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Student Loans

What’s the Best Way to Repay Student Loans?

July 25, 2018
Updated February 7, 2020

 

While serving your student loan debt sentence, you’re likely searching for any and every way to ease the discomfort of burdensome monthly payments. Perhaps you’ve looked into some student loan repayment plans like income-driven repayment (IDR) programs, the most common option being the income-based repayment (IBR). (Find out more about IDRs)

 

Standard Repayment Plan

By default, federal loans start out on a 10-year Standard Repayment Plan that often result in a fairly high monthly payment. For example, if your income was $30,000 a year and your student loan debt totaled $34,722 with an interest rate of 3.900% your monthly payments would be $350. That can be tough for someone balancing rent/a mortgage, food and transportation costs.

 

Your income – $30,000
Student Loan Debt – $34,722
Interest Rate – 3.900%

 

Under Standard Repayment Plan

Monthly Payment= $350
Total Amount Paid =$41,988

 

These high monthly payments are why recent grads on an entry-level salary, seek relief through an IBR or IDR plan. This allows their credit score to stay intact. Also give borrowers some additional money to live their lives. This may sound great to anyone really struggling, but in the long run it can really end up costing, almost double your original loan amount.

 

Income Based Repayment

Income based repayment reduces your monthly student loan payments by placing a cap on how much you’ll pay. No matter how much your income may increase, payments on IBR plans are capped at 10% of your discretionary income (if loan money was received after July 1, 2014) or 15% if you received loan money before July 1, 2014. IBRs require you to recertify every year; your monthly payments are likely going to increase over the course of your repayment term. If you get a raise or switch jobs to a higher salary, your monthly payments are going to jump up right along with it.

 

Your income – $30,000
Student Loan Debt – $34,722
Interest Rate – 3.900%

 

Under Income-Based Repayment Plan

Monthly Payment= $98
Total Amount Paid =$48,523

 

The IBR “Forgiveness”

Most borrowers count on the remainder of their debt being forgiven after 25 years. However, understand that like laws do, there is a possibility that this can change. In addition, many borrowers don’t take into account the fact that it’s considered taxable income in the year of your release. Forgiveness comes with a price because you’re essentially trading student loan debt for a tax debt that’s due the same year you’re supposedly celebrating your student debt freedom.

 

How Income-Based Repayment really works

Without a doubt, income-based repayment is a successful method of lowering your monthly payments, but that’s about all it’s good for, unfortunately.

 

Not only are you more than doubling the number of years you’ll be sitting on debt row, you’re also accruing interest on all those extra years. What’s worse – the interest is then capitalized, meaning it’s added to the principal balance of your loan and you end up paying even more interest on the higher balance – in most cases significantly more than the original amount you borrowed in the first place.

 

Bottom line, if you’re struggling out of college to pay your loan and get on your feet, it may be a temporary solution for a year, or two. We’d never recommend IBR as your entire student loan payoff solution since most payments don’t even cover the interest being collected during that month.

 

Lower your monthly payments by refinancing

Refinancing your student loan debt is perhaps the most flexible way to manage your monthly payments. It allows you to consolidate your various loans into a single, easy-to-remember monthly payment, as well as choose whether you want a variable or fixed interest rate. You can even negotiate your repayment term for the optimal monthly payment.

 

Refinancing with a reputable lender like Education Loan Finance enables you to significantly lower your monthly payments and lock yourself in for the duration of your term. 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.* (Find more ways to Pay Off Student Loans Faster)

 

Refinance vs. Income-Based Repayment

On the surface, IBRs certainly seem like an enticing option, but it’s crucial to know the long-term consequences associated. If the only goal is to lower your monthly payment, IBR is not only capable of achieving the task-at-hand but also readily available for nearly all federal loan borrowers.

 

Refinancing, on the other hand, is a much more intentional way of paying down student loan debt. It’s customizable for your budget and you can lock in your interest rate and know exactly how much you’ll pay every month for the life of your loan.

 

10 Facts About Student Loans That Will Save You Money

 


 

*Subject to credit approval. Terms and conditions apply. Average 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.

 

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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2020-02-14
We’re In Love with These 7 ELFI Customer Reviews

Whether you're spending time with the girls for 'Galentine's Day' or spending the holiday with that special someone, today is a day to share some love with those you care about!   At ELFI, we show our love to our customers through top-notch customer service paired with low rates and flexible terms for refinancing their student loans – and sometimes they show us love back through great TrustPilot reviews. In light of Valentine's Day, we're sharing 7 customer reviews that we're simply in love with!  

All reviews below were given by real Education Loan Finance customers on TrustPilot. Results may vary.

 

Review #1:

“Loved the personal loan advisor experience … When she called me and left me a voicemail, she sounded like a friend, not a scary loan robot, and it really put me at ease through the process.”
No one likes a scary loan robot! It's great to see that our personal loan advisors help put our customers at ease through the refinancing process by giving them guidance, answering questions, and keeping them informed of updates along the way!    

Review #2:

"I wish I'd done this sooner! The refinance process was fairly straightforward and easy to manage, and having the added benefit of a loan advisor was super helpful. The rates are competitive and they have plenty of options for every person."
We hear "I wish I'd done this sooner" pretty often from customers, but it's always nice to see how happy they are once they've made the decision to refinance. If you still have a significant amount of student loan debt, it's probably not too late to refinance!  

Review #3:

"Promote this woman!! Candace was so knowledgeable, prompt, and helpful during every step of the process- made the experience seamless."
So much enthusiasm from this customer! They don't need to worry – we take great pride in the service given by our personal loan advisors and we love
showing people how great they are. They truly do make the refinancing process as seamless as possible.  

Review #4:

"Did not expect to be assigned to an actual representative so good on elfi for that.. Further.. I can tell that Ivan knows what he's doing. He's professional, with prompt responses. It's one thing to put a representative in place, but another for that person to actually provide value. Sometimes with companies, you don't even know who to contact to begin with, let alone, the company reaching out to you first, with a representative who's coherent and professional."
This means so much to us! We aimed to reshape the student loan refinancing industry by offering every customer with a single personal loan advisor that can understand their situation and guide them through the process... Receiving reviews like this truly make us blush because it shows that our process works!  

Review #5:

"Andrea was incredibly helpful! It was nice to have someone take the time to answer all of my questions, provide explanations and keep me apprised of next steps. Refinancing was a breeze...thanks ELFI and Andrea!"
Kudos to Andrea for making refinancing a simple process for this customer! Regardless of your lender, there are always going to be several steps involved in the refinancing process – but having someone there to show you the path ahead really makes it a breeze.  

Review #6:

"Great rates and very helpful customer service. Didier walked me through the process and made it very easy to me to get my loans set up quickly and painlessly. I highly recommend ELFI to anyone looking to refinance their student loans. I compared payment options to several other companies, and Education Loan Finance by far had the best options. I was able to reduce my monthly payments and now I will be paying off my loans in 7 years, rather than 10. Five stars!"
This customer cut three years off of their repayment term by refinancing with ELFI, and they sure seemed happy about it!  

Review #7:

"I’ve been afraid to refinance for years. ELFI was rated well on NerdWallet so I decided to apply. They actually made it easy to understand what I needed to refinance, how the process works etc. I also had someone assigned to help me and answer any questions. I’m so happy to have my loan with a company designed for the modern age who is actually transparent and helpful."
Shucks! This customer was putting off refinancing for years, and we couldn't be happier to be their refi match made in heaven. Our transparent process and personalized customer service really made the difference here!     What else can we say? We love our customers, and these reviews show us that the feeling is mutual. Our average TrustPilot rating currently stands at 4.9/5 stars, with over 800 reviews! Don't just take our word for it – check our all of our reviews here.   Interested in finding your student loan refinancing match in ELFI? Our personal loan advisors are just a call, text, or email away. One of our PLAs will be dedicated to you from the moment you apply and will work with you each step of the way to ensure your ELFI refinanced loan is the optimal fit for you. Contact us to get started!*   Oh, and Happy Valentine's Day from ELFI!  
  *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.
young adult doctor with student loans
2020-02-14
A Doctor’s Guide to Student Loan Refinancing

As a doctor, you likely racked up a significant amount of student loan debt to finish your education. According to the American Medical Association, 79% of medical school graduates have $100,000 or more in student loans.

 

Blog by Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

However, carrying six figures of education debt isn’t as dire for you as it can be for someone working in another field. As a doctor, you likely have a relatively high salary. In fact, the Bureau of Labor Statistics reported that the average salary for family and general practitioners is $211,780.

 

With your education and income, you’re a prime candidate for student loan refinancing. And, refinancing your debt can help you save money and pay off your loans early.

 

Why you should refinance student loans after medical school

When you have such a large amount of student loan debt, interest charges can have a significant impact on your balances. Over time, interest charges can add thousands to your loan cost.

 

Unfortunately, the interest rates on medical school loans can be quite high. Even if you qualified for federal Grad PLUS Loans, you can face steep rates. As of 2020, the interest rate on Direct PLUS Loans is a whopping 7.08%.

 

To put that rate in perspective, let’s say you had $100,000 in student loan debt at 7.08% interest and a 10-year repayment term. Your monthly payment would be $1,165 per month, and by the end of your loan term, you will repay a total of $139,825. Interest charges would cost you over $39,000. Pretty scary, right?

 

When you refinance medical school loans, you may qualify for a loan with a lower interest rate. Or, you can extend your repayment term if you want a more affordable monthly payment. Depending on what option you choose, the savings can be significant.

 

If you refinanced your loans and qualified for a 10-year loan at 4.5% interest, your monthly payment would drop to $1,036 per month. However, you’d pay just $124,366 over the length of your loan. By refinancing your debt, you’d save over $15,000.

 

How to refinance medical school loans

You can refinance your medical school loans in four simple steps:

 

1. Find out if you meet the eligibility requirements

First, make sure you meet the eligibility requirements to refinance student loans. As a baseline, you must:

  • Have earned a bachelor’s degree or higher from an approved college or university
  • Be a U.S. citizen or permanent resident
  • Be at the age of majority — 18 years old, in most states — or older
  • Have a good credit history
  • Have a minimum credit score in the upper 600s
 

2. Consider asking a cosigner for help

If you’ve just started practicing, you may not have established your credit history yet, or you may not be making much money. If that’s the case, consider asking a cosigner for help. A cosigner is a friend or relative with good credit and income who agrees to sign the loan application with you. If you don’t make the minimum payments on time, the lender will go to the cosigner for them, instead.

 

While a cosigner isn’t required, adding one to your application can improve your chances of qualifying for a loan and getting a low interest rate.

 

3. Get a rate quote

Next, get a rate quote to see what kind of terms you can qualify for. With ELFI’s Find My Rate tool, you can get an estimated rate in just a few minutes without any impact to your credit score.*

 

4. Submit your loan application

Once you find a loan that works for you and your budget, you can move forward with the application.

 

You’ll need to provide your personal information, as well as information about your loans and employer. You’ll need to have your recent pay stubs or W-2 forms on-hand, and you’ll have to submit a copy of your government-issued identification, such as a driver’s license.

 

Once you complete the application, ELFI will review your information and will contact you with a decision. Until you find out you’re approved and the loan is disbursed, keep making the payments on your existing debt to avoid late payment fees and penalties.

 

5 other options for managing your loans

Refinancing student loan debt can be a great way to improve your finances, but it’s not for everyone. If you decide that student loan refinancing isn’t a good fit for you, there are a few other options for managing your debt:

 

1. Federal income-driven repayment plans

If you have federal student loans — such as Grad PLUS Loans or Direct Unsubsidized Loans — you may be eligible for an income-driven repayment (IDR) plan. With IDR plans, your loan servicer will extend your repayment term and reduce your monthly payment. Your new payment is dependent on your loan balance, income, and family size. Depending on your situation, you can significantly lower your payment amount.

 

You can apply for an IDR plan online.

 

2. Public Service Loan Forgiveness

If you work for a non-profit hospital, organization, or government agency, you may qualify for Public Service Loan Forgiveness (PSLF). With PSLF, the government will forgive your remaining loan balance after making 10 years’ worth of qualifying payments while working for an eligible employer.

 

However, not many people will meet the PSLF criteria. In fact, 99% of PSLF applicants were rejected last year.

 

To prevent any issues, use the PSLF Help Tool to find out if you meet all of the qualifications for loan forgiveness.

 

3. State student loan repayment assistance programs

Depending on where you live, you may be able to get some help with your debt through state student loan repayment assistance programs. Some states offer healthcare professionals money to repay their loans in exchange for a service commitment to work in a high-need area.

 

For example, doctors who live and work in Kansas can receive up to $95,000 to repay their student loans. In return, you must agree to work in an approved facility in a health professional shortage area.

 

To find out if your state operates a student loan repayment assistance program, visit the Association of American Medical Colleges’ website.

 

4. Locum tenens work

Another option is to take on locum tenens work. With this approach, you fill in for another physician on a temporary basis. Some terms can be for just a few days, while others can last for months.

 

Why is this a good idea? It can be lucrative. Qualified professionals can earn large bonuses, which you can use to make lump sum payments on your debt.

 

You can find locum tenens work — and sign-on bonuses — on the American Academy of Family Physicians’ website.

 

5. Live like you’re still in your residency

Now that you’re no longer in residency, it may be tempting to spend some of your new income on a larger apartment or a better car. However, it’s a good idea to continue living like you’re still in residency to limit your expenses. By keeping your living costs low, you can free up more money for debt repayment.

 

Managing your student loans

As a healthcare provider, you likely have a substantial amount of debt. If your student loans are causing you stress, student loan refinancing can be a smart way to manage your debt. Use the student loan refinance calculator to find out how much you can save by refinancing your student loans.*

 
 

*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.

2020-02-07
This Week in Student Loans: February 7

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:

The Dangers Of Using A 529 Plan For Student Loan Debt

The Setting Every Community Up for Retirement (SECURE) Act that was signed into law on December 20 allows families with a 529 college savings plan to use some of the savings to pay off student loan debt. Previously, you would have to pay a 10% penalty on 529 earnings (not contributions) in order to use the savings for non-qualified expenses, such as paying student loans. This Forbes article explains the limitations of using such plans to pay off student debt.  

Source: Forbes

 

How Each State is Shaping the Personal Finance IQ of its Student

According to CNBC, there's increasing research showing that students who are required to learn financial literacy or take personal finance courses in high school make better financial decisions in their early adult life. See how certain states are taking measures to ensure their students are more financially literate in this article.  

Source: CNBC

 

Student Loan Debt Statistics for 2019

Yahoo Finance has released a report on the state of student loan debt for the year of 2019, including information about the average student loan debt per borrower and student loan debt by state, age, race, and gender.  

Source: Yahoo Finance

 

Ohio Dad Got 55,000 Identical Letters About His Daughter's Student Loan

An Ohio father of a student loan borrower was shocked when he received 59 bins of mail containing 55,000 identical letters from the servicer of his daughter's student loans. The delivery was so large that the man had to pick up the delivery at the back door of the post office and had to make two trips. The servicer claimed it was due to a glitch in the outgoing mail process and that they would work to ensure the mistake would not happen again. When asked what he might do with the letters, the father said, "I just may start a fire, a bonfire, and burn it all," while laughing.  

Source: CNN

    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.