Tips for Finding the Best Student Loan Refinancing Lender

February 3, 2020

Taking out student loans is an investment in your future, just like buying a house, contributing to a 401K, or building a portfolio of stocks and bonds. Whereas housing and stock markets alike can crash seemingly without warning, however, a college degree delivers, more often than not. According to the College Board’s “Education Pays” report, a college student that is behind employed peers in terms of wages while paying for a bachelor’s degree will recoup these losses by age 34 and begin to surpass those same peers.

Note: This blog was previously published in August of 2017, but has been updated to be current for our readers.

In other words, you’ve done good by going to college, and the result is that you are now paying your bills and student loans while also saving for your future. Still, you can’t help but notice all the media hype over the benefits of student loan refinancing, or the great offers from companies like Education Loan Finance that could help you to save money over the life of your student loans.

If you’re going to refinance in order to reduce your interest rates, monthly payments or overall payout on student loans, you have to be just as smart as you were when choosing a profitable major. You need to ask the right questions and compare student loan refinancing lenders. Here are the top questions to help you get to the bottom of finding the best student loan refinancing lender.

Do I qualify for refinancing?

This is question number one. If a lender won’t work with you for some reason or another, you’ll have to go back to the drawing board. As a college student paying down debt, however, you might find yourself in a great position to refinance.

Potential factors affecting your ability to refinance include:

Credit score
Credit history
Debt-to-income ratio
Monthly salary/annual income

Not every lender will use the same factors in determining eligibility. While some rely primarily on credit score and history, others now weigh minimum income requirements more heavily. The good news is, if you earn a good income, you’re working to reduce debt and you’ve built up a solid credit score (680+) and clean credit history, you’re probably in a great position to refinance with just about any student loan refinancing lender you approach, allowing you the opportunity to shop around and pick the lender you prefer.

What are the benefits?

There are a lot of potential benefits to refinancing student loans, but when you do it right, the biggest benefit is saving money. Once you’ve qualified for refinancing, it’s time to look for the best terms, and this could include comparing:

Interest rates
Variable/fixed rates
Monthly payments
Loan duration
Overall payout

With the right terms, you could reduce your debt and save money on every front. This, in turn, could mean paying off debt faster, improving your credit score, reducing stress and generally feeling pretty awesome about your excellent life choices. You might be able to buy your first home or start a business sooner than you hoped. Maybe you can start putting money into retirement accounts and taking advantage of compound interest early in life. Sound refinancing opens doors. Hashtag winning, anyone?

What’s the deal with fixed vs. variable rates?

You may have noticed that among your myriad student loans are lurking some variable rates. As a college grad, you probably understand the difference between the terms “fixed” and “variable,” so you know why the former is generally preferable. Variable-rate loans fluctuate, which is pretty great during economic downturn because your interest rates and payments go down.

Are there penalties for early repayment?

According to the office of Federal Student Aid, the federal loans you take for college incur no penalties for early repayment. Can you keep the same benefits when you refinance? You’ll need to make sure the lender you choose allows you to make extra payments toward the principle of the loan, as opposed to paying off fees and accrued interest first. This way you’ll be sure to enjoy the rewards of your responsible financial behavior, and actually reduce debt and pay your loan down faster.

Are there further discounts available?

You might already know that you should ask about available discounts when comparing insurance policies, but did you know you can also get discounts through loan refinancing? You might not save the same amount as with a greatly reduced interest rate, but every little bit helps.

Some lenders will reduce your rate by a small percentage (say 0.25%) if you select an automatic payment method. You might also be eligible for discounts related to good behavior like on-time, consecutive payments. Or you could get bonuses for referrals. If there are discounts to be had, you definitely want to know about them, and the best way is to ask.

What are some other benefits to refinancing student loans?

You want more than monetary savings when you refinance? You got it. Some lenders are finding ways to sweeten the deal with extras like unemployment protection, career coaching, entrepreneurship programs and more. Often, these bonuses are in the best interest of both lenders and borrowers.

For example, pausing loan payments during hardships like job loss can give borrowers the opportunity to get back on their feet and resume payments faster, and helping borrowers with career and entrepreneurship opportunities can lead to increased earnings and perhaps future loans. It looks like lenders are starting to see the value of long-term relationships with college grads.

Should I refinance or consolidate?

Why not do both? When you refinance and consolidate at the same time, you stand to reduce interest rates and payments, but you could also increase convenience by turning a dozen monthly payments into a single bill.

Before your refinance your student loans, you need to choose a lender that’s going to offer you the best terms and the most benefits. With a list of targeted questions in mind, you can find the perfect lender for the job. It could just be the beginning of a beautiful friendship.

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.

When refinancing law school debt makes sense

When you refinance your law school debt, you take out a loan from a lender like Education Loan Finance for the amount of your current debt. The new loan has different terms, including interest rate and length of repayment. While refinancing isn’t for everyone, it’s a good idea in the following scenarios:

1. You have high-interest student loans

As Sembach found out, graduate, professional, and bar exam loans can have extremely high interest rates. Over time, those high rates can cause your loan balance to balloon, adding thousands to your loan cost. When you refinance your debt, you can qualify for a lower interest rate and save money over the life of your loan.

2. You want to pay off your loans early

If you refinance your loans and qualify for a lower interest rate, more of your monthly payment will go toward the principal rather than interest charges. If you keep making the same payment that you had before you refinanced, you can pay off your loan months or even years early.

3. You want to simplify your payments

If you’re like most graduates, you had to take out a number of different loans to pay for school. “When I graduated law school, I had 10 to 15 different loans that I needed to consolidate,” said Sembach. Unfortunately, that’s very common. Graduates often have several loans to manage, with multiple payment due dates and loan servicers to remember. By refinancing your debt, you consolidate your loan together. After that, you have just one loan and one payment to handle.

4. You want to reduce your monthly payments

If your payments are currently too expensive, refinancing may provide you with some relief. When you refinance your debt, you can extend your repayment term. For example, if you are currently on a 10-year repayment plan, you could opt for a 20-year repayment plan. You’ll pay more in interest charges with a longer term, but your monthly payments will be much more affordable.

5. You aren’t eligible for loan forgiveness

While student loan refinancing can be an effective tool for managing your debt, one of its biggest drawbacks is that you lose out on federal benefits when you refinance federal student loans. If you’re a public defender or work for a legal aid organization, you could be eligible for loan forgiveness through Public Service Loan Forgiveness (PSLF). But if you refinance your loans, you’ll lose your eligibility. However, lawyers who work in private practice or who have loans from private student loan lenders don’t qualify for PSLF. In that case, refinancing can make good financial sense.

How to refinance your loans

Refinancing law school debt is surprisingly easy. Just follow these three simple steps:

1. Check the eligibility requirements

Before refinancing, make sure you meet the lender’s eligibility requirements and collect the necessary documentation to speed up the process. With ELFI, you must meet the following criteria:

You must be a U.S. citizen or permanent resident
You must have at least $15,000 in student loans
You must have a bachelor’s degree or higher
You must have a credit score of 680 or higher
You must have an income of $35,000 or higher
Your credit history must be at least 36 months old
Your degree must be granted by an approved post-secondary institution

If you don’t meet the criteria on your own, you may still be able to get a loan by adding a co-signer to your application. A co-signer is usually a parent, relative, or friend who applies for a loan with you and is responsible for making the payments if you fall behind. Adding a co-signer increases your chances of qualifying for a loan and securing a lower interest rate.

2. Get a rate quote

Before submitting your application, get a rate quote. With ELFI’s Find My Rate tool, you can get an interest rate estimate and view loan terms without affecting your credit score.* Once you find a loan that works for you, you can proceed with the application process.

3. Submit your application

To complete the application, you should be prepared to enter personal information about yourself, including your name, address, Social Security number, employer information, and income. You’ll also need to submit documentation, including:

A copy of a government-issued ID, such as a driver’s license
Proof of income, like a W-2 or recent tax return
Bank account information if you’re signing up for automatic payments
Current billing statement or payoff letter for each current student loan

Alternatives to student loan refinancing

Refinancing can help you save money and pay off your debt early, but it’s not a great solution for all attorneys. If you don’t think that student loan refinancing is right for you, there are other ways to manage your debt more effectively.

1. Apply for PSLF

One option is to pursue loan forgiveness through PSLF. For many borrowers, like Sembach, PSLF can be a powerful debt relief tool. Previously, Sembach worked in private practice. But he switched career tracks to take advantage of PSLF. “I pursued PSLF to help get rid of the debt,” he said. “I took a $10,000 pay cut when I left private practice to become a public defender, but I took the pay cut because of PSLF.” To qualify for PSLF, you must have federal student loans and work for a qualifying non-profit organization or government agency for at least 10 years. During that time, you must make 120 qualifying monthly payments. If you meet those requirements, your remaining loan balance will be forgiven tax-free.

2. Apply for an income-driven repayment plan

If you can’t afford your monthly payments and you have federal student loans, you may be able to reduce your payments by applying for an income-driven repayment (IDR) plan. Under an IDR plan, your loan servicer extends your repayment term and sets your monthly payment at a percentage of your discretionary income. You can apply for an IDR plan online or by contacting your loan servicer over the phone.

3. See if you qualify for repayment assistance

Some states try to attract talented attorneys by offering student loan repayment assistance programs. They will repay some or all of your student loans in exchange for a service commitment. For example, attorneys in Vermont who work for certain civil legal aid organizations can qualify for up to $5,000 per year in student loan repayment assistance from the Vermont Bar Foundation. The American Bar Foundation hosts a database of student loan repayment assistance programs available all over the nation. You can search the database to find programs you may be eligible for near you.

Repaying your student loans

As a lawyer, you likely have a significant amount of student loans. While your loan balance can be a burden, student loan refinancing can help you save money and lower your monthly payments. To find out how much you can save by refinancing law school debt, 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.

2020-03-17

#TorchStudentDebt Series: CMO Josh Phillips

Welcome to the first episode of our #TorchStudentDebt blog series! At ELFI, our goal is to empower a brighter future for those with student loan debt. We do this by offering competitive rates and flexible terms for student loan refinancing* as well as sharing helpful tips for helping you achieve financial freedom. In this exclusive blog series, we’re sharing the stories of individuals who have torched their student loan debt, covering everything from the challenges they faced to the tactics they used to eliminate their debt. Hopefully these experiences can provide you with some insight on how you can eliminate yours. To kick this series off, we’re sharing the story of Josh Phillips, SouthEast Bank’s Chief Marketing Officer. Note: SouthEast Bank is the parent holding company of Education Loan Finance.

Background

Josh is a Brimley, Michigan native that decided to go to college for the same reason that many of us do – to learn and make more money. His first job was picking up shingles around construction sites for his father, who was a licensed builder. He worked at McDonald’s through high school, handing out food in the drive-thru and eventually moving up into the role of “maintenance man,” being in charge of facilities around the building.

“The variety of jobs I had growing up taught me a lot… although I did enjoy some parts of them, I also knew that they weren’t what I wanted to do for the entire adult experience.”

Like a good portion of millennials, Josh was a first-generation college student. This left him in somewhat of uncharted territory when it came to choosing a college and acquiring financial aid.

“Being the first person in my family to go to college, I didn’t really have any idea what I was doing in terms of the best way to approach it. This was in the early 2000s, so there were some resources online to help guide you through the process, but not nearly the amount of resources as there are now on the internet.”

Josh used the U.S. News and World Report college tool to do his research, made a shortlist of schools, and began applying and going on college visits. He ultimately decided to attend Maryville College (TN), a private liberal arts college in East Tennessee.

Taking Out Loans

Going into college, Josh took the same view of his loans that many of us do – putting off the worry until after school.

“I definitely didn’t actively think about the amount of debt I was accruing throughout my college education. Four years seemed like a ways away, so I kind of took the approach of, ‘do what you have to do to get the education and experience you want,’ and worry about those minor details afterward.”

Facing Reality

Josh graduated with a double major in International Business and Political Science, but he also graduated with around $55,000 in student loan debt that consisted of both federal and private student loans.

“At that point in time, I had loans in a variety of places – so it was kind of like this slow, painful trickle of letters coming in telling me how much I owed different lenders. I wouldn’t say it was completely demoralizing, but it definitely made me understand that this was going to be one of the major payments that I’d be making on a monthly basis for a good length of time.”

This was in 2008, right before the bottom fell out of the market. Josh was lucky to find a job with a small startup prior to graduating and transitioned into that after school. He believed that working for a startup would give him the opportunity to potentially grow with the company and accelerate his career faster, but it was definitely a roll of the dice.

“I heard the rule that you shouldn’t go into more student debt than what your first year’s salary will be upon graduation… well, I broke that rule.”

The startup Josh worked for was a marketing and advertising agency that was going through a transition from traditional marketing to digital marketing. Josh was an Account Manager and had the opportunity to work with a number of their larger, newer customers and also assist with general business operations.

Strategy for Paying Down Debt

When Josh transitioned into his new role, he didn’t have much of a strategy for paying down his debt. He simply wanted a job that allowed him to meet the minimum monthly payments and afford his living expenses. As his role within the company grew, he began focusing more heavily on ways to eliminate debt.

Josh didn’t use an Income-Based Repayment plan because he didn’t want to accrue more interest than what he was already paying down. He always tried to make sure the number was “going in the right direction,” i.e., downward.

He applied any quarterly or annual bonuses as lump-sum payments toward his higher-interest student loans. This tactic is known as the debt snowball strategy.
He didn’t change his lifestyle as his career developed. He didn’t buy a new car. He did buy a house on a short sale, but he had roommates to help cover the cost of the mortgage. He didn’t go on any expensive vacations, but would instead stay with family and friends in other states.
He avoided credit card debt. He did use a credit card, but more for the points and rewards than out of necessity.

Using these strategies, Josh was able to pay down his $55,000 in student loan debt in just seven years.

Regrets Along the Way

Despite the impressive timeframe in which Josh paid off his student loans, he did mention that he had some regrets about how he went about it.

“Looking back, I took out extra money to cover living expenses while I was in college… If I had to do it again, I would have probably tightened those purse strings more when I was in school, because living on borrowed money just costs you more and more over time.”

He also mentioned that he wished he would have known about his ability to refinance student loans and lock in a better interest rate. He said that doing so would have allowed him to save on interest and possibly even extend his repayment period so that he could prioritize other financial goals, like saving for retirement. In hindsight, he also wished he would have looked into scholarships and financial aid earlier in the process, as many others with student loan debt do.

Being Debt-Free

As one would assume, Josh is happy to now be free from his student debt.

“I mean, it’s great – I think any time you can eliminate debt, it just opens up new options. Whether you want to go into more debt for a new car or a bigger house, or maybe you just want to get to the point where you don’t owe anyone anything, paying down debt almost gives you a bit of a high. It’s great to see the number going down, and once it’s gone, you kind of want to turn around and figure out what you want to pay down next. Currently, my last debt is my mortgage.”

Advice for Others with Student Loan Debt

When asked what advice he would give others with student loan debt, Josh emphasized the trade-off of having great experiences vs. being debt-free.

“Everyone loves doing new things and getting new experiences, but I would always counter that with the freedom you can feel from getting out of debt. There are plenty of things you can experience for free if you’re creative or thoughtful about how you do it… If you’ve got debt that keeps you worried or at a job you don’t like, it’s a good trade-off to delay your experiences and instead put that money toward your own financial freedom.”

#TorchStudentDebt

That wraps up our first #TorchStudentDebt blog! Stay tuned for more stories of how others put strategies in place to torch their student loan debt, challenges they faced along the way, and advice they have for others still on their student loan repayment journey. Thanks for reading!

About Education Loan Finance

Education Loan Finance, a division of SouthEast Bank, is a leading online lender designed to assist borrowers by consolidating and refinancing private and federal student loans into one simple, low-cost loan. Education Loan Finance believes that providing consumers comprehensive refinancing and consolidation options empowers the consumers on their financial journey. *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.

2020-03-13

How to Compare Student Loan Refinancing Lenders

If you’re like most college students, you may have graduated from school with student loans. According to The College Institute for College Access and Success, graduates left college with $29,200 in student loan debt, on average.

By Kat Tretina

Even if you took out federal student loans, interest rates can be high, causing your loan balances to grow over time. If you want to save money and pay off your debt as quickly as possible, student loan refinancing may be a smart strategy for you. However, there are literally dozens of refinancing companies out there, so how can you find the right one for you?

What is student loan refinancing?

When you refinance federal or private student loans — or even parent student loans — you take out a loan from a company like ELFI for the amount of your existing education debt. The loan you take out has different terms than your old ones, including interest rate, length of repayment, and minimum monthly payment. When you refinance your debt, you can opt for a new loan term. You can extend your repayment term to up to 20 years to reduce your monthly payment and make it more affordable. Or, you can qualify for a lower interest rate and save money over the course of your repayment. You can even pay off your loans months or years ahead of schedule, freeing yourself from your debt. Just how effective is student loan refinancing? ELFI customers reported that they save $272 per month, on average, and should see an average of $13,940 in total savings after refinancing their student loans.¹

How to find the best student loan refinance companies

When you’re shopping around for a lender, there are five steps you should follow before selecting a loan:

1. Assess your loan eligibility

Because refinancing loans are offered by private lenders, eligibility criteria can vary from lender to lender. You may qualify for a loan from one lender, but not another. At ELFI, borrowers must meet the following criteria:

You must be a U.S. citizen or permanent resident
You must have at least $15,000 in student loan debt
You must have a bachelor’s degree or higher
Your income is at least $35,000
Your credit score is 680 or higher
Your credit history is 36 months old or older
Your degree is from an approved post-secondary institution and program of study

If you don’t meet the minimum lending requirements on your own, you may need a co-signer to apply for a loan with you. A co-signer is usually a parent, relative, or friend with good to excellent credit and steady income. The co-signer is responsible for making payments on the loan if you fall behind.

2. Get instant rate quotes to compare interest rates

Before submitting your loan application, it’s a good idea to compare offers from different lenders so you get the lowest student loan refinance rates. Some lenders — like Education Loan Finance — allow you to get a rate quote online in minutes without affecting your credit score.* With the prequalification tool, you can explore your options and choose what repayment terms and interest rate types work best for you before applying for a loan.

3. Look at what borrower protections lenders offer

When you refinance federal student loans, you lose federal benefits like access to income-driven repayment plans and federal forbearance programs, so it’s important to pay attention to what benefits the refinancing lender offers. Not all refinancing lenders have borrow protections, so make sure you read the fine print before selecting a lender. Otherwise, you could end up in a tough spot if you can’t afford your payments. For example, if you’re unable to pay your loan because of a financial hardship or medical issue, you may be eligible for a temporary forbearance with ELFI. You could postpone your payments for up to 12 months, giving you up to a year to get back on your feet without worrying about your loans.

4. Compare repayment terms

When comparing loan offers, there are a few key factors you should consider:

Interest rate types: Some lenders offer fixed and variable-rate loans. Fixed-rate loans have the same interest rate — and monthly payment — for the entire life of the loan. Variable-rate loans have lower interest rates at first than fixed-rate loans, but they can fluctuate over time, causing your payment to change, too. Variable-rate loans make sense if you want to pay off your student loans as quickly as possible because you can take advantage of the initial lower rate.
Interest rate: The rate you receive will affect how much interest accrues on your loan during your repayment.
Length of repayment: A longer loan term will give you a more affordable monthly payment, but you’ll pay more in interest over time. A shorter loan term will have higher monthly payments, but you’ll pay less in interest charges. And, shorter loan terms tend to have lower interest rates than loans with longer terms.

5. Research the lenders

Refinancing lenders vary widely in terms of customer satisfaction and accessibility. Before choosing a lender, research reviews online to get an idea of what to expect as a borrower. For example, ELFI has over 800 reviews on TrustPilot, and a 4.9 out of 5 TrustScore. You can contact ELFI for help by emailing answers@ELFI.com or by calling or texting 1-844-601-3534.*

Tackling your student loan debt

Refinancing your student loans is a great way to save money, lower your payments, or pay off your debt early. But choosing the right lender is key. If you’re not sure if refinancing is right for you, use the student loan refinancing calculator to find out how much you can save and how it would affect your monthly payments.*

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.