There are many options out there when it comes to refinancing student loans. Just about every bank offers some kind of refinance option, and looking for a loan that fits your particular financial situation can be frustratingly time consuming. The last thing you should do is allow yourself to get fed up with looking and just choose one at random. Doing so could put you in a worse situation than before the refinance.
To save you the trouble of checking out all the possibilities, we compiled a list of five of the best institutions to refinance with. Keep in mind that these banks are in no particular order, and all of them are worth looking at.
CommonBond was created by three graduate students in 2011. They were frustrated with the lack of affordable lending options available to them during their time at Wharton Business School at the University of Pennsylvania. They formed the company, and at the end of their initial fundraising in November of 2012, CommonBond raised $3.5 million. That money went on to help MBA students and recent graduates of Wharton, fund their education, or refinance into a better loan. Fast forward to September of 2015, after another successful fundraising campaign, CommonBond was reached out to graduates from over 2,000 universities nationwide, offering numerous refinancing options for both federal and private loans.
CommonBond offers fixed and variable interest rate loans to graduate and undergraduate students. Unlike the federal Direct Consolidation program, CommonBond has a refinance program for Parent PLUS loans. Interest rates range from 1.9% to 6.25% and they don’t charge any application, origination or loan disbursement fees.
SoFi was also started by some graduate students, this time from the Stanford Graduate School of Business. They raised $2 million from 40 alumni, and were able to help out 100 students. By September of last year, SoFi funded over $4 billion in loans. They follow a crowdsourcing model, connecting students with investors and alumni, to give students a network of advisors that help put them in a position to succeed financially, and to pay off their loans.
SoFi offers both graduate and undergraduate refinancing options. However, to qualify the applying student must complete an eligible degree program. Students can refinance both government and private student loans with SoFi, and there aren’t any origination fees or prepayment penalties. The interest rates are both variable and fixed, and they range from 1.9% to 7.24%. The terms of the loans are 5, 10, 15, and 20 years.
Earnest was launched in March of 2014 in Boston, Massachusetts. The two founders, Louis Beryl and Benjamin Hutchinson, noticed a high concentration of young professionals in the area, and decided to give loans to students based on their earning potential rather than their credit history.
Earnest offers loans to graduate and undergraduate students from both federal and private lenders. They offer fixed and variable interest rates, from 1.9% to 7.25%, for terms ranging from 5 to 20 years. There are no origination, application, or prepayment fees and qualifying students must either be currently employed or else have an employment offer to begin working within 6 months. According to LendEDU, Earnest even allows borrowers to choose to make their payments on a bi-weekly basis. Bi-weekly payments might be one of the most unique benefits that Earnest offers. Bi-weekly payments will reduce your interest costs over the life of your loan!
- Citizens Bank
In early 2014, in response to a report from the Consumer Financial Protection Bureau, Citizens Bank, one of Pennsylvania’s largest lenders, announced that it was preparing to offer student loan refinancing. At that time, and this is a common thread among all the lenders listed in this article, there was a serious lack of refinancing options for student loans. One of the reasons for this was that, at the time, student loans were very difficult to refinance. All this has changed substantially. According to LendEDU, Citizens Bank even allows people with Associates or two year degrees the ability to refinance. Moreover, Citizens Bank is the only lender to offer refinancing to people with online degrees.
Citizen’s Bank offers variable and fixed interest rate loans, ranging from 2.35% to 8.89%. The terms on these loans range from 5, 10, 15, or 20 years, and there are no application, origination, or disbursement fees. The minimum loan amount is $10,000.
LendKey was originally started as a peer to peer lending company back in 2007, and was called Fynanz. In 2013 Fynanz changed its name to LendKey, and moved away from that model. They began connecting students with local credit unions and community banks. By September 2014, Lendkey was servicing over 30,000 borrowers, was working with over 300 credit unions. They also had a combined loan portfolio of over $700 million.
Lendkey offers both fixed and variable rate loans, with interest rates ranging from 1.9% to 6.93%. The loans terms are available for 5, 10, and 15 years. They offer undergraduate and graduate loans, and can refinance existing private and federal student loans. There are no origination fees or prepayment penalties, but the minimum amount students can refinance is $7,500. Out of all the banks in this article LendKey offers the longest unemployment protection, which can last up to 18 months.