Companies to Refinance Your Student Loans With

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What exactly is student loan refinancing?

The process through which one acquires a new loan with a new interest is called student loan refinancing and for this usually, the person can pay off the old loans and get a new one with different terms and conditions and also a lower interest rate.

In simple words, a lender pays off the loans and gives the student a new loan with new agreements and hopefully a lesser interest rate.

Now let’s say the student has $40,000/- in federal student loans with an annual interest of 5% which means that the student would be paying around $500/- for the next 8 and a half years.

But if the student were to refinance it and get a lower interest rate, say, 3% of $40,000 then his monthly payment will be roughly around $423/-, it is a wiser option to refinance student loans than consolidating them as consolidating will only help reduce the number of monthly payments to just one monthly payment, but it will not help in reducing the interest amount.

What should you think about before Refinancing Your Student Loans?

The thought of having a lender pay off your student loan debts and then offering you a loan at lower interest rate does sound good, but it is a decision that needs a lot of thinking because the moment you turn to a private lender to refinance your student loans, you lose out on a lot of federal programs and repayment options like the Public Service Loan Forgiveness Program and many more.

Lenders typically do not have any special offers or programs on student loans, and most of the time they will ask you to check and re-check your financial status, they will ask if you have emergency savings before taking a risk and also to be prepared for a financial crisis.

Requirements to make one eligible for refinancing student loans

Though the requirements vary from vendor to vendor, some lenders may want you to have a good credit score or some lenders need you to be a permanent resident in the city/town where they are located. Here are a few basic requirements to make you eligible for refinancing your student loan:

  • A clean and good credit history: Regardless of your credit score lenders will run a credit check to make sure you make your payments on time.
  • A good FICO credit score: A minimum score of 650 is what most private lenders require as a good FICO (Fair Issac Corporation).
  • Current Financial Status: Most private lenders ask you to check and make sure that your financial status is good and they also ask you to make sure that you have emergency savings.
  • Location: Most private lenders again prefer lending loans to people who are permanently residing in the same town/area/city as them
  • DTI: Lenders make sure that you have a good DTI (debt to income) ratio before and by “good” they mean low DTI scores, as a low DTI score indicates that you have more money in your income to pay the monthly loan.

Best Companies to Refinance Your Student Loans

You can refinance your student loans through these Student Loan Refinance Companies:

Earnest

Earnest is an online lender who started off in 2013 and to date has refinanced nearly 105,000 borrowers. It is best for borrowers who prefer customizing their repayment schedule in order to pay off their debt as soon as possible.

Loan Types: Graduate, Undergraduate, Refinance

Loan Servicer: Earnest

Co-signer release available: No

Education Loan Finance

Education Loan Finance is a division of the SouthEast bank and they have been refinancing student loans since 2015. If good customer service is a priority for the borrower then this company is the best option.

Loan Amount: +$15,000/-

Loan Servicer: SouthEast Bank

Co-signer release available: No

SoFi

SoFi is an online lender, who, since 2011 has been offering student loans and refinancing services and they have refinanced the debt of around 250,000 students from America.

Loan Types: Undergraduate, Graduate, MBA, Refinance

Loan Servicer: MOHELA

Co-signer release available: No

Laurel Road

KeyBank founded this side project in 2013 and since then they have helped thousands of borrowers pay for their college. It is best for borrowers who need refinancing during their dental or medical residency. Unlike other lenders, they are they do not provide this service online.

Loan Types: Graduate, Residence, Refinance

Loan Servicer: KeyBank

Co-signer release available: Yes

LendKey

LendKey is an online lender who has been in the refinancing game since 2019 though they are one of the oldest lending companies, and they provide borrowers different offers from different/multiple lenders.

Loan Types: Graduate, Undergraduate, Refinancing

Loan Servicer: LendKey

Co-signer release available: Yes

Citizens Bank

It is a traditional bank whose roots can be traced back to 1828, they are based in Rhode Island. Though they are a traditional bank they provide online services and are best for existing Citizens Bank customers or for borrowers who didn’t graduate or aren’t citizens of the US.

Loan Types: Undergraduate, Graduate, Refinancing

Loan Servicer: Citizens Bank

Co-signer release available: Yes

CommonBond

They are one of the first student loan refinancing company who offers both fixed and variable rate for loans. They are best for borrowers who value repayment flexibility and for those who have a Bachelor’s Degree.

Loan Types: Student Loans, Refinance

Loan Servicer: Firstmark Services

Co-signer release available: Yes.

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