Is A Student Loan Refinance The Right Option For Me?
Millions of individuals throughout the United States are struggling with this question right now. It is no wonder either – currently, Americans owe more than $1.5 trillion. This may seem staggering but when you consider that over 45 million individuals have student loan debt it begins to put things in to perspective. Many students are struggling to meet their student loan payments. Estimates show that over 1 million borrowers default on their student loans each year. In fact, up to two thirds of student loan borrowers have less than $1,000 in their bank account. It is no wonder that many borrowers find themselves at a crossroads when determining the best way to handle their student loan debt.
Is Refinancing The Best Move For You?
If you have student loan debt it is likely that you receive offers for refinancing and consolidation on a regular basis. Banks and lenders are competing more than ever to earn consumer business. When you consider that the average interest rate for student loans ranges from 4-8% it makes a lot of sense by big banks and lenders would love to have a piece of your consolidation. All of us with student loan debt have already accepted the fact that we are going to be paying interest on our loans. The next step is determining how we can pay as little as possible. That is what we will try to address in this review.
Before we get started on reviewing several of the most highly rated and respected student loan refinancing companies there is something very important borrowers should first consider. While big banks are often the first thing that comes to mind, students should also look to Credit Unions and Small/Regional Banks for consolidation and refinancing. Checking with your local banks and credit unions, or the bank that you already do business with, can be a smart first step when thinking about student loan refinancing. Not all banks or credit unions will offer student loan options. With that said, due to the fact that they often have more lenient underwriting regulations it is possible you may find your best deal locally. With this in mind, we will take a close look at some of the bigger student loan service providers.
Reviewing 5 of the Major Student Loan Consolidation Companies
These reviews are not ranked in any particular order and it is extremely likely that the best offer will vary depending on the customer. Banks use a huge list of criteria to make financing decisions so the lender best for one individual may be completely different than someone else who may even have a similar credit profile. Above all else, consumers need to shop around and get as much information personalized to their situation to make the most informed and financially wise decision.
1) SoFi – Check Your Rate
- Minimum credit score of 650 required to refinance student loans
- Zero origination fees and zero application fee
- There is no pre-payment penalty for paying off loan early
- Flexible term lengths available (5, 7, and 10 year repayment plans)
- Rates can be checked online and do not impact credit history
- Consolidate private student loans and federal student loans
Overall, SoFi is becoming one of the most popular student loan refinancing companies. This is due to their ease of use, flexible options, low interest rates and attentive customer service. A simple search will reveal they are highly rated across rating platforms. By and large, consumers mostly have good things to say about the service they receive.
2) LendKey – Check Your Rate
- Checking your rate takes just minutes with no credit impact
- Variable and Fixed interest rates are available as loan options
- No hidden fees for origination or application
- Provides rates from hundreds of banks consumers can select from competitors
- Option to remove co-signers if requirements are met (12 month on time payment)
LendKey is somewhat unique to this list as it provides you with rates from hundreds of banks and credit unions. This means you will be able to review offers from many sources. Rates are advertised as low as 2.47% for variable rate and 3.49% for fixed rate loans. Because there are so many lenders complied with LendKey the is no reason not to your their rate with LendKey.
3) Earnest – Check Your Rate
- Earnest provides some customers with cash signing bonuses
- Customers can set up auto payment for a 0.25% interest rate discount
- Options to skip payments and no payment for paying off your balance early
- Rates are available for review online – no credit review necessary
One of the biggest reasons Earnest makes this list is because they often send out cash bonus offers if you refinance your loans. The amount of your bonus varies based on how much you refinance. Some customers are eligible for up to $500 sign up bonus. When reviewing your loans, if all other aspects of your offers are equal, this makes Earnest a no brainer. However, do not fall for the bonus if you are not getting a great rate as well.
4) Citizens Bank – Check Your Rate
- Personalized rate quotes available online in less than 2 minutes
- Federal student loans and private student loans can be combined in to one consolidation
- Live chat assistance avaialble to assist in the application process
- No prepayment, origination fee, or application fee for student loan refinancing
- Up to 0.5% discount in interest rate available for some customers
One of the best aspects of a Citizens Bank refinance is that you can get a substantial 0.5% interest rate discount. This discount is available when you set up automatic payments and maintain an account with Citizens Bank. Borrowers who already have a Citizens Bank Account should absolutely check their rates with Citizens. The discount they provide could be the difference between hundreds of dollars when compared to other competitors.
5) CommonBond – Check Your Rate
- Rates start as low as 2.69% for refinancing student loans
- Flexible term lengths from 5, 7, 10, 15, and 20 year terms
- Fixed, variable and hybrid interest rates are available for loan options
- Loan forbearance options are available for up to 24 months in some circumstances
- Find your rate in seconds at no impact to your credit history
CommonBond is another very popular option in part because customers have the option to refinance Parent Plus loans in the name of the student borrower (removing the parent from the loan). If you do use a co-signer, there is the option for them to be removed after 36 months of on time payments. With flexible terms and options CommonBond is definitely worth a look.
Final Wrap Up For Consolidation and Refinancing
The key takeaway is that there are many companies and banks out there that will gladly refinance your loans if you meet their credit requirements. This is great news because it gives consumers the power to search for the best interest rate and repayment terms. Borrowers should also not shy away from any sort of bonus offers. Sign up bonuses are not simply gimmicks but are a product of a very competitive lending environment. Because almost all lenders allow you to view rates at no impact to your score and this process only takes minutes, it is sensible to check your rates with as many companies as possible before settling on a lender.