you can qualify for a loan at a competitive rate. If you have less-than-perfect credit, you can still refinance your debt. You’ll just need a cosigner with good to excellent credit to apply for the loan with you.

Refinancing has multiple benefits:

1. Save money

When you refinance and qualify for a lower rate, you can save a substantial amount of money.

ELFI customers reported that they are saving an average of $272 each month and should see an average of $13,940 in total savings after refinancing their student loans with ELFI.1

Use the student loan refinance calculator to find out how much you could save by refinancing your loans.*

2. Consolidate your debt

To pay for college, you likely had to take out multiple student loans. You may have a mix of federal and private loans and have different loan servicers, monthly payments, and due dates to manage. Juggling multiple loans can be confusing, making it more likely you’ll lose track and miss a payment.

When you refinance your debt, you’ll consolidate all of your loans into one. Instead of having multiple loans and due dates, you’ll have just one loan and one easy payment to remember.

3. Reduce your monthly payments

When you apply for student loan refinancing, you can qualify for a lower interest rate. But, you can also change your loan term. If you decide to extend your loan term, you can reduce your monthly payment and get more breathing room in your budget, a valuable benefit when you’re getting your career off the ground.

Later on, when you’re more established and making more money, you can make extra payments and pay off your debt early without paying a prepayment penalty.

How to refinance your loans

Refinancing your loans is a simple process; You can get a rate quote from ELFI online without affecting your credit score.* Once you find a loan that works for your needs, you can finish the application process online.

If you need help or have additional questions, call ELFI to speak to a Personal Loan Advisor at 844-601-3534.

*Subject to credit approval. Terms and conditions apply.

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

What Trump’s Executive Order Means for Your Student Loans

Posted on August 21, 2020August 24, 2020

Due to the coronavirus outbreak and its impact on the economy, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March. The CARES Act gave some federal loan borrowers relief, temporarily suspending their loan payments and reducing their interest rates to 0%.

By Kat Tretina

The CARES Act was originally set to expire on September 30, and payments and regular interest rates were supposed to be reinstated on October 1, 2020. However, President Trump signed an executive order on August 8 that extended the payment suspension until December 31, extending its benefits but raising some new questions for student loan borrowers.

Here’s what Trump’s executive action means for you, and what to do if you don’t qualify for the CARES Act federal student loan protections.

How CARES Act executive order affects your student loans

For federal loan borrowers who may be still experiencing financial hardships because of the COVID-19 pandemic, President Trump’s executive action was welcome news.

Under the executive action, certain CARES Act protections have been extended until December 31, 2020:

Federal loan payments suspended
Interest rates reduced to 0%
Collection activities postponed

The Education Department has clarified that the extension includes the prior CARES Act protections for those pursuing Public Service Loan Forgiveness and loan rehabilitation, with non-payments during this period still counting as qualifying payments for the Public Service Loan Forgiveness program and the federal loan rehabilitation program.

Thanks to the executive action, you won’t have to make payments on your loans, and you won’t become delinquent or enter into default. You can use the money you would’ve spent on your payments on rent or other necessary expenses. Or, you can continue making payments on your loans to accelerate your repayment. Since interest rates are set at 0%, you can use this period to chip away at your loan principal.

Who is eligible for the CARES Act federal student loan protections?

Unfortunately, not all student loan borrowers are eligible for the CARES Act federal student loan protections. Only federal Direct Loan borrowers and those with federally held FFEL Loans qualify, so you must have one of the following loan types:

Direct Subsidized
Direct Unsubsidized
Grad PLUS
Parent PLUS
Direct Consolidation
FFEL Loans currently owned by the U.S. Department of Education

Should I refinance my student loans?

While federally held student loans are covered by the bill, neither Perkins Loans nor privately-held FFEL loans are covered by the bill. Private student loans are also ineligible for the CARES Act protections and the executive action extension.

If your loans don’t qualify, now may be a good time to consider student loan refinancing. Student loan refinancing rates are at an all-time low, so you can reduce your rate, lower your monthly payment, and save money over the length of your repayment term.

When you refinance, you apply for a loan from a lender like ELFI for the amount of your combined existing debt. Your new loan will have different terms, such as interest rate, monthly payment, and the repayment period. To get the lowest student loan refinancing rates, you typically need good to excellent credit, and you need to opt for a shorter loan term.

With good credit — or a cosigner to apply for the loan with you — you may qualify for a lower interest rate than you have now and save a significant amount of money.

For example, if you had $40,000 in student loans at 6% interest and a 10-year repayment term, you’d pay $53,290 over the length of your repayment term.

But if you refinanced and qualified for a 10-year loan at 4% interest, you’d pay just $48,598. By refinancing your student loans, you’d save $4,692, and you’d even reduce your monthly payment.

Original Loan

Balance: $40,000

Interest Rate: 6%

Loan Term: 10 Years

Minimum Monthly Payment: $444

Total Interest: $13,290

Total Repaid: $53,290

Refinanced Loan

Balance: $40,000

Interest Rate: 4%

Loan Term: 10 Years

Minimum Monthly Payment: $405

Total Interest: $8,598

Total Repaid: $48,598

Use the student loan refinance calculator to find out how much you save by refinancing your student loans. If you decide to move forward with refinancing, you can get a rate quote from ELFI without affecting your credit score.*

*Subject to credit approval. Terms and conditions apply.

8 Apps That Can Help You Pay Off Your Student Loans Faster

Posted on August 20, 2020August 20, 2020

Over the past few decades, student loan debt has skyrocketed. That’s no secret. Fortunately, at the same time, hundreds of tools have been created to help make paying off student debt easier and faster. Many of them can be accessed entirely through your phone, turning student loan relief into a mobile, accessible service. We’ve compiled a list of several apps that can help you pay off your student loans. Take a look:

Mint

There are dozens of fantastic budgeting apps, and Mint is among the best. It allows you to track and plan for expenses by providing easy access to statistics and other information about your spending.

How does this pertain to student loans? The answer is simple. Proper budgeting and paying off student loans go hand in hand. Being able to set aside portions of your income every month for your student loan payments is key to successful financial management. Plus, by looking at your budget and determining where you can cut spending, you’ll be able to put more money toward your student loan payments, allowing you to become debt-free faster.

EveryDollar

Created by personal finance guru Dave Ramsey and his team, EveryDollar is another great budgeting application. Designed to be simple and efficient, EveryDollar is a very effective budgeting tool. As with Mint, maintaining a budget is key to every quick student loan payoff. EveryDollar is best used to identify where you can spend less money in order to reallocate that money to your student loan payments, and with all the information laid out in front of you, it’s hard not to see where you can make some improvements.

ChangEd

Built by two individuals who struggled to pay off their student loans, ChangEd is an app that links to your credit and debit cards. When you make a purchase with those cards, ChangEd rounds up to the nearest dollar, taking that change and sending it straight to your student loan provider when you reach a minimum threshold. While seemingly a small amount, this extra change adds up. It’s more money going directly to your student loan payments. Who would turn that down?

Qoins

Qoins functions very similarly to ChangEd. You connect your credit and debit cards, and after every purchase, Qoins will round up and send that money to your student loan provider. The difference between Qoins and ChangEd: there’s no minimum threshold to reach, all the extra money goes straight to your loan provider. That said, it charges a higher monthly fee than ChangEd to do this.

Undebt.it

Undebt.it is a handy app that allows you to track all your debt in one place, then it provides a plan to help you pay it off in the most efficient way possible. One way is the ever-popular debt snowball method, where you pay off all of your smallest loans first, but you can also choose from a variety of repayment strategies. You can choose whichever works best for you. One highlight is the app’s ability to show what a difference an extra payment makes.

Debt Payoff Assistant

Debt Payoff Assistant is a debt tracker focused mostly on the debt snowball method. Input each of your debts, student debt especially, and a unique debt repayment plan is generated. The app offers great utility, with several built-in calculators, as well as the ability to view a payoff schedule, estimated payoff dates and more.

Givling

Givling is a quirky way to deal with student debt faster. Twice a day, Givling hosts a trivia contest via their app. Winners earn a cash prize, and as one plays more, they help to crowdfund future giveaways and prizes. So if you’re good at trivia, this could be your chance to tackle some student debt. If you aren’t good, you’re still helping to pay off someone else’s student loans. That said, the odds are against you winning big through Givling, and it’s definitely better to consider it a fun diversion rather than a serious solution for dealing with student debt.

Google Opinion Rewards

A little like a side hustle, Google Opinion Rewards and other survey-for-pay websites are a different way to deal with student debt. When you complete a survey, you will receive a very small reward, but the rewards add up over time. It’s a great way to fill short periods with nothing to do. You can easily earn a little pocket change in a waiting room or while waiting for the tea kettle to boil. Put it towards your student loans, and you’ll be well on your way!

There are dozens more apps that can help you pay off your student loans, and undoubtedly there will be even more in the coming years. It’s never been easier to get organized and tackle your student loans head on, and with these apps, we hope you’ll get it done in style. If the apps don’t cut it, it may be time to consider student loan refinancing, check it out here.

The Benefits of Making Consistent Student Loan Payments

Posted on August 18, 2020August 18, 2020

If you have student loans and consistently make your monthly payment, congratulations! You know how beneficial that can be for your financial health. However, if you are in the habit of skipping student loan payments because you think it won’t affect you, you need to keep reading.

Although missing a student loan payment isn’t quite as detrimental as missing a car or mortgage payment, missing student loan payments can have a strong negative impact on your financial future. Still need convincing? Here are four great reasons to continue making consistent student loan payments, and what to do if you’re struggling to make your payments.

Benefits of Consistent Student Loan Payments

Whether you have federal student loans or private student loans, there are many benefits to making consistent payments on time. When you make consistent student loan payments, you’re more likely to:

Have a Better Credit Score

Your credit score can affect many facets of your life. For example, if you want to buy a car, rent a home or buy a home, your credit score will be reviewed before you’re approved.

One of the most important factors in determining a person’s credit score is their payment history. The payment history shows if you miss a payment, and missed payments remain on your credit history for 7 years. So any missed student loan payments could take a significant toll on your credit score, while making consistent payments can help improve your score. A better credit score can:

Qualify for a Mortgage, Car Loan or Better Interest Rate

When you apply for a loan, sometimes lenders require a minimum credit score to approve the loan. Even after you are approved for a loan, a higher credit score means a better chance of receiving a lower interest rate. A lower interest rate equates to paying less interest over the life of the loan, saving you money!

Qualify for Refinancing

Whether you want to refinance your student loans or your mortgage, having a good credit score can help you qualify for refinancing and a better interest rate.

Qualify for Better Credit Card Limits and Rates

Having a strong credit score and good credit history shows lenders you are responsible with credit and making payments. Therefore, when you apply for a credit card, you are more likely to receive a higher credit limit and lower interest rate.

Qualify for Rental Housing

Even if you think you will not be taking out any other loans, if you are trying to rent a house or apartment, some locations require a credit report. A low credit score or negative credit history can prevent you from qualifying for certain housing.

Save on Interest

When you make consistent payments on your student loans, you will save on interest costs. Interest compounds daily, meaning more interest is added to your loan each day. Some interest accrues based on the principal of the loan (the amount you borrowed), while other loans interest compound based on the total outstanding balance. Therefore, consistently making payments, and making extra payments when you can, will save you from paying more interest.

Avoid Late Fees

When you make consistent payments by your due date, you will avoid having to pay any late fees. Saving yourself money that could be put towards your loans!

Pay Loans Off Faster

One of the best benefits of making consistent payments is that you can pay your student loans off faster. For example: if you are paid bi-weekly and decide to make half your monthly payment each time, you will ultimately make one extra payment per year.

Here is how it works: If you owe $50,000 at 7% interest and have a 20 year loan term, your payment would be approximately $387.65 per month. If this is paid consistently monthly you would end up paying over $43,000 in interest over the 20 years. However, if you divide your payment in half to $193.82 and pay that every two weeks you would pay the loan off 3 years sooner and save over $7,000 in interest.

What to Do If You Can’t Make Consistent Payments

If you are worried because you can’t make the payments by your due date, here are some options to try:

Switch to a Different Repayment Plan

If you have federal student loans, look into whether a different repayment plan would help make your payment more manageable. Although switching to a longer loan term or income-driven repayment plan will increase the amount of interest you owe in the long term, it’s best to have an affordable payment you can make so you do not default on your loan.

Try Refinancing Your Student Loans

Refinancing your student loans is an excellent way to make your loans more affordable and save on interest costs. Refinancing is taking out a new loan to pay off your old student loans. When you apply for a new loan you may qualify for a new lower interest rate, which reduces the amount you’ll pay over the life of the loan. A lower interest rate can also reduce your required monthly payment, making it more budget-friendly. After you refinance, you may also see that it is easier to make more consistent payments, such as bi-weekly, to pay your loan off faster. Use our Student Loan Refinance Calculator to see how much you can save with refinancing.*

When you are paying off any type of debt, it’s always best to make consistent payments on time. This will not only keep you in the habit of making payments but will save you money in the long run. Although paying off student loans may seem like a marathon at times, you will reach the end! Keep going because it will literally pay off!

*Subject to credit approval. Terms & Conditions apply.

Sneak Peek: 5 Takeaways From the Torch Student Debt E-Book

Posted on August 13, 2020

In the United States, over 45 million people are dealing with student loan debt. And it’s not just a problem for millennials and Generation Z. In fact, the number of people over 60 with student loan debt has quadrupled since 2010.

By Kat Tretina

If you’re looking for help with your loans, you may be overwhelmed by the amount of information out there and may not know what sources are legitimate.

Torch Student Debt is a free eBook from Education Loan Finance, a company with an A+ rating with the Better Business Bureau and a 4.9 TrustScore on TrustPilot based on over 1,100 customer reviews. It’s a comprehensive guide on accelerating your debt repayment, saving money, and reducing your monthly payments.

Here’s a sneak peek into five key tips from the book.

1. If you have federal loans, a Standard Repayment Plan is the most cost-effective repayment option

If you have federal student loans, the default repayment plan the government assigns you to is a 10-year Standard Repayment Plan. After your grace period — the six months after graduation where you don’t have to make payments — you’ll make full interest and principal payments and pay off your loans within 10 years.

While you can extend your federal repayment plan to 20 to 25 years to get a smaller monthly payment, doing so will likely cause you to pay more in interest charges over time.

If you can afford it, stick to a 10-year plan. You’ll pay off your loans sooner, and you’ll pay less money in interest charges.

2. If you can’t afford your payments, you can switch to an income-driven repayment (IDR) plan

If you have federal loans and can’t afford your monthly payments under a Standard Repayment Plan, you can lower your monthly payments by switching to an IDR plan. Under an IDR plan, the government bases your payments on your discretionary income and family size, and you could potentially qualify for a much lower monthly payment. Some borrowers even qualify for $0 payments, meaning you don’t have to make any payment at all, and you still stay current on your loans.

There are four IDR plans to choose from:

Income-Based Repayment:
Income-Contingent Repayment
Pay As You Earn
Revised Pay As You Earn

3. Depending on where you work, you may qualify for loan forgiveness

Public Service Loan Forgiveness is a government program for federal loan borrowers. If you work for the federal, state, or local government or a non-profit organization, you can qualify for loan forgiveness after working full-time for 10 years while making 120 qualifying monthly payments under an IDR plan. The government forgives your balance tax-free, so you don’t have to pay income taxes on the discharged loan amount.

4. Student loan refinancing can supercharge your debt repayment

If you want to get rid of your debt as quickly as possible, student loan refinancing is a powerful tool. When you refinance, you can get a lower interest rate and combine your loans into one. It’s a smart strategy if you have good credit and steady income and can qualify for a lower rate, and you don’t intend to pursue PSLF or an IDR plan.

Education Loan Finance customers reported that they are saving an average of $272 every month and should see an average of $13,940 in total savings after refinancing their student loans with ELFI. To see how much you can save by refinancing your student loans, use the student loan refinance calculator.*

Once you’re ready to refinance your loans, you can get a personalized rate quote from ELFI online without affecting your credit score.*

Interest rates

ELFI offers competitive interest rates, and you can decide between fixed and variable-rate loans. Fixed rates have the same rate for the entire repayment period, so your interest rate and monthly payment never change, giving you security and peace of mind. By contrast, variable rates tend to start off quite low. Over time, they can fluctuate along with the LIBOR rate and cause your payment to increase. Some people opt for a variable rate to use the lower initial rate to pay off their debt more quickly.

Loan terms

ELFI has loan terms* between five and 20 years in length. You have the flexibility of choosing your own loan term to match your budget and financial goals. In general, the shorter the loan term, the lower your interest will be. And, while your monthly payment will be higher with a shorter loan term, you’ll pay much less in interest charges and pay off your loans faster.

ELFI’s Student Loan Refinancing Rates and Terms:

Variable Rates: 2.39% APR*

Fixed Rates: 2.79% APR*

Loan Terms: 5, 7, 10, 15, and 20 years

Loan Amount: $15,000 and up

5. You can connect with ELFI’s personal loan advisors for personalized support

Student loans can be complicated, and you may have questions about how to handle your loans best.

ELFI is well-known for its customer service, and it offers a unique feature: Personal Loan Advisors. When you contact ELFI, a Personal Loan Advisor will be assigned to you and work with you every step of the way to ensure your loan is the perfect fit for your needs.

ELFI’s advisors are available via text, email, or phone. Your advisor will help you understand the pros and cons of refinancing, choose the best repayment term and interest rate type for your needs, and answer any questions you may have.

Repaying your student loans

There is a lot of student loan advice out there, and a lot of it is confusing. Weeding through all of the available information can be frustrating and overwhelming. Instead of handling all of it on your own, you can learn about your legitimate student loan repayment options by downloading your free copy of Torch Student Debt.

*Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 07-17-2020. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. See Eligibility Requirements for more information. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.10 per $1,000 borrowed. Rates are subject to change.

Student Loans: What is the Difference Between a Principal and an Interest Payment?

Posted on August 4, 2020August 3, 2020

If you’re planning on going to college, you should be prepared for potentially high costs. The average cost of tuition and fees at a public four-year university for an in-state student is $10,440, while it’s $36,880 at a private school.

By Kat Tretina

While those numbers are pricey enough on their own, financing can add to the expense. If you borrow money to cover the total cost of attendance, you’ll end up repaying more than you initially borrowed because of interest charges — what lenders charge you in exchange for lending you money.

When dealing with student loans, it’s important to understand how student loan interest rates affect your repayment and how your extra payments are applied to your debt.

How Student Loan Interest Rates Affect Your Loan Balance

Student loan interest rates can cause your loan balance to grow over time. The higher the rate, the more interest that accrues.

For example, if you took out $30,000 in student loans and qualified for a 10-year loan at 4% interest, you’d pay $6,448 in interest charges on top of the $30,000 you borrowed.

But if you qualified for a $30,000 loan at 5% interest — a difference of just 1% — you’d pay $8,184 in interest charges. The extra percentage point would cause you to pay over $1,700 more in interest charges.

However, you can cut down on interest payments by paying off your debt ahead of schedule. When you pay off your loans early, less interest accrues over your loan’s life, allowing you to save money.

The Difference Between Principal and Interest Payments

When you enter into repayment, your loan payments cover two different aspects:

- Interest: Interest that has accrued to date
- Principal: The original loan amount

When you make a payment, lenders typically apply the payment to any fees first, such as late fees or returned payment fees, then to interest charges. If any money is left over, they will apply the excess to the principal balance.

Education Loan Finance Student Loan Repayment Options

If you take out private student loans from ELFI*, you can choose from the following repayment options:

- Immediate repayment: You make payments toward the principal and interest right after disbursement
  - Best for: You’re working while in school and can afford the payments. You want to pay the least amount of interest possible.
- Interest only: While you’re in school, you make payments that only cover the interest that accrues on the loan.
  - Best for: You can’t afford to make full payments, but you want to minimize interest charges. You’re working part-time or have some income while in school.
- Partial payment: With partial payments, you make a flat-rate payment — typically $25 — while you’re in school.
  - Best for: Money is tight while you’re in school, but you want to chip away at some of the interest that accrues.
- Fully deferred: If you opt for fully deferred repayment, you don’t make any payments at all while you’re in school. This is the most expensive repayment option, as more interest accrues over the life of the loan.
  - Best for: You are in a rigorous academic program and need to completely focus on your studies, so you don’t want to make any payments while in school.

Use the private student loan calculator to see what your payment would be and how much you’d repay over the life of the loan under each repayment plan.*

Student Loan Repayment Strategies to Pay Off Your Debt Faster

Once you graduate, there are ways to accelerate your debt repayment and reduce the amount of interest that accrues.

1. Make Extra Payments

If you want to pay off your debt faster and are thinking about different student loan repayment strategies, consider increasing your minimum monthly payments.

More of your payment will go toward the principal each month, reducing how much you’ll pay in interest and allowing you to pay off the debt ahead of schedule.

For example, if you had $30,000 in student loans at 5% interest and a 10-year repayment term, your monthly payment would be $318 per month. If you only made the minimum payments, you’d repay a total of $38,192 by the end of your loan term.

If you increase your payments to $368 per month — an addition of just $50 per month — you’d pay off your loans 20 months early. And, you’d repay just $36,731. By adjusting your monthly payment, you’d save $1,461.

2. Use the Debt Avalanche or Debt Snowball Methods

If you have multiple student loans, consider using either the debt avalanche or debt snowball method to tackle your debt.

With the debt avalanche method, you make extra payments toward the loan with the highest interest rate.

With the debt snowball, you target the debt with the lowest balance first.

Which is best for you? It depends on your goals and personality. Learn more in our breakdown of the debt snowball and debt avalanche method repayment strategies.

3. Refinance Your Debt

Student loan interest rates have a big impact on your overall repayment. By refinancing your student loans,* you can qualify for a lower interest rate so more of your monthly payment goes toward the principal. Over time, refinancing can help you save a significant amount of money.

The Bottom Line

By understanding how payments work and how student loan interest rates affect your total repayment, you can pick a repayment plan that works for you.

If you still have questions, ELFI’s Personal Loan Advisors can walk you through the loan application process and answer any questions you have.*

*Subject to credit approval. Terms and conditions apply.

4 Questions to Ask Your ELFI Personal Loan Advisor

Posted on July 24, 2020July 27, 2020

Figuring out the ins and outs of student loan refinancing can be difficult. Sometimes, it may even feel like you need a finance professional on speed-dial when you’re beginning to learn how everything works. Fortunately, with an ELFI Personal Loan Advisor, you have exactly that.

The ELFI loan team is trained to help students and graduates understand the refinancing process, as well as to help determine a plan so you can pay off your student loans quickly. As a bonus, being matched with a specific loan advisor means he or she can keep track of any student loan refinancing questions, financial situations or payment goals that may impact your long-term refinancing strategy. There’s no need to re-explain to a new advisor each time. Instead, you and your Personal Loan Advisor can develop a plan to meet your specific needs.

Here are a few things to consider discussing with your advisor:

What is a Loan Repayment Term?

A student loan repayment term is the length of time it will take to repay your loan, for example, you could opt for a 5- or 10-year repayment term. You’ll have the opportunity to make this choice when you start the refinancing process, and your ELFI Personal Loan Advisor can help you determine which will be the best fit for you.

Here are a few considerations when choosing your student loan repayment term:

Long-term loans, for example, 10 years, often have smaller monthly payments because you have a greater amount of time to pay them off. The downside of long-term loans is that they accrue more interest than short-term loans over time. If you’re borrowing a large amount or want to maintain a lower monthly payment, a longer repayment term might be a good fit for you.

Short-term loans, on the other hand, can be paid off much more rapidly, but tend to have larger monthly payments. If you have the financial flexibility to make these larger payments, or if you have a relatively small loan, this is a great way to knock out your loans quickly and avoid paying additional interest.

What are Variable and Fixed Interest Rates, and How do They Work?

Your Personal Loan Advisor can also help you understand your fixed or variable interest rate, so you know what to expect from your monthly student loan payments.

Fixed interest means your rate will remain the same for the entire life of the loan. The initial interest rates on these loans often begin higher than variable rate loans, but the benefit is there’s no chance of a fixed interest rate increasing. These are a great choice if you prefer predictable monthly payments, or if you’re planning to pay your loans back over a long period of time.

Variable interest rate loans are the opposite. With this type of loan, your interest rate may change over time, based on the London Interbank Offered Rate (LIBOR). Your loan advisor might encourage you to consider this type of loan if variable rates are currently on a down-swing and you plan to pay off your loans quickly.

Can I Consolidate Federal and Private Student Loans?

Your ELFI Personal Loan Advisor can also explain the difference between private and federal student loans, as well as what will happen when you consolidate them.

When you refinance your student loans, you may have a variety of private and federal loans with several different interest rates. Consolidating wipes the slate clean by rolling all your loans into one monthly payment with your choice of a fixed or variable interest rate.

Consolidating your student loans can be a smart move because it often means a lower interest rate for your monthly payments and makes your loan progress easier to track. The downside of consolidating federal loans is that you may lose any benefits currently associated with them, including deferments and income-driven payments.

Working with your student loan advisor, you can determine whether consolidating your loans is the right choice for your financial situation.

Do You Offer Any Special Benefits or Programs?

If you’re already an ELFI customer and love working with our personal loan advisors, then be rewarded for telling your friends! Register through our online form, share your personalized referral link and receive $400* when a friend refinances their student loans with ELFI.

Working with a dedicated Personal Loan Advisor can make all the difference when it comes to having a great refinancing experience.

If you’d like to learn more, check out our blog “What’s so Great About an ELFI Personal Loan Advisor?” for even more reasons you’ll love working with our loan team.

*Subject to credit approval. Program requirements apply. Limit one $400 cash bonus per referral. Offer available to those who are above the age of majority in their state of legal residence who refer new customers who refinance their education loans with Education Loan Finance. The new customer will receive a $100 principal reduction on the new loan within 6-8 weeks of loan disbursement. The referring party will be mailed a $400 cash bonus check within 6-8 weeks after both the loan has been disbursed, and the referring party has provided ELFI with a completed IRS form W-9. Taxes are the sole responsibility of each recipient. A new customer is an individual without an existing Education Loan Finance loan account and who has not held an Education Loan Finance loan account within the past 24 months. Additional terms and conditions apply.