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Student Loan Refinancing (Blog or Resources)

This Week in Student Loans: July 10, 2020

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Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

US Capitol

GOP Concerns Over Costs Could Limit Student Loan Relief In Next Stimulus

GOP Senate leaders are showing increasing concern about the costs of additional economic relief, particularly when it comes to student loan relief, as they weigh a second stimulus bill.

Source: Forbes

 


State Senate Chambers

Democrats Fail to Override Trump Veto on Student Loan Policy

This Friday, House Democrats were unable to override the Trump Administration’s veto on a proposal to reverse the Education Department’s strict policy on loan forgiveness for students misled by for-profit colleges. The House voted 238-173 in support of the override measure, coming up short of the two-thirds majority needed to send it to the Senate.

Source: ABC News

 


question mark

Study Finds Gen Z Borrowers Are Unaware of COVID-19 Student Loan Relief Programs

While the CARES Act allowed those with federal student loans to pause payments until September, a recent survey from Student Debt Crisis shows that Gen Z borrowers, in particular, were the least aware of the relief program.

 

Source: CNBC

 


note saying pay off debt

Author Shares Her Big ‘Wake Up Call’ That Led Her to Pay Off $81,00 in Student Debt

35-year-old Melanie Lockert, the author of “Dear Debt,” shared with CNBS the story of how she was able to pay off $81,000 in student loan debt over 9 years, with her big wake up call coming five years into repayment.

 

Source: CNBC

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Dash Through the Debt: How a Shorter Student Loan Term Adds Up

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If you’re like most college graduates, you’re sick of your student loans. If you want to get rid of your debt once and for all, refinancing your loans and opting for a shorter student loan term is a smart strategy. You can secure a lower rate and pay off your loans years ahead of schedule while saving thousands. 

 

Here’s what you need to know about shortening your loan term, as well as how much shortening your student loan term could save you. 

 

How long does the average graduate take to repay their student loans? 

When you graduate from college, you likely expect to pay off your student loans quickly. However, life often gets in the way of your plans, even if you make a good salary. 

 

While the Standard Repayment Plan for federal student loans is ten years, many students extend their repayment terms with income-driven repayment plans, forbearance or deferment periods, or by missing payments altogether. According to the One Wisconsin Institute, the average length of repayment for graduates with bachelor’s degrees is 19.7 years. If you have graduate student loans, the average repayment period is even longer. 

 

With such a longer repayment term, you’ll pay thousands of dollars in interest charges on top of what you initially borrowed, adding to your loan’s total cost. And, carrying such a heavy financial burden for decades can force you to put off other goals, like buying a house, starting a business, or even getting married. 

 

How to get a shorter student loan term

When you take out a student loan, you sign a loan agreement or promissory note where you promise to pay the loan back according to set repayment terms. The agreement will outline the loan’s interest rate, payments, and loan term. 

 

Many borrowers don’t realize that you’re not stuck with those terms forever. If you’re unhappy with your current loan’s repayment terms or your finances improve, there is a way to change them: student loan refinancing.* 

 

When you refinance your debt, you apply for a loan from a lender like Education Loan Finance for the amount of your total existing student loan debt. If you have both federal and private student loans, you can combine them so you’ll have just one loan to manage and one monthly payment to remember.* 

 

The new loan will have different terms than your old ones, including the interest rate and monthly payment. When you apply for the loan, you can choose your own loan term that works for your goals and budget. For example, if you currently have a ten-year loan term, you can select a five or seven-year loan if you’d prefer a shorter term. 

 

Benefits of a shorter student loan term

Instead of making payments for 20 years or more, it’s a good idea to select a shorter loan term, if you can afford it. Opting for a shorter student loan term has many advantages: 

 

1. You can get a lower interest rate

When you have a long loan term, lenders consider you to be a riskier borrower and they charge you a higher interest rate. You’ll have a lower monthly payment, but the longer loan term will cost you more money in interest charges over time. 

 

By contrast, lenders reserve their lowest interest rates for credit-worthy borrowers who choose the shortest loan terms. If you want the best possible rate, opting for a shorter loan term will allow you to save money. 

 

You’re probably wondering, “How much can I save by shortening my loan term?” Let’s look at an example. 

 

Pretend you had $30,000 in student loans with a ten-year loan term at 5% interest. By the end of your repayment term, you would repay a total of $38,184; interest charges would cost you $8,184. 

 

If you refinanced your loans and chose a five-year loan and qualified for a 3.19% interest rate, you’d repay just $32,496 over the life of your loan. By refinancing your debt and selecting a shorter loan term, you’d save $5,688. 

 

Original Loan

Balance: $30,000

Interest Rate: 5%

Loan Term: 10 Years

Minimum Payment: $318

Total Interest: $8,184

Total Repaid: $38,184

 

Refinanced Loan

Balance: $30,000

Interest Rate: 3.19%

Minimum Payment: $542

Total Interest: $2,496

Total Repaid: $32,496

2. You’ll pay off your debt earlier 

When you choose a shorter loan term, you’ll be able to pay off your debt years ahead of schedule. Not only will you save a significant amount of money in interest charges, but you’ll also have the psychological benefit of not having to worry about debt any longer. If your student loan balance was causing you stress, that’s a significant advantage, and a huge weight off your shoulders. 

 

3. You’ll free up cash flow

Once you’ve paid off your student loans, you’ll free up extra cash flow. You’ll no longer have to make your monthly loan payment, so you can instead direct that money toward other goals, such as saving for retirement, boosting your emergency fund, or buying a home. If you use the above example, you’d have $542 per month you could use to fund your financial goals. 

 

To put that in perspective, let’s say you paid off your loans by the time you turned 27. After that, you invested the $542 you were paying toward your student loans into your retirement nest egg. If you contributed $542 every month into your retirement fund and earned an 8% annual return, on average, your account would be worth over $1.8 million by the time you reached the age of 67. 

 

The bottom line

While extending your loan term may seem like a good idea to get a lower monthly payment, that can be a costly mistake. You’ll have to pay a higher interest rate and, over time, the longer loan term will cause you to pay back far more in interest charges. 

 

Instead, consider refinancing your loans and selecting a shorter student loan term. You’ll be debt-free sooner, and you may save a substantial amount of money. 

 

To find out how much you can save, use the student loan refinance calculator.*

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Should You Keep Paying Federal Student Loans During CARES Act Suspensions?

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You probably already know that the CARES Act has suspended Federal student loan payments for the time being. Until September 30th, you aren’t required to make payments, and the interest rate of your loans is set to 0%. This is primarily to help those with student loans who are struggling during these uncertain times. If your student loans are in forbearance due to the CARES Act suspensions, you have several repayment options based on your financial goals.

 

Option 1: Take Advantage of That 0% Interest

Normally, when making extra payments on student loans, your money is first attributed to any collections charges or late fees, then to accrued interest, then to the principal itself.

 

With the current 0% interest rates, however, if your account doesn’t have any fees or charges, you’ll save some money at that step. The more you can reduce your principal balance, the more money you’ll save over time in interest.

 

For example, let’s say you have $25,000 in student loans at a 4% interest rate and you want to pay it off in the next 10 years. Over that period, you accrue $5,373.54 in interest. However, if you take advantage of the CARES Act 0% interest, you can change the course of your repayment.

 

For instance, if you continue to pay your student loans during this period, the payments will be attributed straight to principal and will save you about $300 in accrued interest over the course of your repayment.

 

Option 2: Wait Until September And Resume Payments

If the coronavirus has affected your finances, don’t worry about paying down your student loans too quickly. Instead, use this time to get your other debts under control. Focus on paying back higher interest rate debt, like credit card debt, which will impact your long-term financial health.

 

Option 3: Refinance and Take Advantage of Low Interest Rates

During this time, many student loan refinancing companies are offering low interest rates. If you’re locked into an unfavorable rate, this would be a great time to consider refinancing student loans to save on interest costs.

 

This is an especially great option for borrowers with private loans, as these types of loans aren’t currently receiving any type of federal forbearance benefit. For a personalized look at how refinancing could improve your financial health, check out the ELFI Student Loan Refinancing Calculator.*

 

So, should you keep paying federal student loans during the CARES Act suspensions? The answer depends on your unique goals. Whether you choose to pay your federal loans, take care of other expenses, or refinance your student loans, this is a great opportunity to eliminate some additional debt before the September 30 deadline. Happy saving!

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

This Week in Student Loans: June 18, 2020

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Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

photo saying legislation

NAACP And 60 Other Groups Call On Congress To Cancel Student Debt

After the federal government has provided student loan relief to all federal student loan borrowers through the CARES Act, a coalition of over 60 organizations including the NAACP, American Federation of Teachers, and the National Consumer Law Center are now calling Congress to cancel student loan debt altogether in their next stimulus package.

 

Source: Forbes

 


low rates on federal student loans

Student Loans: 3 Ways To Get A Lower Interest Rate

This Forbes article lays out the three ways to get a lower interest rate on your student loans, covering options such as refinancing, borrowing a new student loan, or even switching to a variable rate loan.

 

Source: Forbes

 


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How to Pay Off Student Loans When You’re Broke

With many individuals struggling to pay off their student loans due to lack or income or overwhelming expenses, this Fox Business article lays out options for paying down student debt when faced with difficult financial circumstances.

 

Source: Fox Business

 


student debt in america

How Student Loans Became a $1.6 Trillion Problem

With the cost of college increasing almost 25% in the past decade and total student loan debt reaching $1.6 trillion, this CNBC video offers a historical view of the path the U.S. took to arrive at this state.

 

Source: CNBC

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Should You Prequalify With Multiple Student Loan Refinancing Lenders?

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Depending on what kind of student loans you have, you could be stuck with high interest rates. For example, federal Grad PLUS Loans are currently at 7.08%. At such a high rate, you could end up paying thousands in interest charges. 

 

By Kat Tretina

 

Refinancing your student loans can help you save money, but you should think twice before submitting a full loan application with multiple lenders. According to myFICO, the organization behind the FICO credit score, each hard credit inquiry can drop your credit score by up to five points. 

 

Submitting several loan applications isn’t wise, but should you prequalify with multiple student loan refinancing lenders? Absolutely! By rate shopping with just a soft credit check, you can ensure you get the best deal. 

 

How student loan refinancing works

With student loan refinancing, you apply for a loan with a lender like Education Loan Finance for the amount of existing education debt you have, including federal and private student loans. The new loan has completely different terms than the old debt, including the interest rate and term length, and you use it to pay off the other loans. Moving forward, you have just one loan to manage with only one easy monthly payment. 

 

What’s the advantage? With good credit — or with a parent, relative, or friend with good credit who acts as a cosigner — you can qualify for a loan with a lower interest rate. Over the course of your loan repayment, you can save a substantial amount of money by refinancing your debt. 

 

For example, say you graduated from graduate school with $35,000 in PLUS Loans at 7.08% interest. If you made the minimum payments on a 10-year repayment term, you’d pay $13,939 in interest charges. 

 

If you refinanced your loans and were willing to shorten the loan term to seven years, you could qualify for a 4% interest rate. You’d have a slightly higher monthly payment, but you’d be debt-free three years earlier. And, you’d pay just $5,186 in interest charges. By refinancing your loans, you’d save over $8,000. That’s a significant amount of savings you could put toward other goals, like building an emergency fund, buying a home, or starting a retirement nest egg.

 

Chart displaying the repayment examples for an original loan and refinanced loan, showing monthly payments, total interest paid, and total repaid.

Note: Figures are rounded to the nearest whole dollar.

 

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

 

What is loan prequalification? 

With private loans, lenders decide whether or not you qualify for a loan — and determine your interest rate — based on your credit, income, and other factors.

 

Lenders often list a range of interest rates on their websites. While the lowest rates are tempting, you may not qualify for the lowest advertised rates.  The lender’s advertised lowest rates aren’t an indication of what rates you’ll actually get. 

 

Only a select number of borrowers will qualify for the best terms. The lowest interest rates are typically reserved for candidates with the highest credit scores who opt for the shortest loan terms.

 

To give you a real idea of what rate to expect, some student loan refinancing lenders — like Education Loan Finance — offer prequalification tools. By entering basic information about yourself, you can get a rate quote without undergoing a hard credit inquiry. You can see what rates and loan terms you’d qualify for before submitting a full loan application. 

 

Should you prequalify with multiple student loan refinancing lenders? 

When you refinance student loans, rates and terms can vary widely from lender to lender. Some things to keep in mind when shopping around include: 

  • Interest rates: Your interest rate will have the biggest impact on your total repayment. When rate shopping, pay attention to the total APR to see what you’ll repay over the life of your loan. 
  • Rate type: While some lenders only offer fixed interest rates, which stay the same for the entire repayment period, other lenders also offer variable-rate loans. Variable interest rates often start off very low but can fluctuate over time. Education Loan Finance has both fixed and variable-rate loans.*
  • Loan term length: The shorter the loan length, the lower your interest rate. However, a shorter loan term also means a higher monthly payment. Depending on the lender, your loan term could range from five to 20 years.
  • Hardship policies: Not all lenders offer forbearance, so double-check the lender’s economic hardship policies. With Education Loan Finance, you may be eligible for up to 12 months of forbearance if you lose your job or face another financial emergency. 
  • Customer service: The quality of customer support is important as you make payments and have questions. ELFI has an award-winning customer service team and a 4.9 rating on TrustPilot.

There’s no downside to shopping around. With loan prequalification, there’s no impact on your credit, so you can get several rate quotes and find the best rates and loan terms for your situation.

 

Use the Find My Rate tool to get personalized rates without impacting your credit score.* 

 


 

*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 After Medical Residency?

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Congratulations! You’ve graduated from medical school and completed your residency. You are most likely earning substantially more than you were as a medical resident. If you are focusing on paying down your student loans now that you are earning more, you might be wondering whether refinancing your student loans following residency is a good idea. In many cases, it can be a smart move. But there are important things to consider when deciding whether to refinance following medical residency.  

 

By Caroline Farhat

 

In 2018 the average student loan debt for a new medical graduate was $196,520. With the average medical resident salary of $61,200 per year in 2019, it may seem impossible to chip away at the debt balance. But after residency when the average salary for a family physician is $239,000, paying off your student loans can become much more manageable. But once you start thinking about your other financial priorities such as purchasing a house, starting a family, or saving for retirement, suddenly the loans seem like they will never be fully paid off. To combat this, refinancing student loans after you complete your residency can be a great way to reduce the loan amount you owe, making it easier to pay them off more quickly.  

 

What to Consider When Deciding Whether to Refinance After Residency

Here are the factors to consider when deciding whether to refinance your student loans after medical residency.

 

Student Loan Forgiveness

If you completed your residency at a non-profit hospital and think you will continue to work for a non-profit or government entity, you may be eligible for student loan forgiveness. If you have federal loans and are considering entering the Public Service Loan Forgiveness (PSLF) program, refinancing your federal student loans to private loans would not be a good option for you since private loans are not eligible for forgiveness under that program. With only 46% of medical graduates planning to work towards student loan forgiveness, this may not be a big factor for many, but it is something to be aware of. The PSLF requires 120 on-time payments while you work in a qualifying non-profit organization or government entity. Only certain federal loans and payment plans qualify for the program. Once the criteria are met, the remaining balance of your student loans is forgiven. At this time, taxes would not be owed for the forgiven amount, however, legislation is frequently introduced to change the program terms. 

 

Your Loans During Residency

How did you handle your student loans during your medical residency? Did you put them in deferment or forbearance? Did you already refinance them? If your loans were in deferment or forbearance they most likely accrued interest, meaning you will be facing more debt to contend with. Although the balance may seem intimidating you may be able to stop the high interest from accruing by refinancing and qualifying for a lower rate. If you have already refinanced, you may qualify for a lower interest rate now since you have increased your income.

 

Your Financial Goals

Your financial goals and timeline are factors that will determine if refinancing after residency is a smart decision for you. Will you continue to live like you are in residency and be able to use your additional income to quickly pay off your student loans? Or is it your financial goal to purchase a home once your residency is completed? If you have other financial goals you want to focus on in addition to paying off your student loans, refinancing would be beneficial to save you extra money per month. Retirement savings is important to focus on since new physicians may be in their 30s when they finish residency. Refinancing earlier and having extra money to save for retirement while you are still young allows you to catch-up on your retirement savings and take advantage of compounding interest.    

 

In addition, refinancing can allow you to shorten the length of your loan. This will not only save you in interest costs over the life of the loan, but it also helps you pay off your loans faster.  

 

Your Current Financial Status

When deciding whether now is the time to refinance, take into account your financial status. Do you have a strong credit score and a good credit history? These are just some factors that are analyzed by lenders to determine your interest rate on a new loan. Lenders usually require a minimum credit score in the 600s, at ELFI the minimum required score is 680. But if you are looking to score a lower interest rate you want a credit score in the high 700s. Lenders will also want to see three years of good credit history. If your finances need a little improvement, refinancing right after residency may not be a good time because you may not see much savings. However, a financially prudent cosigner may be able to help you qualify for a lower rate. If you are already rocking a high credit score and strong credit history, refinancing after residency could save you money now. 

 

Your Current Income

If you are now earning a physician’s salary, instead of your medical resident salary it may be a great time to refinance. When you apply to refinance student loans, your debt-to-income ratio is calculated and helps determine your interest rate. The lower your ratio the better. All your debt is taken into account, including mortgage, car payment, student loans and credit cards. Most lenders will require a ratio of 50% or lower to qualify for refinancing. 

 

For example: if your debts are student loans of $2,000 per month, mortgage of $3,000 per month, auto loan of $500 per month, and credit cards of $200 per month, your total monthly debts are $5,700 per month. If your monthly income is $14,000 per month your debt to income ratio is $5,700/$14,000 = 40.7%.  

 

If you want to see how much you could save by refinancing, use our Student Loan Refinance Calculator to get a custom calculation of your potential savings.* You can also see how shortening the loan term could help pay your loans off faster and save you more interest over the life of the loan. 

 

Conclusion

For many physicians, refinancing student loans after residency will be advantageous. But be sure to consider your own circumstances and finances to determine what would be most beneficial for you. Either way, having a plan to tackle student loan debt is always a good start!

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

This Week in Student Loans: June 12, 2020

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Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

will there be a second student loan stimulus package?

Will There Be A Second Student Loan Stimulus Package?

The CARES Act passed in wake of the coronavirus pandemic provided relief to many federal student loan borrowers, but the payment suspensions are set to end on September 30. However, the newly proposed HEROES Act included provisions that will provide relief to borrowers through September of 2021. This Forbes article provides detail as to whether their will be a second stimulus package for borrowers.

 

Source: Forbes

 


low rates on federal student loans

Take Advantage of Low Student Loan Interest Rates

The interest rate on federal direct student loans for undergraduates for 2020-2021 is 2.75%. These historic lows can be attributed to the coronavirus pandemic, and this U.S. News article explains why those planning to attend college should take advantage.

 

Source: U.S. News & World Report

 


question mark

Should You Continue Paying Private Student Loans if Payments Are Suspended?

With many wondering whether they should continue to pay federal student loans during the CARES Act suspensions, there has also been some question around private student loans, as a multi-state pact that emerged recently provides relief to private student loan borrowers.

 

Source: Fox Business

 


debt relief

Student Loan Debt Relief: What Are Your Options Now?

With many changes happening in the world of student loans as of late, from the CARES Act passed months ago to the newly proposed HEROES Act, this Forbes article outlines the current options available for student loan borrowers to obtain relief.

 

Source: Forbes

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

How Much Can You Save By Refinancing Student Loans?

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When you refinance your student loans, you are obtaining a new loan with a private lender, often with a new interest rate, loan term, and monthly payment. You can refinance both federal and private student loans, and you can also refinance some or all of your current student loans.   

 

By Caroline Farhat

 

Refinancing is advantageous for many reasons. It can save you money on your monthly payment, reduce your term length and save you in interest costs for the life of the loan. Interest savings can be in the thousands in some circumstances. It also simplifies your student loans because it allows you to consolidate multiple loans into one. 

 

A question often asked when someone is considering refinancing is, “how much can you save by refinancing student loans?” Here are some of the primary factors that affect savings, some data showing the average savings that people have seen, along with a concrete example of how the savings come to be.

 

Factors that Affect Savings

When refinancing, everyone will experience different savings because the savings are based on several factors. Here are some of the factors that will affect the amount of savings you will see when refinancing student loans. 

  • Current interest rate and new interest rate – The amount you can save by refinancing student loans is significantly affected by the interest rate. If you have a high interest rate on your current student loans and now qualify for a much lower rate you would see a higher savings rate. However, if you do not qualify for a lower rate, your savings will be small, if you get any savings at all.
    • Note: if you are looking to reduce your monthly payment and are not as concerned with saving money in the long term, you can refinance and extend your loan term to reduce your monthly payment. The interest costs over the life of the loan will increase in most cases, but you can always refinance your loan again in the future to save in interest costs. 
  • Credit score – A higher credit score indicates more credit trustworthiness. Therefore, the higher the credit score the lower the interest rate you may qualify for, thus increasing the amount you can save by refinancing your student loans. A cosigner may help you qualify for refinancing if your score is not that high.
  • LIBOR rate – Private student loan interest rates are tied to the LIBOR rate. Therefore, if the rate is lower you can expect that interest rates for private loans will be lower. A lower rate equals more savings when refinancing.  
  • Term length – Increasing and decreasing your term length from your original term length can affect the savings. 
    • For example, if you have 10 years left on your loans and refinance to a 7 year term, you may not experience any monthly savings (unless your interest rate is significantly lower) because you are shaving 3 years off your loan term. The payment would have to be larger to make up for the difference in time. But you could save significantly in interest costs over the life of the loan. 
    • If you refinance to the same term or longer, you may experience significant monthly savings.  
  • Income – A higher income may qualify for a lower rate because the debt-to-income ratio may be lower. Debt-to-income ratio is one factor lenders consider to see how much payment you can afford.   
  • Amount of loan being refinanced – A larger amount of student debt to refinance has the potential for more savings. 
  • Different lender requirements – Each lender has their own specific minimum requirements and offers rates based on their individual factors. Therefore, lenders may offer different interest rates to you based on their individual requirements. 

 

How Much Can You Save by Refinancing Student Loans? 

Although many factors affect savings when refinancing student loans, here are some examples of what others have saved: 

  • A 2016 report shows borrowers who refinanced student loans lowered their interest rate by an average of 1.7%. They also reduced their term length by five years and saved an average of $18,668 over the life of the loan. If you had an extra $18,000 dollars, what would you do with it?
  • Some professions are more likely to be burdened by student loan debt because of the amount of schooling it takes to achieve the required degrees. One such profession is nursing. The average nursing graduate in 2019 expected to have a median debt between $40,000 and $54,999. Many nursing graduates who refinanced student loans of $50,000 experienced savings of $110 to $170 per month.  
  • Here at ELFI we pride ourselves on great customer service and saving our customers money. The average savings for ELFI customers in 2020 is $272.00 per month. The total average savings in interest costs over the life of the loan is $13,940.1  

 

Need more inspiration? Here is a scenario illustrating how refinancing can save you money: 

 

If you have student loan debt of $75,000 with 10 years remaining at an interest rate of 8% APR you would be paying an estimated $910.00 per month. After refinancing you may be able to qualify for a much lower interest rate and have a new payment of $754.00, a savings of $156.00 per month. This would yield you a savings of $18,672 over the life of the loan. 

 

When you refinance with ELFI there are no application fees, no origination fees, and no prepayment penalty, so you will most likely see the savings from refinancing is worth it. Interested in seeing how much you could potentially save? Check out our Student Loan Refinance Calculator.* With the calculator, you can get an estimate of savings and test different scenarios to determine if shortening or lengthening the loan term works better for your financial situation.  

 


 

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

 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

This Week in Student Loans: June 5, 2020

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Please note: Education Loan Finance does not endorse or take positions on any political matters that are mentioned. Our weekly summary is for informational purposes only and is solely intended to bring relevant news to our readers.

 

This week in student loans:

around 1.5% of applicants were approved for public service loan forgiveness.

Why 147,000 People Were Rejected For Student Loan Forgiveness

Out of 150,545 borrowers who have applied for Public Service Loan Forgiveness, just 2,215 borrowers (about 1.5%) have been granted forgiveness. Forbes writer Zack Friedman breaks down the details behind this low approval rate in the article linked below.

 

Source: Forbes

 


Government and mass debt cancellation

Student Loan Expert on Mass Debt Cancellation: ‘We don’t need these blunt solutions’

With around 44 million borrowers across the country holding more than $1.6 trillion in student loan debt, there is much talk about mass student loan forgiveness or cancellation. Jason Delisle at the American Enterprise Institute explains why he believes mass debt cancellation isn’t the answer for the U.S. economy.

 

Source: Yahoo Finance

 


college student upset about not being able to afford college due to the financial impact of the coronavirus.

More than Half of Students Probably Can’t Afford College Due to COVID-19

According to a new survey by OneClass, the coronavirus crisis has already had a significant impact on many families’ ability to pay for college. The survey found that more than half, or 56%, of college students say they can no longer afford their tuition. Nearly half of those surveyed said they needed to find a new way to pay for college due to the impact of the coronavirus on their financial situation.

 

Source: CNBC

 


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

Student Loan Borrowers In CARES Act Forbearance Can’t Buy Or Refi Homes

According to this Forbes article, certain mortgage lenders are considering the forbearance caused CARES Act suspensions on federal student loans a reason to deny mortgages or mortgage refinancing, during a time where mortgage rates are lower than they have been in years.

 

Source: Forbes

 

 

That wraps things up for this week! Follow us on FacebookInstagramTwitter, or LinkedIn for more news about student loans, refinancing, and achieving financial freedom.

 


 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Will Adding a Cosigner Save You Money When Refinancing Student Loans?

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Student loan refinancing is the process of consolidating student loans into a new loan taken out with a private lender, often with a lower interest rate and new loan terms. If you’re planning to refinance your student loans, you are likely looking to qualify for the lowest interest rate possible, save money over the life of your loan, make repayment more manageable, or pay off your loans faster. As you perform your research about which lender to apply with, calculate how much you could save, and the requirements to qualify, you also may have come across information about the pros and cons of adding a cosigner to your loan and wonder whether adding a cosigner could help save you money. Here are some situations where adding a cosigner can help you, whether it’s to simply qualify to refinance or to save you money. 

 

Adding a Cosigner to Qualify for Refinancing

Student loan refinancing lenders typically have similar requirements to qualify to refinance student loans, but the specifics can vary by lender. These requirements can include things such as:

  • Minimum credit score
  • Minimum debt-to-income ratio
  • Employment history
  • Minimum loan amount
  • Minimum credit history
  • Degree requirements
  • Required documents, such as W-2s and pay stubs

 

Check out ELFI’s full eligibility requirements here.*

 

If you are in strong standing in all of these categories, you can likely qualify with any student loan refinance lender that you choose. However, if you don’t meet the minimum requirements to refinance, adding a cosigner who has a stronger credit score or credit history may be the solution to helping you qualify. Before adding a cosigner, make sure that they are aware of the responsibilities of cosigning a loan.

 

Adding a Cosigner to Qualify with the Right Lender

For many individuals who are looking to refinance student loan debt, they face the issue of meeting the requirements of certain lenders but not others. For example, some lenders require a minimum credit score above 650, and some require a credit score of 680. If you don’t meet the requirements of certain lenders, you may feel obligated to choose a lender that has less strict requirements (keep in mind that this typically comes along with a higher interest rate).

 

By adding a cosigner who meets the requirements of any lender, you’ll be able to choose the lender that offers a lower interest rate, thus saving you money over the life of your loan. 

 

Adding a Cosigner to Save Money When Refinancing

Now that we’ve covered two common situations in which adding a cosigner may help you, whether it’s to simply qualify for refinancing or qualify with the right lender, let’s discuss a third scenario in which you already qualify for refinancing with the lender of your choice. It’s important to note that just because you meet the lender’s requirements doesn’t mean you’ll qualify for the lowest interest rate you see on their website. Lenders determine your interest rate based on many of the eligibility factors listed above, such as credit score, credit history, debt-to-income ratio, and employment history. Lenders typically offer a range of rates for specific term lengths, and those with better credit standing and debt-to-income ratios typically receive the lower-end interest rates. 

 

If you’re unsure whether you’ll receive the lowest interest rate a lender offers, prequalifying to receive an estimated rate may be the next step to take.* Prequalification is the process of submitting some basic information to the lender and allowing them to conduct a soft credit pull to determine an estimated rate. If you prequalify and aren’t happy with your rate, adding a cosigner who has a stronger credit score, credit history, debt-to-income ratio, or employment history may give you the ability to obtain the rate you want. Unless the cosigner carries these characteristics and thus appears to be a more qualified borrower to the lender, adding a cosigner alone will not lower your interest rate. If you have questions about whether you think adding a cosigner could help, reach out to your lender for more information. 

 

How Much Money Could Adding a Cosigner Save You?

So, how much money could adding a cosigner save you when refinancing your student loans? It all depends on your specific circumstances, but let’s review a hypothetical scenario:

  • Let’s say you currently have $50,000 in student loans with 15 years left on your repayment term at 7.25% APR. Your monthly payment is $456 per month and you’ll pay $82,080 over the life of your loan if you made all payments on time.
  • You are looking to refinance $50,000 in student loan debt to a 15-year term. The lender that you plan to prequalify with offers rates ranging from 4-6% APR for 15-year terms. After prequalifying, the lender offers you an estimated rate of 6% APR. 
  • At 6% APR on $50,000 in student loans over a 15-year term, your monthly payments would be roughly $422 per month, and you would pay approximately $75,960 over the 15-year term if you made all payments on time. You’re already saving $34 per month and $6,120 over your loan term by refinancing.
  • You decide to add a cosigner who has a stronger credit profile, debt-to-income ratio, or employment history, and the lender then prequalifies you at the lower-end interest rate of 4% APR.
  • At 4% APR on $50,000 in student loans over a 15-year term, your monthly payments would be roughly $370 per month, and you would pay approximately $66,600 over the 15-year term if you made all payments on time.
  • By adding a cosigner to qualify for the lower interest rate, you would save $52 per month and save $9,360 over the life of your loan. 
  • By refinancing and adding your cosigner, you’ve now saved $86 per month and will save $15,480 over your loan term compared to your original loan. 

While this scenario is hypothetical, it does show that adding a cosigner who has stronger borrowing credentials to lower your interest rate could provide you with significant savings both on a monthly basis and over the life of your loan. The potential monthly savings may even make you consider switching to a shorter loan term to lower your interest rate and pay off your loans faster.

 

To wrap things up, you can essentially consider adding a cosigner when refinancing student loans as a “lifeline” to either meet minimum requirements to refinance, meet the requirements of a particular lender, or lower your interest rate and save money over the life of your loan. If you’re interested in refinancing your student loans, check out our Student Loan Refinancing Calculator to see what you could potentially save, then prequalify with ELFI in just minutes, without affecting your credit score.* ELFI offers some of the lowest student loan refinancing rates available and assigns every customer a Personal Loan Advisor to assist them through every step of the process and answer any questions they have – such as whether adding a cosigner will be beneficial. 

 

 Related >> Cosigners and Cosigner Release: What to Know

 


 

*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.