Written By: Louis DeNicola
After weighing the pros and cons of refinancing student loans and deciding that you want to refinance your loans, a helpful next step is to research lenders and their loan offerings. If you’ve already started comparing lenders, you may have heard of Earnest, an online-only lender that takes a slightly different approach on student loan refinancing.
In this review, we’ll tell you all about Earnest and how it stacks up against other lenders in the student loan refi space.
What is Earnest?
Earnest student loan refinance in a nutshell
How Earnest compares with other lenders
Advantages of refinancing with Earnest
Drawbacks of refinancing with Earnest
What it takes to qualify
Best borrowers for Earnest
Taking a closer look at the online platform
A look at the fine print
What to expect during the application process
How to compare student loan refi offers
Earnest is an online-only lender that offers student loan refinancing, parent PLUS loan refinancing, and personal loans. The company launched in 2013 and has lent nearly $2 billion in student loans.
Earnest stands out from the competition with its holistic approach to underwriting, and flexible student loan terms and repayment options. Your credit, income and outstanding debt are considered when you apply for refinancing, as is common with many types of loans. However, Earnest also considers the following factors:
- If you have enough savings to cover at least two months of normal expenses, including your new loan.
- If you regularly save money and have increased your bank account balances over time.
- Whether you have a lot of non-student loan and non-mortgage debt.
- Whether you’ve made loan payments on time in the past.
- If you regularly pay late, overdraft or insufficient fund fees.
- Your earnings potential in your chosen career.
Base on their eligibility criteria, it’s clear Earnest is willing to work with borrowers who may not have the greatest credit score or income now, yet have managed to save a good chunk of money and have the potential to earn a good salary in their chosen career field.
Earnest student loan refinance in a nutshell
Fixed APR range*
3.25 to 6.39%
Variable APR range*^
2.57 to 6.19%
Loan terms offered
Terms offered every month interval between five to 20 years. In total, there are 180 different term possibilities.
No application, origination, prepayment or late payment fees. There may be an $8 fee for returned payments.
Florida residents may also need to pay a 0.35% stamp tax, which is collected by Earnest and sent to the Florida Department of Revenue.
$5,000 to $500,000
Monthly or bi-weekly payments
Unlike many student loan refi lenders, Earnest doesn’t allow borrowers to sign up with a co-signer.
Get a 0.25% interest-rate discount when you sign up for automatic debit payments.
You can change your next bill’s due date, and reschedule all future due dates.
You can request to skip a monthly payment after making six full on-time payments, and skip another payment after each additional 12 consecutive full on-time payments.
*Rates are current as of Jan, 4, 2018, and include a 0.25 percent autopay discount
^Variable rates are capped at 8.95%, 9.95% or 11.95%, depending on the term of your loan.
Earnest exemplifies a millennial-focused student loan refinancing company with its online application, thorough FAQ section featuring instructional GIFs and a variety of options when it comes to choosing loan terms and repaying your loan.
Being able to choose a precise term could save you money. If you can’t afford a 10-year term, the option of an 11-year term instead of being locked in for 15 years can lower your interest rate and save you money. Similarly, having a bi-weekly payment option may align with borrower’s paycheck schedule, but it can also lead to long-term savings.
Earnest also offers options to borrowers who have trouble making payments that you won’t find from other lenders. Logging into your account to change your due date, or choosing to skip an occasional monthly payment, could make all the difference to a borrower who’s just a little behind.
Merit-based underwriting. Although an applicant’s credit score is part of the approval process, Earnest also considers educational and employment history, your earning potential and your overall financial habits. By reviewing your linked financial accounts, Earnest can also determine if you regularly save money or have an emergency fund, which could help you get approved. The inclusion of this data in the decision process may be particularly beneficial for recent graduates, who may not have a long credit history or high credit score.
Choosing a loan term based on your payment amount. When you refinance your student loans with Earnest, you can choose a term between five and 20 years and Earnest will determine the corresponding interest rate and monthly payment. Such flexibility lets you choose as short a term as possible, rather than having to choose from a few options, and can lead to getting a lower interest rate and paying less in interest over the lifetime of your loan.
Flexible repayment features. Earnest offers several features that can make it easier to manage your student loan payments. For example, you can choose to make payments monthly or every two weeks. The latter option may better align with your paydays, and making loan payments every two weeks can lead to saving money on interest over the lifetime of your loan. You may also benefit from these features:
- Skip a payment. Once you make at least six on-time payments, you can request to skip a payment. You can also request to skip an additional payment every time you make 12 consecutive on-time payments.
- Change your payment date. You can easily change your next payment date and delay it by up to six days, as long as you make the request four or more business days before the payment is scheduled. This could help you avoid a late payment when money is tight. You can also reschedule your payment due date for all future autopayments, perhaps to align with when you get paid.
- Make extra payments. If you’re enrolled in autopay, you can also schedule extra payments throughout the month online or with the Earnest app. You can also increase your autopay amount, or switch back to making minimum payments, from your online dashboard.
Loan forbearance and deferment options. You may be able to temporarily stop making payments by putting your loan into forbearance or deferment. Interest continues to accrue, but missing the payments while the loan is in forbearance or deferment won’t hurt your credit, result in fees or lead to defaulting on your loan.
You may qualify for forbearance if your income drops through no fault of your own (e.g. your hours are cut or you’re laid off), you’re on parental leave or your essential expenses (e.g. childcare or medical bills) unexpectedly increase. You can put your loans into forbearance for up to three months at a time, and for a total of 12 months over the lifetime of your loan.
Deferment may be an option if you return to school at least half-time, join the Peace Corps or are on active duty while serving in the military. Earnest may allow you to defer your loan payments for up to 36 months.
Death or total and permanent disability discharge. If you die or become permanently and totally disabled, Earnest will discharge the remainder of your debt.
In-house loan servicing. Some student loan refinancing lenders outsource the servicing of the loan to a third-party company. The servicer is the company you’ll make your monthly payments to, and the company you’ll have to deal with if you have trouble making payments or want to put your loans into forbearance or deferment. Earnest manages the application process and continues to service the loan after it’s disbursed.
Can’t refinance with a co-signer. Earnest’s underwriting process may make it easier for some people who don’t have great credit to qualify for refinancing. But unlike many other lenders, you can’t add a co-signer to your application to increase your chances of qualifying, or to help you get a lower interest rate on your new loan.
Questions about the future. In October, Navient, which spun off from Sallie Mae in 2014 to manage the company’s federal student loan debt business, announced it will acquire Earnest in a $155 million deal. The brands will remain separate, and Earnest’s loan terms, benefits, rates and customer service won’t change, according to the press release. However, some borrowers may be concerned as Navient got in trouble with the Consumer Financial Protection Bureau (CFPB) earlier this year for illegal practices related to its student loans, including giving borrowers misleading or inaccurate information.
Can’t refinance Sallie Mae or parent student loans. The acquisition by Navient also means you won’t be able to refinance Sallie Mae loans, as the two companies, which were formerly under the Sallie Mae brand, have a non-compete agreement. Additionally, you can’t include student loans that a parent took out to pay for your education with your student loans. However, your parent could apply to refinance those loans themselves.
Limited availability. Earnest doesn’t offer student loan refinancing in five states and doesn’t offer variable-rate student loans in eight states*.
You must graduate. You must receive a degree, or be close to graduating, if you want to refinance your student loans with Earnest. Although you may be able to qualify with an associate’s degree, there are also lenders that offer refinancing even if you didn’t get a degree.
Must have a job, a different income source or have an offer to start working within six months
An associate degree or higher from colleges or universities that are accredited with the U.S. Department of Education under Title IV.
Not available to residents of Alabama, Delaware, Kentucky, Nevada, or Rhode Island
Variable-rate loans aren’t available in Illinois, Minnesota, New Hampshire, Oklahoma, Tennessee, Texas, Utah, and Wyoming.
You’re financially prudent but still building your credit. You may have trouble qualifying for refinancing without a co-signer if you don’t have a high credit score. But if you practice good financial habits, like regularly saving for retirement and having an emergency fund that will cover at least two month’s worth of expenses, you may be a good candidate for refinancing with Earnest.
You want to release a co-signer. If you currently have a private student loan with a co-signer, refinancing the loan in your name is one way to release the co-signer. You can do this by refinancing with many companies, but Earnest could be a good choice considering its underwriting process.
Earnest’s website is easy to navigate and filled with helpful information. Right at the top, you’ll find a link to the eligibility page, with overviews of the eligibility requirements for each of Earnest’s loans.
There’s also a help center, which is like a frequently-asked questions hub that’s broken down into five subsections: general questions, applying for loans, repaying your loans, student loan refinancing and personal loans. Each has a variety of detailed and high-level questions and answers, and some of the answer pages have relevant GIFs that show you how to make changes to your online account.
The application process is also straightforward, with guidance provided along the way and answer boxes that pop up when you scroll over many terms.
Between the eligibility page, help center and the loan disclosure forms, Earnest does a good job of making loan terms and conditions easy to find.
Fine-print areas that you may want to review when comparing lenders and loans include the fees (Earnest barely has any), co-signer options (you can’t add a co-signer with Earnest), and caps on variable-rate loans (Earnest’s range from 8.95% to 11.95%).
Qualification criteria can also be important, especially if the lender doesn’t offer a soft credit check pre-approval. But Earnest does a good job of listing its eligibility requirements and you can apply for pre-approval without hurting your credit.
To get a feel for the process, SimpleTuition began a student loan refinancing application. You can start by getting pre-approved with a one-page application or step-by-step process. They both ask for the same information:
- Your name, address and phone number.
- The highest degree you’ve achieved, when you graduated and the school you attended.
- Your annual income; your monthly rent or mortgage payments; and the sum of your cash, retirement and investment accounts.
- Your approximate student loan balance.
- Your email address to create an account.
- Whether you’re a U.S. citizen or permanent resident.
- Your Social Security number and consent for Earnest to do a soft credit inquiry, which won’t affect your credit score.
After completing this pre-approval application, you may get results immediately showing potential interest rates and monthly payments. Ours listed loan options for five, seven, 10, 15 and 20-year loan term loans. Or, you may be asked to continue to fill out the full application to see your rates.
Education. Your school name, degree and graduation date will be filled in already because you filled that out for the pre-approval process, but you’ll also have to specify your major and when you started at the school. If you have several degrees, you can add information about each school and degree.
You can also specify if you’re currently enrolled, completed your degree, plan to enroll in the future, didn’t complete a degree or transferred between schools. The relevant information (such as start or end dates) change to match your choice.
Employment. Indicate whether you’re currently employed or not. If not, you’ll be prompted to share if you have a job lined up, along with that job’s information.
If you are employed, you’ll need to enter your company’s name, job title, when you started working there, whether you’re a full-time or part-time employee and if you’re employed by someone else or self-employed as a contractor or business owner. You’ll also be asked if your job is ending soon, in which case you’ll be prompted to add information about your next employer.
You can add several jobs to your application, and you can indicate your total number of years of professional experience.
Financial. Earnest asks you to connect the checking account where your paycheck gets deposited, credit cards with balances and savings or investment accounts. It can use the connection to verify your income and expenses, and better understand how you handle your finances.
You’ll also be asked to share your annual salary or wages, bonuses and non-employment income (such as child support or rental property income). If you want, you can also share the value of additional assets in retirement and brokerage accounts.
A required step is indicating if you have missed any payments in the last five years and whether any of your accounts have been in collections. If you answer yes, you’ll have space to explain the circumstances.
Personal. A lot of your basic information, including your name and address, may already be filled in at this point. However, you may need to add your date of birth and a previous address if you’ve moved in the last six months.
There’s also an optional text box where you can add any additional explanations.
Review. The final step is to confirm the loan amount you want to apply for, consent to a hard credit inquiry (which could affect your credit score), and enter your Social Security number.
After you submit your application, you can check on the status through your account online, call, email or chat with a customer service representative. You may need to upload documents to verify the information in your application, such as a tax return for your income or government-issued ID to verify your identity. Once Earnest has all the required information, it will make you an official loan offer, if you qualify. Your terms are valid for 30 days, giving you time to apply for refinancing from other lenders and compare your offers.
Earnest has a few unique value propositions, and it could be an excellent choice if you want to refinance your student loans. But every student loan refinancing company has its pros and cons, and you will be better off comparing multiple lenders and loan offers before committing.
You can start by reading about some of the top student loan refinancing companies on SimpleTuition and MagnifyMoney, another subsidiary of SimpleTuition’s parent company, LendingTree. Look to see if you meet the minimum eligibility requirements, such as your state of residency, credit score, degree type, and loan amount and type.
Like Earnest, some lenders offer a soft credit check pre-approval, which you can fill out to see if you qualify and your approximate loan terms. When you’ve narrowed down your list to your top choices, you can go ahead with a hard inquiry application at all of them.
Credit-scoring agencies recognize the value of shopping around to find the best loan terms and for credit-scoring purposes, multiple hard inquiries for student loans only count as a single hard inquiry if you occur within a 14- to 45-day window, depending on the credit score being used.
Once you have your official loan offers, you can use a refinancing calculator to find out which will save you the most money. However, also consider the benefits and drawbacks of the lender. Even if it costs you a little more money, you may prefer a lender that has more hardship options for borrowers who have trouble making a payment.
Written By: Louis DeNicola
Many private lenders, including large traditional and small community banks, credit unions and alternative online lenders, offer student loan refinancing. When you refinance your loans, the lender pays off your current balances and issues you a new loan — ideally, you wind up with a lower rate or better terms than you had.
Refinancing can be a helpful, money-saving choice. In addition, if you’re consolidating multiple student loans into one, that strategy can make managing monthly payments easier.
However, if you refinance federal student loans with a private lender, you may lose out on certain federal benefits, so consider the pros and cons carefully. You’ll also want to shop for lenders, as your new loan’s terms, interest rate and other features will vary based on your creditworthiness and your choice of lender.
Gearing up to offer student loan refinancing can be difficult for small community banks and credit unions, while, from your perspective, finding and comparing offerings from regional financial institutions can take a lot of time. LendKey, founded in 2009 after the arrival of the Great Recession, aims to solve both of these problems.
LendKey isn’t a lender. Rather, it’s a cloud-based platform that community banks and credit unions can use to quickly and easily offer student loans and student loan refinancing. You can apply for student loan refinancing through LendKey and compare offers from community banks and credit unions.
The money you borrow comes from the bank or credit union, and each lender may have its own criteria for applicants. However, LendKey services the loans and manages much of the loan application process, ensuring that you only see offers from lenders that operate in your area.
As of Sept. 7 of this year, LendKey had more than 275 financial institution clients. Although they may not all offer student loan refinancing or be available in your area, being able to quickly find and compare offers from a variety of small lenders can be advantageous to borrowers.
|Fixed APR range*||Starting at 3.15% with autopay.|
|Variable APR range*||Starting at 2.90% with autopay. The variable-rate cap depends on the lender and will be listed in the loan disclosure form.|
|Loan terms offered||Five, seven, 10, 15 or 20 years|
|Fees||No origination fees, but you may need to pay a small fee to become a member of a credit union before refinancing your loans with it.
There may be late-payment fees, such as 5% percent of the unpaid amount, and returned check charges, such as $10-$25 per returned check.
|Loan amount||The limits vary depending on the lender.|
|Repayment plans||Interest-only for the first 48 months if you choose a 15- or 20-year repayment term. Or, you can start full interest and principal payments at the outset with any of the repayment terms.|
|Co-signer release||Most lenders let you release a co-signer after making a series, such as 12, 24 or 60, of on-time full principal and interest payments. You also must pass a credit check and meet the lender’s income requirements.|
|Savings opportunities||You can get a 0.25% interest rate discount if you set up automatic debit payments.|
|Additional features||Most of the lenders let you put your loans into forbearance for up to six months at a time, for a total of 18 months over the loan’s lifetime, if you lose your job.|
*As of January 8, 2018
What it takes to qualify:
|Credit score and income||The minimum credit score varies by lender, but is often in the mid-600s, according to a LendKey representative. You must also make at least $24,000 per year.|
|Loan types||Private and federal student loans for associates, undergraduate and graduate degrees.
Parent loans, LSAT, MCAT, GRE and other exam-preparation loans are not eligible.
|School and state eligibility||You must graduate with an associates, undergraduate, graduate or doctorate degree. The eligible-schools list varies by lender.
Refinancing is not available to residents of Maine, Nevada, North Dakota, Rhode Island or West Virginia.
The lenders in LendKey’s network may offer lower interest rates than other student loan refinancing companies. But even though there are many lenders in its network, it’s still important to compare offers from multiple places. Generally, as with so many types of loans, you’ll need higher credit scores to get the premium rates with any student refi lender.
A LendKey representative told us that borrowers with credit scores in the mid-600s should be able to qualify for most refi offers from its network of lenders. You’ll also need a minimum annual income of $24,000, which is in line with other lenders, including Citizens Bank, iHelp Student Loans and EdvestinU.
There are a few features that every LendKey lender offers, such as a 0.25 percent interest rate discount when you use autopay, and no origination fees. Both of these are fairly standard with student loan refinancing, but are still worth noting, especially if you’re comparing offers from other lenders that may not offer a discount or charge an origination fee.
With LendKey, you can also choose from five different loan terms: five, seven, 10, 15 or 20 years, and between a fixed- or variable-rate loan. That’s not an unusual range, but some other lenders may offer fewer loan term options, such as only 10, 15 or 20 years. Some lenders also only offer one interest rate type, although many offer both fixed- and variable-rate loans.
You can’t refinance your student loans through LendKey if you didn’t earn a degree, a requirement that some lenders don’t impose. For example, you can refinance at Citizens Bank without a degree if you make 12 full on-time payments on the loans you wish to refinance and meet its other eligibility criteria, including no longer being enrolled in school.
A few of the features that really stand out are available from most, but not all, lenders in the LendKey network. These include a graduated repayment option, which lets you make interest-only payments for the first four years if you choose a 15- or 20-year repayment term.
While making interest-only payments can lead to higher monthly payments later, it may be a good option if you want to lock-in a low interest rate now (because you think interest rates may rise) but can’t afford a high monthly payment at the moment. You can still make larger payments and pay down the principal during these four years if you want. Student loans don’t have prepayment penalties.
Lengthy loan forbearance. You may be able to delay payments for up to 18 months, in six-month increments, if you lose your job. Other lenders offer similar forbearance options, but generally not for as long. Since your loan will still accrue interest when it’s in forbearance, this could increase your overall cost of borrowing. But it’s still a better option than missing payments, which could hurt your credit and result in you defaulting on the loan.
Advantages of refinancing with LendKey
Easily compare prescreened offers. LendKey lets you check and compare loan offers with a soft credit inquiry, which doesn’t hurt your credit score. You’ll only see offers from eligible lenders based on your address, degree type, loan amount and loan types. The offers may depend on these factors, as well as your income and credit, and they’re contingent on a hard-inquiry credit check and verification of your information.
You can easily sort your loan offers by annual percentage rate (APR), monthly payment or number of payments (the term), and filter the offers by APR, monthly payment, terms and interest rate type.
Most LendKey lenders offer a co-signer release option. If you’re applying for refinancing with a co-signer, you may be able to release the co-signer and take complete responsibility for the debt after as few as 12 consecutive full payments.
Repayment plan options. Some lenders let you choose a four-year interest-only repayment plan if you take out a 15- or 20-year loan.
Lengthy loan forbearance. You may be able to delay payments for up to 18 months, in six-month increments, if you lose your job.
No origination or application fees. It doesn’t cost anything to refinance your loans through LendKey. However, you may need to pay a small fee to become a member of a credit union before refinancing your loans with it. There also may be late-payment fees, such as 5% percent of the unpaid amount, and returned check charges, such as $10-$25 per returned check.
Combined federal and private loans. Some of LendKey’s lenders let you refinance federal and private students loan into a single new loan. While you’ll lose some federal benefits when you do, if you’ve decided the refinancing is right for you, then such consolidation can be helpful.
Disadvantages of refinancing with LendKey
Rates may vary depending on where you live. While LendKey has some of the lowest advertised interest rates, even if you have excellent credit and little debt you might not be able to get the low rate. The advertised rate on LendKey is the lowest possible rate among all of its lenders, and some lenders are only available to residents of specific areas.
Lack of filters when comparing offers. While it’s easy to compare offers during the prescreening, you can only filter the loans based on annual percentage rate, monthly payment, term and type of rate.
Other features may be important to you, such as a graduated repayment plan, 12-month co-signer release, forbearance options or a high loan limit. To compare these, you’ll need to select a loan offer to view the lender and either contact the lender directly or review the loan disclosure form (available on the following “submit your application” page).
Only available in select states. You won’t be eligible for refinancing through LendKey if you’re a resident of Maine, Nevada, North Dakota, Rhode Island or West Virginia.
You can’t refinance parent loans or test-prep loans. Some lenders, such as SoFi, let you combine loans that your parents took out to pay for your education with your student loans. LendKey’s lenders may let you combine your federal and private student loans, but you can’t include parent loans. You also can’t include loans you took out to prepare for a test, such as the LSAT or MCAT.
You must earn your degree to qualify. If you took out a student loan and attended school, but left before earning a degree, you won’t be able to refinance through LendKey.
What customers is LendKey best for?
Comparing offers from a variety of lenders is a good way to ensure that you get the best rate and terms possible. LendKey lets you quickly see offers from community banks and credit unions that you might not otherwise know about or think to check.
Since LendKey’s prescreening process is quick and easy and doesn’t hurt your credit, anyone who’s meets the minimum credit, loan type, degree and residency requirements should at least take it for a spin.
Taking a closer look at the online platform
It’s easy to find and apply for refinancing on the LendKey website. The student loan refinancing home page lists interest rate ranges, has a video and snippets explaining the potential benefits of refinancing with LendKey, and offers informational articles about refinancing student loans.
However, it can be difficult to find specific information about LendKey’s loan terms and eligibility requirements. SimpleTuition had to reach out to a press representative to clarify potentially important information, including where LendKey offers student loan refinancing and whether benefits like a co-signer release are available from all lenders.
Some of these points may not be important to you. LendKey screens out ineligible lenders and if your loan amount is too low or high, or you don’t meet other loan requirements for lenders in your area, you’ll get a screen that says no offers are available.
Still, it would be helpful to have a page that clearly lists general qualification requirements, benefits and other terms.
Those quibbles aside, the online platform is easy to navigate and very responsive. After filling out a simple questionnaire, you typically be able to compare and filter loan offers based on several criteria, including the loan terms and APR. You could apply for refinancing in a few minutes, although it’s best to take your time, compare lenders and read the fine print first.
Reviewing fine print before signing a contract is always important, but it may be especially important when you’re refinancing a student loan with LendKey. While the basic features, such as the interest-rate type, APR and term are easy to see, other features and benefits depend on the lender.
You have to start the lending process through the prescreen, but that doesn’t commit you to refinancing with LendKey. You may want to submit the application information, narrow down your options to the few loan offers that have the lowest APRs (and fit your term and interest rate type preferences) and then review the fine print for those lenders.
An option to filter loan offers based on features, such as the number of consecutive payments you need to make to release a co-signer, would be helpful. Instead, you need to choose a loan offer before you can see which lenders offer these terms, then research the fine print for that lender on your own.
You can find some information, such as the loan’s fees, interest rate cap for variable-rate loans and interest rate reduction terms, near the top of the loan disclosure form, which is available near the bottom of the application submission page.
However, the loan disclosure may not show when and how you can release a co-signer or if a particular lender offers interest-only repayments. You could call the lender or LendKey to find out the specifics.
Alternatively, if you search the lender’s name, “refinancing” and “partner.lendkey.com,” you should find the website for refinancing student loans through the bank or credit union. The page will have the lender’s interest rate ranges, loan features and eligibility requirements.
The loan application process begins when you click the “check your rate” button, which prompts you to choose whether you’re applying for a new loan or want to refinance. (If you’re on the student loan refinancing page, you might not see this popup.)
Fill out the application
To proceed with the application, you’ll have to share:
- Your name, address, email address and phone number
- Your citizenship status
- Your total annual income
- The school you graduated from and the type of degree you earned.
- The estimated total loan amount you want to refinance and the loan type or types
If you don’t think you’ll qualify for refinancing due to your credit, or you want to add a co-signer to see if you’ll get better terms, you’ll also need to include a co-signer’s information.
You don’t need to put in your Social Security number, although you do need to be a U.S. citizen or permanent resident. At this point, your credit will only be checked with a soft credit pull, which doesn’t hurt your score.
Compare loan offers
After submitting your application, you’ll generally see the results within 30 seconds. The number of results you’ll get depends on the information in your application, including where you live and what types of loans you have.
You can narrow down the results by filtering for an APR range, monthly payment range, loan terms or interest rate type, and sort the results by APR, monthly payment or number of payments.
Choose a lender
Once you’ve determined which loan offer is best for you, clicking on “select and continue” will show you which banks or credit unions could refinance your loans with these terms. You can switch between lenders that offer the same loan terms. Or, you can go back to the list of all the offers by clicking “reselect offer.”
Click “confirm” once you’ve decided on the terms and chosen your preferred lender.
Submit an application
The next step is to submit your application and authorize the lender to do a hard credit inquiry, which could ding your credit. You’ll need to enter your Social Security number and date of birth. You’ll also have to create an account, which allows you to log in and submit required documents or check your loan status later.
Review the loan disclosure form before submitting your application. If you might want to release a co-signer, use a graduated repayment plan or put your loans on hold after losing a job, you may want to contact the specific lender to check if it offers these benefits.
Review the conditional loan offer
Once you submit your application, LendKey will review your credit and conditionally approve you for a loan. The terms may be different than the original offer you saw, so be sure to review them before proceeding.
Verify your information
If you want to move forward with the loan offer, you’ll need to verify your information. For example, you could upload copies or pictures of pay stubs to verify your income, a picture of your diploma to show you earned a degree and a picture of a government-issued ID to prove your citizenship status.
Final approval and loan disbursement
LendKey will forward your information to the lender, who will then send back the official loan document for you to sign. Once you do, the lender will pay off the student loans that you’re refinancing and you’ll begin making payments toward the new loan.
These finals steps may take a few weeks. Make sure you continue paying your student loans until the process is complete.
While LendKey makes it easy to compare loan offers from community banks and credit unions, you may also want to consider refinancing with a traditional bank, alternative lender or a community bank or credit union that’s in your area but isn’t part of the LendKey network.
Other lenders may offer you a lower interest rate, more-fitting terms or additional features that you think will be beneficial. For example, SoFi lets you refinance your student loans with a parent’s educational loans. Also, while SoFi has shorter three-month (12-month maximum) unemployment forbearance options than some LendKey lenders, if you lose your job, you’ll get free access to a career counselor who can help you find work.
You may also need to use a different lender to refinance your loans if you don’t qualify because you didn’t earn a degree or don’t live in an eligible state. You could use SimpleTuition to compare student loan refinancing lenders and terms. As with LendKey, some of these lenders will show you refinancing offers based on a soft credit check.
Written By: Louis DeNicola
Refinancing your student loans through a private student lender could help lower your monthly payments, decrease your interest rate and save you money. Once you’ve considered the pros and cons of refinancing and decided that it makes sense for you, it’s time to choose a lender and an offer.
Shopping for lenders lets you zero in on the loan offer that best suits your needs. Even if you set fees and interest rates aside, you want to compare lenders — they may offer different terms and repayment options, or have different eligibility requirements.
College Ave is a new fintech company that offers student loan refinancing. Unlike many other lenders that offer student loan refinancing, refinancing is available in every state. There are other perks as well, such as the ability to choose your loan term and decide between two repayment plans. However, College Ave also has a higher interest-rate range than you’re apt to find with some other lenders, and you can’t release a co-signer (let that person out of his/her obligation).
What is College Ave?
College Ave was co-founded by two former Sallie Mae executives, Joe DePaulo and Tim Staley, in 2014. It is one of the newest companies in the student loan space.
Unlike some major banks that offer student loans or student loan refinancing in addition to traditional lender services, College Ave focuses solely on student loans. When it launched, the company offered private student loans to help people pay for school. Then, in 2016, it began offering student loan refinancing as well.
The application for refinancing is simple, it can take just three minutes to complete, and you’ll find out if you qualify right away. You can also personalize your new loan by choosing the interest type, repayment term and repayment plan.
However, College Ave falls short on clarity at times.
College Ave student loan refi in a nutshell
|Fixed APR range*||3.35 to 7.50% with autopay discount|
|Variable APR range*||2.75 to 7.25% with autopay. Capped at 25%.|
|Loan terms offered||You can choose from five to 15 years|
|Fees||If you don’t make a minimum payment within 15 days of the due date, the late fee is the lower of 5% of the unpaid monthly payment or $25. (There’s also a returned check charge of $25.)|
|Loan amount||$5,000 to $150,000 for graduate or undergraduate programs. Up to $250,000 for medical, dental, pharmacy and veterinary programs.|
|Repayment plans||Interest-only for the first 24 months, or you can start full interest and principal payments at the outset.|
|Savings opportunities||You can get a 0.25% interest rate discount if you set up automatic debit payments.|
*As of Oct. 12, 2017
How College Ave compares with other lenders
Compared with some traditional banks or credit unions, College Ave’s easy-to-follow application process is certainly a plus. Customer service is also quick to pick up the phone and answer questions.
While College Ave has an online calculator that you can use to estimate your loan terms and savings, it doesn’t offer prequalification or preapproval. With a prequalification or preapproval, other lenders can tell you if you’re likely to qualify, and your approximate terms, with a soft credit inquiry (one that doesn’t hurt your credit score).
College Ave’s interest rate range is also higher than other lenders, and you may be able to save money by comparing your options and getting a lower rate elsewhere. However, don’t assume that the lender with the lowest advertised rate is the one that’s going to offer you the best terms. Lenders have different criteria for evaluating applicants, and you might find that you get the best refinancing offer from a lender that has mid-range advertised rates.
Being able to choose your loan terms is certainly a plus for College Ave, and a feature that most student loan refinancers don’t offer. However, other lenders offer longer terms of up to 20 or 25 years, which could lower your monthly payment compared with what you’d get under College Ave’s maximum of 15 years.
You may also contrast interest rate types and repayment plans when reviewing lenders. College Ave offers variable- and fixed-rate loans, which is common but still a perk that some other lenders don’t have.
Another potentially important distinction among lenders: forbearance and deferment options. These programs let you temporarily stop making payments when you have a financial hardship, such as a medical emergency or a job loss, or if you return to school or join the military.
Navient services College Ave’s refinanced loans, so it determines the forbearance and deferment requirements and manages the programs. A Navient representative said it allows for in-school and military deferments, and offers forbearance in three-month periods with a maximum 12 months for the life of a loan.
Advantages of refinancing with College Ave
Personalized loan terms. Most lenders let you choose from two or three term options, such as five, 10 or 15 years. But with College Ave, you can choose any term from five to 15 years. Your term impacts you interest rate and monthly payment, and being able to choose a nonstandard repayment term, such as nine years, could help you minimize your overall loan cost.
Graduated repayment option. When you refinance with College Ave, you can choose between making interest-only payments for the first 24 months or full interest and principal payments from the start. Interest-only payments could be a good option for those who want to refinance and lower their monthly payments in the short term, but be advised: Doing so will increase your overall borrowing costs and could mean higher monthly payments later.
Referral program. You can earn $250 for referring others to College Ave, and the person you refer will get a $100 bonus.
Open to residents of every state. Some lenders can only refinance loans to residents in select states, but College Ave refinancing is available across the country.
Relief on fees. College Ave charges neither an application fee nor an origination fee.
Drawbacks of refinancing with College Ave
Lack of transparency. Although College Ave aspires to offer clarity, it falls short on several fronts. Unlike some other student loan refinancers, College Ave doesn’t list a minimum credit history or income or debt-to-income (DTI) requirements to qualify for refinancing. However, these are all factors that a representative said are important in determining your eligibility and terms when refinancing.
The College Ave savings calculator tool lets you estimate your loan terms based in part on your credit score. The tool doesn’t let you choose a credit score below 680. A spokesperson for the company told SimpleTuition that the minimum required credit score is in the “high 600s” and confirmed that you likely won’t be able to get approved for a College Ave loan with a score in the low- or mid-600s.
Other information, such as the late-payment fee and cap on variable interest rates, isn’t listed on the pages for refinancing or in the FAQ. A customer service representative shared the information over the phone, however, and you can find it on a loan disclosure form once you start the application process.
No refinancing parent loans in the student’s name. If a parent took out either a loan from a private student lender or a federal parent PLUS loan to pay for your education, you may want to take over the legal responsibility for the debt. Some lenders let you refinance your student loans and parents’ loans together. With College Ave, you can only refinance parent loans if the parent co-signs your new loan. However, that still leaves your parent with a legal responsibility for the debt.
No option to release a co-signer. Some lenders let you apply for refinancing with a co-signer and offer an option to release the co-signer once the primary borrower makes a series of full on-time payments and is eligible on his or her own. Refinancing through College Ave doesn’t give you this option.
You must graduate to be eligible. In order to refinance your student loans, you must graduate from an eligible school and earn a degree. If you took out loans but didn’t earn a degree, you’ll have to refinance with a different lender that allows you to do so.
College Ave doesn’t publish a list of eligible schools, but at a minimum, the school must be Title IV-eligible, meaning it complies with the requirements to be part of federal student aid programs. You can send an email to firstname.lastname@example.org with the school’s name to confirm its eligibility.
Serviced by Navient. After refinancing your loans with College Ave, you’ll receive a welcome letter from Navient, which partners with College Ave. You’ll make payments, receive statements and have to turn to Navient if you have questions about your loan. While many refinancers partner with loan servicing companies and this isn’t inherently a drawback, if you’re turning to College Ave because of its customer service or ease of use, you won’t necessarily have the same experience once the refi is done.
What it takes to qualify:
|Credit score, credit history, income and debt-to-income ratio||Not disclosed|
|Loan types||Private and federal student loans. You can refinance parent loans only if the parent co-signs the new loan.|
|School and state eligibility||You must graduate from a Title IV-eligible undergraduate or graduate program. Refinancing is available in all states. You can send an email to email@example.com with a school’s name to confirm its eligibility.|
What borrowers is College Ave best for?
As a new fintech company, College Ave may be a great fit for someone who is looking for a sleek and easy application process and personalized loan terms. Being able to choose your term, interest-rate type and repayment plan can help you manage your payment or long-term costs.
College Ave could also be a good option for borrowers who don’t qualify at other lenders because of their state of residence, since it provides loans nationwide.
If a particular features draws you to College Ave, be sure to look for other lenders that have a similar feature, then take time to compare and contrast.
For example, you may want to compare College Ave and Earnest if you’re looking for an option to customize your repayment term. However, Navient bought Earnest in 2017. While the initial announcement indicates that Earnest will remain a separate brand, keep an eye on post-acquisition reviews and possibly changes to Earnest’s refinancing terms.
Another example: Borrowers who want to refinance and then make interest-only payments could also look for offers from LendKey, which connects them to a network of regional banks and alternative lenders. Some of LendKey’s partner lenders offer interest-only payments for the first four years.
A closer look at the online platform
College Ave has an intuitive website and it’s easy to find the refinancing page and start an application. But before you do, you can use College Ave’s savings calculator to get an approximate idea of your new loan terms and overall savings.
Start by listing the student loan types you hold and your outstanding balance, monthly payment and years until your loans are paid off. College Ave uses this information to determine your current total cost of repayment.
On the next screen, you can toggle between different options to see how they could affect your monthly payment and overall savings.
The interest rate on your new loan depends on the interest rate type, loan term and credit score. If you’re not sure what your credit score is, you can check it for free through SimpleTuition’s parent company, LendingTree. However, keep in mind that the free score you get is a VantageScore, while College Ave uses a FICO score, so there will likely be a difference between the two. As an alternative, you can get your free FICO at Discover Scorecard. Check with your bank and credit card issuer as well, as many financial institutions now offer free FICO scores as a perk.
Aside from the student loan refinancing application and savings tool, there are several pages on the College Ave website devoted to student loans for current students, or parents of current students. The site also has a blog, where you’ll find informative articles on student loans, paying for school and personal finance.
There are several FAQ pages, with answers to common questions about student loans, student loan refinancing and repayment.
A look at the fine print
You won’t find a lot of fine print on College Ave’s website. But that could be construed as a negative. As with all financial contracts, it’s important to read the terms before signing. However, College Ave doesn’t display some potentially important information until after you start the application process.
For example, a College Ave representative confirmed by phone that refinanced loans have a late payment fee that’s the lesser of $25 or 5 percent of the amount due. The late fee is only charged once you’re 15 days past due, though.
Another representative confirmed that the variable-rate refinancing loan has a cap of 25 percent, inclusive of the 0.25 percent autopay discount. And she said there’s no way, as mentioned previously, to release a co-signer from your loan.
You’ll see all these fine-print items on the loan disclosure form, the second stage of the application process.
There are some fine-print items that are clearly listed on the refinance or FAQ pages, including the minimum and maximum loan amounts and loan term options. You’ll also read that College Ave doesn’t charge an origination fee and there’s no prepayment fee.
What to expect during the application process
College Ave has a short application that can take just three minutes to complete and submit.
The first page asks for your name, email, phone number, address, date of birth, citizenship status, Social Security number and household income. You’ll also have to share information about your school and degree.
If your school doesn’t appear after you enter the state and city, it may not be an eligible school for College Ave student loan refinancing. As we recommended earlier in this article, you can send an email to firstname.lastname@example.org with the school’s name to confirm its eligibility.
You can also share your employment information and an alternative contact whom the loan servicer can reach if it’s having trouble contacting you, but these fields are optional.
Worried about those hard inquiries eating away at your credit score? Moving to the next page will not result in a credit inquiry. After submitting the information, you’ll see a loan disclosure form. It isn’t an official offer for refinancing, but it shows a lot of those fine-print items you don’t see on the website, such as the late-payment fees and variable-rate cap. You’ll also be able to see examples of how choosing different interest-rate types and repayment plans can alter your repayment amount.
Moving forward in the application, you’ll choose whether you want to apply alone or with a co-signer. With either option, your application will get submitted and College Ave will then run a credit check. If you choose to go with a co-signer, you can email the co-signer a link to the application or fill in his or her information right away. The co-signer will need to share similar personal and financial details, such as his/her address, Social Security number and annual household income.
When you submit a completed application, you’ll generally receive official loan offers right away. In some cases, you may need to provide additional documentation to confirm your identity or financial particulars.
Continue making your loan payments as usual after accepting a refinancing offer. It could take up to three to four weeks for the lender to pay off your loans, and if you miss a payment in the meantime, you may have to pay fees and it could affect your credit.
Once you see that your original loans are paid off, stop paying those loans. Navient will service your new loan, and you’ll receive an email with your estimated first-payment due date.
How to compare student loan refi offers
Each lender has its pros and cons, and there isn’t a single best one for every student borrower. Still, there are ways to evaluate your options, and some key points you should compare before choosing which lender to use.
- Eligibility. Make sure you qualify for refinancing with the lender. You might be ineligible due to your state of residence, the types of loans you have, what institution you attended or whether you earned a degree.
- Desirable loan options. Decide if you want a variable- or fixed-rate loan, and consider your ideal loan term. Then look for lenders that offer loans with these features.
You can quickly compare general loan terms from multiple lenders on SimpleTuition. Some lenders let you apply for preapproval and to get approximate loan terms. Even if lenders don’t have a preapproval option, if you’re committed to refinancing you can still submit multiple applications to see your offers.
Credit inquiries from multiple student loan refinancing applications will only count as one hard inquiry for credit-scoring purposes if you complete the applications within 14 days.
Once you have all your offers, you can plug the terms into a refinancing calculator to see which one saves you the most money. However, be sure to consider more than just the savings. Deferment or forbearance options, and the option to release a co-signer, may be important even if they don’t have immediately quantifiable monetary value.