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Student Loan Refinancing

6 Things to Consider Before Refinancing Student Loans

January 3, 2018
Updated March 2, 2020


If you’re like most grads who are paying down their student loan debt (roughly 62%), you may be hesitant to step into the brave new world of refinancing. Maybe you’ve grown comfortable with the current orbit of your old loan(s). Or maybe you want to think about your student loan debt as little as possible and think that by closing your eyes and making your monthly payments, your debt will simply vanish. And it will… eventually.


But you’re smarter than that, and hesitation could cost you thousands. But as you weigh your fears against the potential benefits of refinancing, the least you can do is be as informed as possible so you have hard evidence to consider while you count down to launch.


Let’s take a closer look at what refinancing your student loans might look like:


To Consolidate or To Refinance?

Some graduates confuse loan consolidation with refinancing individual loans and immediately shy away from the conversation altogether. The point of consolidation is to boil down all your various loans and interest rates into one, easy-to-remember monthly payment. The point of refinancing is to get a lower interest rate on one of your existing loans. You have several choices to make with your new loans. You could arrange for smaller monthly payments by extending the life of the loan. Or you could opt for similar monthly payments, but more of your hard-earned cash goes to paying down the principal of the loan.


Related >> Our Simplest Guide to Student Loan Refinancing


Fixed Rate vs. Variable Rate

Just in case you missed it on your first go-around, there are two types of interest rates – fixed and variable. Fixed rates stay the same over the life of the loan, while variable rates change depending on several variables like the federal funds rate. You’ll have to decide what’s more important – the possibility of getting the lowest interest rates or the certainty of knowing exactly how much you’ll pay every month over the life of your loan. Before choosing a variable rate loan, consider whether you can afford to make the payments if the interest rates spike for months at a time.


The Good News

Refinancing is especially beneficial for recent graduates, as they’re often struggling to keep up with student loan payments and other bills on low starting salaries. By refinancing, you can pay less in interest or lower your monthly payments. Consolidating multiple student loans into one could get you a lower single rate than if you added up the rates from all your loans. Decreasing your loans by even one percent could shave hundreds off your monthly payment, which means tens of thousands over the life of your loan. Our customers have reported that they are saving an average of $309 every month and should see an average of $20,936 in total savings after refinancing their student loans with Education Loan Finance.1 See what you could save by using our student loan refinance calculator.*


The Not-So-Good News

Unfortunately, refinancing is not available to everyone. Most creditors want to see a credit score of 700 or higher before they’re willing to lend you money. They’ll also insist that you be gainfully employed and have a good record of on-time student loan payments.  Before you apply to refinance, check your credit report for any dings. If your credit score is too low, explore the many ways you can work to repair it. And if your first attempt to refinance is rejected, don’t be afraid to re-apply.


Hidden Fees

Many lenders charge origination fees, a charge for just opening the loan, which can often cost around 1% of the total loan amount! As if that’s not enough to deter you from refinancing with them, many lenders punish you with an extra fee if you pay off your loan early. That’s because the longer you have the loan with them the more money they make. Reputable lenders such as Education Loan Finance can help empower you to borrow smart, save smarter, and pay off your student loan debt as quickly as possible, which is most certainly in your best interest. For that reason, we don’t charge application and origination fees, nor will we ever penalize you for paying off your student loan debt early.*


Get A Co-signer

We know it can be difficult to ask family members for financial help, but when it comes to refinancing your student loan debt, having a qualified co-signer might make the difference between “approve” and “not approve.” Ask someone close to you to act as a co-signer – someone with a strong credit profile who’s willing to be equally responsible with you for your student loan.


Explore Your Options Before Refinancing Your Student Loans

The prospect of refinancing or consolidating your student loans may cause some graduates to hesitate. But do yourself a favor and, at the very least, explore your options. You may be surprised at how much money you could save with a new loan. Whether you are ready to step into refinancing or simply want to get more information, Education Loan Finance is here to empower you. It’s a big, bright world out there, and we want you to feel confident that no matter what you do is the right step towards fulfilling your financial dreams.



1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 8/16/2016 and 10/25/2018. 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.


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

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.

student loan news
This Week in Student Loans: June 18, 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:
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


question mark

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?

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.