×

3 Student Loan Refinancing Topics That Need a Second Look

August 4, 2016

Many students will agree that student loans are a welcomed and often necessary part of the financial aid package when pursuing higher education, and most people don’t look forward entering the repayment phase, there certainly are smarter ways to manage their outstanding education loan debt. Fortunately, student loan refinancing programs, along with qualifying for certain rates, help borrowers by combining one or more federal and private student loans into a single loan with new terms, a new monthly payment amount, new repayment terms, and hopefully a lower interest rate. With the many positives of student loan refinancing — all of which may help borrowers save money during their repayment period — there are also some lesser-known topics that borrowers should not avoid addressing when researching their refinancing options.

Take a Second Look at These Topics When Refinancing Student Loans:

  1. Always Research the Best Options:

Student loan refinancing programs should be given just as much consideration as the school in which you attended when said loans were created. Like choosing the wrong school, selecting the wrong refinancing program can be detrimental. Simply put, performing an internet search for “student loan refinancing” is not enough to obtain the terms needed to save money. There are hundreds of financial institutions, and with so many programs to consider, it is extremely important to find a program that is going to work for you and your budget. The best way for you to ensure that the lending institution is leading you in the right direction — and doing what is right for you and your budget — is to do research and ask questions. Start by making sure you understand the repayment terminology, and then investigate the company. Look for reviews and call the lending institution to ask questions. At the very least, lenders must be credible and reputable, but they should also be available to kindly and thoroughly answer all of your questions. Finally, if you choose to refinance your loans, make sure you understand exactly what you have to gain or lose with each. Do this, and you are on your way to protecting your wallet and your financial independence.

  1. Always Weigh the Implications of Refinancing a Federal Loan:

Refinancing student loans with a private lender involves a bit of debt consolidation, which means multiple student loans (federal and private) are combined into a single loan, with a single monthly payment. This newly refinanced student loan will have new terms, hopefully, a lower interest rate, a new monthly payment amount, and/or a new repayment length. Before this process takes place, however, it is especially important to understand exactly what changes will take place if you choose to include any or all of your federal loans into the refinancing package, as refinancing a federal loan may nullify federal student loan protections, such as public service forgiveness and income-based repayment plans. With this in mind, and given that many private lenders are willing to offer similar benefits in order to help their clients remain in good standing, some people still choose to include federal loans in the refinanced package simply to create a single, more convenient repayment plan.

  1. Always Compare Fixed and Variable Interest Rates:

When considering student loan refinancing, borrowers commonly forget to compare their options regarding the two types of interest rates on loansfixed interest and variable interest rates.

  • Variable rates change over time based on current financial and economic conditions. They can do so at any time in the financial climate, thereby affecting the interest applied to a loan. Variable interest rates will often start lower than fixed interest rates, but there is always the possibility that, as they fluctuate, they will rise and cause an increase in monthly payments.
  • Fixed rates, on the other hand, maintain the interest rate that was agreed upon in the initial contract, and remain at that rate over the life of the loan. With a fixed rate loan, borrowers are protected against the possibility of rising interest rates during the entire repayment period.

Choose the Right Program

Finding the right student loan refinancing program (along with agreeable terms and rates) can be time-consuming and daunting, especially for first-time refinancers. However, understanding your options is the best way to obtain a firm grasp on your finances and find the best refinancing loan possible. If you need any assistance, Education Loan Finance’s refinancing experts and management team — with over thirty years of experience in the student loan industry — will gladly help!

 

What’s the Best Way to Repay Student Loans?

Leave a Reply

Your email address will not be published. Required fields are marked *

2019-10-30
How to Use ELFI’s Student Loan Refinancing Calculator

Wondering if it’s time to refinance your loans? Our refinancing calculator can help you estimate how much you could save with ELFI. Here’s a breakdown of what you’ll need to enter in each field of the calculator.

 

Current loan debt.

How much do you still owe on your loan? Entering the correct amount here is vital to getting a more accurate estimate of your savings.

 

Monthly payment.

This is how much you currently pay each month on your loan. If you have a variable monthly payment, enter the average here.

 

Current interest rate or remaining term (in months).

Here you have the option to enter, as a percentage, how much you currently pay in interest on your loan. OR you can enter, in months, how much time you have left until your loan is paid off. For example, if you have 7 years of payments left, you’ll enter 84 months.

 

Loan type.

Here, enter the type of loan you’ll want after you refinance. This question isn’t asking whether you currently have a fixed or variable loan - it’s asking if you want your refinanced loan to have a fixed or variable rate. Choose the option that fits you.

 

Loan term in years.

Now tell us how long you want to spend paying off the loan - the answer could be anywhere from 5 to 20 years. Again, this is for your refinanced loan, not your current loan.

 

Current Monthly Payment | ELFI Monthly Payment | Monthly Savings | Lifetime Savings

You don’t have to enter any information into these fields. They automatically generate estimates based on the information you entered into the other fields on the calculator. Once you’ve entered your information into each field, you can look at these boxes to see a comparison of your monthly payment versus what you could save. You also have the option to go back and change any information you entered into the calculator when you’re done. Changing some of the options might reveal ways you could save even more.

 

Find my estimated rate.

Once you’re finished, click this button and ELFI will take you to our pre-qualification process if you’re interested in getting a quote or starting the refinancing process.

Want to know more about refinancing with ELFI? Check out our FAQ’s page.

 

Try Our Student Loan Refinancing Calculator

 
2019-10-29
Student Loan Scams: Voicemail Edition

Robocalls. They’ve become so common and irritating that we rarely answer our phones if we don’t recognize the number. The voice messages these scammers leave range from humorous to threatening – from the “local police” waiting to take you into custody, to a stranger offering cash for your home.    A recent string of messages hits particularly close to home for the 45 million U.S. borrowers who owe $1.5 trillion in student loans. These calls claim changes to federal student loans or advertise offers of forgiveness of student loan debt. Some people who find these messages in their voicemail don’t even have student loans. But for the 45 million Americans who do, the offers can be a little too tempting. Student loan debt is a burden that we want to find a way out of and sometimes, what sounds to be too good to be true is in fact that. So much so, that we’re willing to put on earmuffs when it comes to a quick way out.    These scammers are after social security numbers, credit card numbers, federal student aid IDs, or for a victim to contribute money to a loan assistance program that (surprise, surprise) has no intention of helping you with your student loans. A reputable company will never ask for any of these things over a voicemail or on the phone.   So how are borrowers supposed to know what offers to be wary of? Let’s run down a list of common tactics for student loan voicemail scams.   

Student Loan Scam Tactic #1: They Offer to Abolish Your Student Loans

This tactic is just what it sounds like: fraudsters offering to completely do away with your student loan debt. The scam is tricky because there are federal loan forgiveness programs that pay the balance of your loan under certain circumstances, like if you join the military or qualify and meet the requirements of the Public Service Loan Forgiveness (PSLF) program. We’ve outlined how the PSLF program works in a previous blog post   The offer from the scammer usually sounds something like, “we’ll release your student loans for a nominal, upfront fee.” The red flag is the advance payment – something legitimate organizations would never do. It’s actually illegal for companies to make you pay before helping you. This claim is even more suspicious when they offer “quick” student loan forgiveness. In actuality, the Public Service Loan Forgiveness program takes years to complete and includes detailed requirements for qualifying. To put it simply, if you have student loan debt, you must repay that debt. If you are having a challenge repaying your student loans, contact your lender or a reputable resource focused on assisting people in your situation.   

Student Loan Scam Tactic #2: They Offer “Exclusive” Access

Some voicemails promote programs for reducing student loan monthly payments or even your total balance as part of an exclusive offer. However, companies who have your real best interest at heart would never make promises or offers without first knowing your personal financial situation.   

Student Loan Scam Tactic #3: They Convince You to Act Quickly

These student loan voicemail scams work by telling you to call back “right away” or risk losing your offer. But you should never be pressured into an offer. You student loans will remain subject to your existing agreements with your student loan lender unless you take action to change them, such as by refinancing your student loans with a new lender. Don’t feel pressured to make a choice now. A company can only propose different rates or terms based on your applying for a new program. Take your time and do your research on who is making the offer and determine if they are a reputable organization with experience in student loans and student loan refinancing.  

Student Loan Scam Tactic #4: They Use Political Buzz For Power

For borrowers with federal student loans, scammers sometimes claim transitions in presidential administrations have ushered in changes to student loan laws, for example, the switch from the Obama to the Trump administration. Scammers get fuel from the fact that many politicians are currently talking about student loan debt. They believe borrowers will get confused between the different proposals and plans and assume they’ve heard of the offer. Once you’ve given them your data, they have all they need.  

Student Loan Scam Tactic #5: They Tell You That You Can’t Do It Without Them

This is the classic scammer line: you need me or else you will miss out on this great opportunity. We hate to break it to those scammers, but there’s nothing that they offer that you can’t do on your own – for free. You can explore lowering your student loan interest rate, negotiate new loan repayment terms, and even try to qualify for PSLF all on your own, without paying a company to assist you.   

How Do You Avoid These Scams? 

Now that you know what phony offers are out there, there’s one simple way you can avoid scammers: don’t answer the phone and don’t call them back. 
  • If you do answer the phone—and realize it's a robocall—hang up and don’t push any buttons or engage in conversation. This is one situation where you should push manners to the side and get off the line as quickly as possible.
  • Do your research into who is calling you and reach back out to them through the official phone number from their website if necessary. 
  • Remember, anyone can build a website. Make sure you validate a student loan company is authentic by looking for indicators, such as sufficient user reviews on reputable sites and a listing on the Better Business Bureau.
  The U.S. Department of Education has outlined steps you can take to avoid student loan scams and listed companies they’ve taken action against.    If you’re looking to consolidate or refinance your student loans for a potentially lower interest rate or new repayment terms, the team at ELFI* can walk you through the entire process and help you decide if it’s right for you.    
  *Subject to credit approval. Terms and conditions apply.   NOTICE: Third-Party Web Sites: 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.
Female medical student standing next to professor
2019-10-17
Medical School Debt: Why Now May Be the Time for You to Refinance Student Loans

The road to becoming a doctor is a long and expensive one. After 4 to 5 years of undergraduate studies, 4 years of medical school, and 3 to 7 years of residency, many graduates are well into their 30’s before they earn a doctor’s income. Residency does come with a paycheck, but the average Resident Physician makes $58,803 a year, according to glassdoor.com. It's hard to imagine much of that is applied to medical school debt.   Americans owe a total of $1.6 trillion in federal and private student loans and newly-minted doctors carry a good portion of those loans, carrying an average of $179,000 in medical school debt, six times more than the average graduate.   Student loans can be a financial and emotional burden, even for doctors, and consolidating and refinancing those loans can be a relief on both fronts. With consolidation, you can roll multiple loans into one, leaving you with a single monthly payment. This simplifies repayment. Refinancing means agreeing to new and different terms of your loan with the goal of getting a better interest rate or term. Better rates and terms can make medical school debt more manageable.  

Why Now is the Time to Refinance

Monthly principal and interest payments on student loans can bury many borrowers. A lower interest rate can help you save thousands of dollars over the life of your loans. Better rates also mean you can pay down that medical school debt faster, also helping you pay less in the long run.   The importance of refinancing now is that you can start saving immediately. Depending on what you qualify for through private lenders like ELFI1, you could lower your interest rate, have a single monthly payment, lock in a fixed interest rate, and more. All helping you to enjoy the fruits of your hard work faster.   Another reason to refinance now is that the Federal Reserve Board lowered interest rates twice already this year. This federal interest rate applies to banks—it’s the amount of interest they charge each other to lend federal reserve funds. The benefit for you, as a borrower, is that the less interest banks pay, the less you can potentially pay.  

Refinancing Federal vs Private Loans

In our blogs, we regularly discuss the difference between private student loans and government student loans. Keep in mind, the differences between these loans come back into play for refinancing.   Regardless of your initial loan type, when you refinance your medical school debt, you take out a new loan with a private lender – ideally at a meaningfully lower interest rate. With this new private loan, you can lose access to federal benefits like:
  • Income-driven repayment plans
  • Ability to pause payments through deferment and forbearance programs
  • Loan forgiveness programs
  ELFI has a team of Personal Loan Advisors who can help you decide if refinancing makes sense for your situation. As always, we encourage borrowers to look for student loan refinancing loan options with no origination fees or application fees first.  

Downfalls to Refinancing Medical School Debt

Other than losing out on federal borrower benefits, refinancing your loans might not make sense right now. If you already have a low-interest loan, you might not see much savings. To see what you can save, use ELFI’s savings estimator tool.   Additionally, some banks charge fees that could potentially offset any interest savings. With ELFI, you’ll never pay:
  • Application fees
  • Origination fees
  • Prepayment penalties
  Finally, if you’re still in your residency or fellowship, it might make sense to wait until you have a higher income or better credit score, both of which will impact the interest rates available to you. Or you might considering having a cosigner to help you achieve an even lower rate.  

Other Options to Payoff Medical School Debt

While refinancing can lower your monthly payments and get you a better interest rate, there are other options for lowering your medical school debt.   Consider overpaying your monthly amount. This option isn’t realistic for all borrowers, but if you’re savvy enough to live simply or lucky enough to apply a spouse’s paycheck, you can quickly pay down that medical school debt. Some graduates might even have the option of taking out a zero-interest (or ultra low-interest) loan from relatives or friends. Once the student loan is repaid, you can put the excess funds toward other debts or investments.  

Understanding Your Loan Refinance Options

It is important to explore all your options when opening an initial student loan. It's equally as important to explore the best refinancing options for reducing your medical school debt. If you need help navigating those options, contact ELFI. As pioneers in the space, our management team has over 30 years of expertise in student loans and student loan refinancing.     1Subject to credit approval. Terms and conditions apply.   Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.