Student Loan Refinancing (Blog or Resources)

10 Pros and Cons of Refinancing Private Student Loans

Posted on September 25, 2020September 25, 2020

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

6 Benefits of Refinancing Private Student Loans

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

1. Obtain a Lower Interest Rate

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

2. Make Your Repayment More Manageable

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

3. Pay Debt Off Faster

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

4. Release a Cosigner

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

5. Combine Multiple Loans

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

6. Choose a Different Lender

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

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

1. Lose Benefits with Your Current Lender

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

2. Get a Higher Interest Rate

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

3. Raise Monthly Payments

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

4. May Extend Time to Repay

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

The Bottom Line

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

*Subject to credit approval. Terms and conditions apply.

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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.

Which Student Loans Should You Refinance in 2020?

Posted on September 10, 2020

With interest rates favorable to student loan borrowers, right now can be a great time to refinance. But not all loans are created equal. In fact, it may be better to wait to refinance certain types of loans. Keep reading to find out which student loans you should refinance in 2020.

By Caroline Farhat

Refinancing Rates at All-Time Lows. Should You Refinance?

Refinancing interest rates for student loans are at an all-time low in history. This is due to the Federal Reserve lowering interest rates in response to the COVID-19 pandemic. When the Federal Reserve lowers interest rates, this impacts rates that lenders will use on loans that you borrow. This change affects private student loans with variable interest rates and any new loan that you want to take out, including refinancing rates. This makes it an ideal time to refinance if you have certain loans.

As of September 8, 2020, student loan refinancing rates are as low as 2.39% for a variable interest rate loan and 2.79% for a fixed interest rate loan. If you refinance now you could potentially be saving thousands of dollars over the loan term because you will be able to lock in a low interest rate. This will also save you on your monthly payment.

Example of Savings When Refinancing

Here is an example of how much can be saved by lowering your interest rate:

If you have $60,000 in student loans and an interest rate of 9% with 10 years remaining on your loan term, your estimated monthly payment would be $760.00. If you took advantage of the low interest rates now and qualified for a fixed rate of 3.76% you could save as much as $159.00 per month and over $19,000 in interest over the remaining 10 years.

To find out your possible savings, use our Student Loan Refinance Calculator* where you can put in your specific loan numbers to obtain an estimate of the amount of savings for your specific situation.

So now that you see how beneficial it can be to refinance student loans, which ones should you try to refinance in 2020?

Considerations for Refinancing Federal Student Loans

Federal student loans are currently benefiting from the protections provided by the CARES Act and the subsequent Executive Order signed on August 8, 2020. The benefits provided include:

0% interest – Right now federal loans are not accruing any interest because of the lowered interest rate. This means the loans are not increasing and can actually be paid off faster if payments are made while the interest rate is 0%.
Administrative forbearance – This means no payments are due during forbearance. Payments are set to resume in January 2021.
During the administrative forbearance, payments that you would have made during this time but are not required to make, still count towards forgiveness for loans in the Public Service Loan Forgiveness program.

All of these benefits are set through December 31, 2020, making it more ideal to wait until 2021 if you want to refinance any federal student loans. If you have federal loans and were to refinance them now, you would lose these federal benefits. During this time if you have a federal student loan it is best to use the money that you would normally be paying on your loans to save for an emergency fund, pay off other high interest debt, or use it to make a lump sum payment on your loans when payments resume.

Best Student Loans to Refinance in 2020

The loans that would be best to refinance now in 2020 include:

Private Student Loans

If you obtained private student loans in the early 2000s you could have an interest rate as high as 9%. Refinancing older student loans would greatly benefit from the much lower interest rates. Even if you have newer student loans with a lower interest rate than 9%, with rates so low you may be able to refinance with a shorter term length and still be able to see savings and cut time off your student loan.

Here is how that could work: with a student loan balance of $60,000 with 18 years remaining at 7% interest you would be paying approximately $489 per month. But if you refinance the loan and qualify for a rate of 4.07% you could save an estimated $43 per month, over $25,000 in interest, and cut your loan term down to 15 years. That’s saving you time and money on your student loans!

Variable Interest Loans

If you have a variable interest rate loan, you may also be experiencing the benefits of the interest rates being lowered. However, just as rates can be lowered, they can be raised. If you want the security of knowing your rate cannot go up, now would be a good time to lock in a low fixed interest rate.

Bottom Line

Refinancing is a great way to save money on your loans. Knowing the current student loan environment is helpful to determine the best financial move for you now. With the current CARES Act, refinancing only your private student loans and not your federal student loans may be the most financially savvy move you can make this year.

*Subject to credit approval. Terms and conditions apply.

Student Loan Refinance Rates Just Dropped Again. Should You Refinance?

Posted on September 4, 2020

If you have student loan debt and are looking for ways to save money, you’re in luck because right now is a great time to consider refinancing your loans. Currently, refinancing rates are at an all-time historic low. As of September 3, 2020, interest rates for refinancing student loans are currently as low as 2.79% for a fixed rate. Compared this to the early 2000s when private student loan rates were as high as 9% and you can see that now is the time to take advantage of the opportunity to see significant savings. Before you decide on refinancing your student loans, it’s best to consider the pros and cons.

Pros of Refinancing Now

When you refinance student loans, it means you are obtaining a new private student loan to pay off your old loan or multiple student loans. You can refinance private and federal student loans. The new loan may have a different term length than your previous loan and will have a different interest rate (presumably a lower one) and monthly payment. Here are some reasons refinancing now could be beneficial:

Lock in a Low Rate

If you refinance now, you will be able to take advantage of the low refinancing rates being offered. Having a low interest rate helps you save money in interest costs. This can also help you pay off your loan faster if you are able to pay more than the minimum payment and can put more towards the principal of the loan. To see just how much a lower interest rate can save you, check out this example:

If you have student loan debt in the amount of $50,000 with an interest rate of 7% and a loan term of 20 years, your monthly payment would be approximately $388.00. If you refinance and qualify for an interest rate of 4.65% with the same loan term your payment would be approximately $320.00 and you would save over $16,000 in interest costs over the length of the loan. A lower interest rate can result in huge savings!

Save on Monthly Cost

If your goal is to save some money, refinancing can definitely help accomplish that goal in most cases. If you qualify for a lower interest rate, with the right loan term you can save on the monthly cost of your student loans. Based on the example above, you would see a savings of over $60 per month. In certain instances where your new interest rate is significantly lower than your previous interest rate, you may be able to shorten the length of your loan term and still save in monthly costs. This will save you money and time on your student loan!

Save on Interest over the Loan Term

If you refinance to a lower interest rate you can literally save thousands of dollars over the life of the loan. These savings can be put towards other financial goals, setting you up for a stronger financial future. Your savings rate will depend on what your current interest rate is on your loan and the new rate you will qualify for. If you are interested to see how much your savings could be, use our Student Loan Refinancing Calculator to get an idea of your savings.*

Single Payment

Refinancing is also beneficial to help simplify your finances. If you have multiple student loans that you are paying with different due dates, it can be difficult to keep up with all the different loans. When you refinance, you can essentially consolidate all or some of your student loans into one loan with one payment. This will make it easier to manage your finances. You will also be less likely to miss a due date and avoid having to pay late fees.

Cons of Refinancing Now

Although there are numerous benefits for many student loan borrowers, there are some drawbacks to consider before deciding whether refinancing is right for you now.

Lose Federal Borrower Protections

When you refinance federal student loans, you will obtain a private student loan, which means you will not have access to any of the federal borrower protections currently being offered due to the COVID-19 pandemic. Therefore, if you refinance your federal student loans now you will lose the following protections:

0% interest: an executive order was signed on August 8, 2020 extending a 0% interest rate on federal student loans through December 31, 2020. This means no interest will be accruing on your federal loans through the end of the year. If you refinance now, interest will begin accruing on your new loan at your new rate.
Administrative Forbearance: included in the executive order extending the 0% interest rate, the administrative forbearance was also extended through December 31, 2020 meaning no student loan payments will be due on most federal student loans until 2021. If you refinance now, payments will begin being due at the start of the loan, instead of resuming in 2021.
Other federal borrower protections that are lost when you refinance include:
Public Service Loan Forgiveness (PSLF): if you work for a qualifying employer and have qualifying loans that you are hoping will be discharged through PSLF, it would not be wise to refinance any federal loans. Private student loans are not eligible for this program.
Deferment or Forbearance options are more flexible with federal student loans.

Considerations to Make

If you are still unsure whether refinancing is a wise financial move for you, consider some of these options:

Only refinance any private student loans you have and not federal loans. That way you can take advantage of a low interest rate on some of your loans, but still keep the federal borrower protections on your federal loans.
Wait until 2021 to refinance when the federal protections of 0% interest and administrative forbearance will end, and rates may still be low. Although keep in mind rates can change and increase.

Bottom Line

Deciding whether to refinance your student loans now is a decision that should make wise financial sense for you. Ultimately any time you focus on your financial future and plan financial decisions, it is a step in the right financial direction!

*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.

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.

7 Ways to Put Your Good Credit Score to Work

Posted on August 17, 2020August 17, 2020

If you have been paying your bills on time and have achieved a high credit score, congratulations! A high credit score opens up many options that can help in both your financial and personal lives. Now that you have a good credit score, here are seven ways to put it to work for you.

What is a Good Credit Score?

A credit score is a three-digit number that lenders use to determine how much of a risk it is to lend money to that person. There are two major types of credit scores, a FICO credit score and a VantageScore. Lenders can use either score, although a FICO score is used by 90% of the top lenders. A credit score can range from 300 to 850. A good credit score is considered to be in the range of 670 to 739. According to Experian, one of the credit bureaus that calculates scores, the average FICO score in 2019 was 703.

What Can a Good Credit Score Do for You?

When you have a good credit score, there are many benefits you can take advantage of to help improve your finances and that affect your personal life. Here are some examples of how you can put your good score to work for you:

Help Qualify for Credit Cards and Loans

When you apply for credit cards or loans, like student loans, mortgage or car loan, the lender pulls your credit report and score to determine your creditworthiness. A good credit score will help you qualify for credit cards or loans. With a strong credit score, you can qualify for sought-after credit cards that offer rewards and benefits. With a low credit score, you may not even qualify to obtain credit.

Save You Money in Interest

If your credit score allows you to qualify for a credit card or loan, a good credit score can help you qualify for a lower interest rate, thereby saving you money. This can help advance your financial future because if you save money in interest costs you can put those savings towards other financial goals, like retirement or an emergency fund.

Qualify for Housing

A credit score doesn’t just affect you when you are trying to take out a loan, it can also affect your personal life by determining whether you will be approved for rental houses or apartments. Landlords may look at your score to determine whether you may be at risk of not paying rent. A good score makes you more likely to be approved for housing.

Avoid Security Deposits: When you have a good credit score, you can use it to your advantage by not having to pay some security deposits or paying a reduced security deposit. This can come into play with utility companies, like electric and water companies, as well as with cable and internet companies. With a lower credit score, you may have to pay a high security deposit when you are signing up for utilities. A higher credit score leads to more savings!

Help Get a New Cell Phone

If you are looking to get a new cell phone, but won’t be paying for it outright, you may need to lease a phone. Some carriers will require a good credit score to qualify for a lease plan on a new cell phone. Otherwise, you may have to pay the entire cost up front or choose a different phone.

Qualify for Refinancing

If you want to refinance your mortgage or student loans, having a good credit score can help you qualify and obtain a lower interest rate. Refinancing can help decrease your monthly costs, as well as your interest costs over the life of the loan.

More Options from Different Lenders

With a high credit score, you will be able to qualify with many different lenders when you are trying to obtain a loan. Having many different lenders willing to work with you enables you to obtain the lowest interest rate and best terms. With a lower credit score, you may qualify with fewer lenders and would be forced to use lenders that offer less than ideal rates and terms.

How to Improve Your Score

A credit score is determined by information in your credit report, such as your payment history, whether you make late or on-time payments, how much debt you have and how much available credit you have. If your credit score isn’t where you want it to be, here are a few ways to improve it:

Pay your bills on time every month.

A major part of your score is based on the consistency of your payments. If you don’t have a budget, create one to make sure all your payments can be made.

Pay down debt.

The next major factor in determining a credit score is the amount of outstanding debt. Try to pay down your balances to keep the debt amount low.

Do not apply for a lot of credit.

Every time you apply for credit it causes an “inquiry” on your report. All inquiries for the past 12 months are shown. A lot of inquiries can raise a red flag that a person needs credit and would have a difficult time paying it back.

Do not close long-standing accounts that are in good credit.

Some of your score is based on the length of your credit history. A longer credit history can help improve your score.

Having a good credit score can help you in the future, whether with financial aspects or your personal life. If your credit score is negatively affecting you, follow the above steps to improve it. And if you have a high credit score, put it to good use and keep up the good work!

This Week in Student Loans: August 14, 2020

Posted on August 14, 2020

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

This week in student loans:

Trump Extended Federal Student Loan Relief: Here’s What Experts Say You Should Do If You Qualify

This past Saturday, President Trump signed an executive order to extend the federal student loan suspensions included in the CARES Act, which put all federal student loans into automatic forbearance with 0% interest accrued during the period.

Source: CNBC

New Details, Timeline Announced For Big Student Loan Servicing Changes

This week, the U.S. Department of Education released new details and a possible timeline for the upcoming loan servicing changes that would impact millions of student loan borrowers.

Source: Forbes

Student Loan Interest Rates Are Way Down — Here’s How to Refinance in 3 Quick Steps

Interest rates on private student loans offered by banks and online lenders have dropped significantly during the COVID-19 pandemic – here’s how you can take advantage of these low rates by refinancing.

Source: Yahoo Finance

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

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.

Best Tips for Paying Off Medical School Debt

Posted on August 12, 2020

Working as a healthcare professional can be lucrative, but the cost of your education can be overwhelming. According to the Association of American Medical Colleges, the average cost of medical school at a public university is $243,902, while the average price at a private school is $322,767.

By Kat Tretina

With such expensive totals, most students have to borrow a significant amount of money to pay for school; the median amount of student loan debt for medical school graduates was $200,000 as of 2018.

You could spend 20 to 30 years repaying your debt, and with high-interest rates, pay hundreds of thousands in interest charges. Paying off medical school debt can be challenging, but there are ways to manage your loans more effectively.

7 best ways to pay off medical school student debt

Follow these tips to save money, reduce your monthly payments, or pay off your medical school loans early.

1. Make payments during your residency

Many medical school students opt to defer their payments during residency so they can focus on this grueling stage of their education without worrying about their loan payments. However, deferring your payments can cause more interest to accrue on your loans, adding to your overall cost.

If possible, make partial payments during your residency. The American Medical Association reported that the average first-year resident makes around $60,000, so you’ll have some income coming in that you can use. If you can’t afford to make full principal and interest payments, even making interest-only payments or flat $25 monthly payments can reduce charges and help you save money over the long run.

2. Pursue Public Service Loan Forgiveness (PSLF)

As a medical school graduate, you may qualify for loan forgiveness through PSLF if you work for a non-profit hospital, medical facility, or government agency. If you have federal student loans and work for a qualifying employer full-time for ten years while making 120 monthly payments, your remaining loan balance will be forgiven tax-free. The following loan types are eligible for PSLF:

Direct Subsidized Loans
Unsubsidized Loans
PLUS Loans
Direct Consolidation Loans

3. Apply for an income-driven repayment plan

If you have federal loans and cannot afford your monthly payment under a 10-year Standard Repayment Plan, apply for an income-driven repayment (IDR) plan. Under an IDR plan, your payment is based on your income and family size.

During your residency and while establishing your career — while your income is relatively low — an IDR plan will reduce your monthly payments.

Plus, if you still have a balance after 20 to 25 years of making payments, the remaining loan balance is forgiven. However, the discharged amount is taxable as income.

4. Use your physician signing bonus to make a lump sum payment

To recruit healthcare professionals, some hospitals and healthcare facilities offer signing bonuses. According to the American Medical Association, the average physician signing bonus is $32,692. If you’re eligible for a signing bonus, use it to make a lump sum payment against your student loan debt. It can make a significant impact on your balance and repayment term.

For example, let’s say you left medical school with $200,000 in student loan debt at 6% interest with a 10-year repayment term. If you received a signing bonus of $32,692 and applied the entire amount toward your student loans, you’d pay off your loans 25 months ahead of schedule. Plus, you’d save $23,274 in interest charges.

5. Research loan repayment assistance programs

If you’re willing to work in an underserved or rural area as a healthcare practitioner, you may qualify for loan repayment assistance and get some or all of your student loans repaid. There are national and state programs. For example, the National Health Service Corps Loan Repayment Program provides primary care clinicians who serve for at least two years at approved sites with up to $50,000 in loan repayment assistance.

For a list of potential loan repayment programs, check out the Association of American Medical Colleges’ database.

6. Refinance your student loans

If you’re wondering how to pay off medical school debt faster, student loan refinancing* is one of the most effective techniques. When you refinance, you work with a private lender like Education Loan Finance to take out a new loan for the amount of your existing debt. If you have private loans or a mix of private and federal loans, you can consolidate them together and qualify for a new interest rate and loan term.

If you have good credit, you may qualify for a lower interest rate, allowing you to save a substantial amount of money. How much could you save? Consider this example.

If you had $200,000 in loans at 6% interest and a 10-year repayment term, you’d pay $66,449 in interest charges by the end of your repayment term.

However, let’s say you refinanced your debt and qualified for a 10-year loan at 4.25% interest. Your monthly payment would drop, but you’d still repay just $45,850 in interest charges. By refinancing your loans, you’d save $20,599 in interest.

Original Loan

Balance: $200,000

Loan Term: 10 Years

Interest Rate: 6%

Minimum Monthly Payment: $2,220

Total Interest Paid: $66,449

Total Repaid: $266,449

Refinanced Loan

Balance: $200,000

Loan Term: 10 Years

Interest Rate: 4.25%

Minimum Monthly Payment: $2,049

Total Interest Paid: $45,850

Total Repaid: $245,850

Use the student loan refinance calculator to find out refinancing could help you cut down on interest charges.*

7. Make extra payments

Instead of making only the minimum payments, pay extra each month to reduce the interest that accrues. Over time, paying extra will help you save money and pay off your debt ahead of schedule. Increasing your payment by just $100 per month can make a difference, even if you have six-figures of student loan debt.

With $200,000 of student loans at 6% interest and a 10-year term, your minimum monthly payment would be $2,220. If you increase your monthly payments by $100 — paying $2,320 toward your debt each month — you’d pay off your loans six months early. And, you’d save $4,147 in interest charges.

The bottom line

Medical school can be expensive, and if you’re like most students, you had to borrow money to pay for your education.

Paying off medical school debt may seem intimidating, but you likely earn a good income with your degree. You have multiple options for managing your debt, and you are likely a strong candidate for student loan refinancing.

If you decide that refinancing is right for you, you can check your rate online with ELFI.*

*Subject to credit approval. Terms and conditions apply.