College Students and Recent Grads, Pay Down My Debt

19 Options to Refinance Student Loans – Get Your Lowest Rate

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19 Options to Refinance Student Loans - Get Your Lowest Rate

Updated: November 17, 2016

Are you tired of paying a high interest rate on your student loan debt? You may be looking for ways to refinance your student loans at a lower interest rate, but don’t know where to turn. We have created the most complete list of lenders currently willing to refinance student loan debt. But the Top 4 lenders offer the best rates, and you should focus your shopping on these lenders.

You should always shop around for the best rate. Don’t worry about the impact on your credit score of applying to multiple lenders: so long as you complete all of your applications within 14 days, it will only count as one inquiry on your credit score. You can see the full list of 19+ lenders below, but we recommend you start here, and check rates from the top 4 national lenders offering the lowest interest rates. We update this list daily:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.50% - 6.74%


Fixed Rate

2.24% - 6.04%


Variable Rate

No Max


Undergrad/Grad
Max Loan
apply-now
lendkeyA+

20


Years

3.25% - 7.26%


Fixed Rate

1.97% - 5.60%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
apply-now
earnestA+

20


Years

3.50% - 7.45%


Fixed Rate

2.14% - 5.79%


Variable Rate

No Max


Undergrad/Grad
Max Loan
apply-now
commonbondA+

20


Years

3.50% - 7.74%


Fixed Rate

2.23% - 6.03%


Variable Rate

No Max


Undergrad/Grad
Max Loan
apply-now

We have also created:

But before you refinance, read on to see if you are ready to refinance your student loans.

Can I Get Approved?

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loans and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Is it worth it? 

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a single shopping period (which can be between 14-30 days, depending upon the version of FICO). So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Here are more details on the 5 lenders offering the lowest interest rates:

1. SoFi*: Variable Rates from 2.24% and Fixed Rates from 3.50% (with AutoPay)

sofiSoFi (read our full SoFi review) was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. Although SoFi initially targeted a very select group of universities (it started with Stanford), now almost anyone can apply, including if you graduated from a trade school. The only requirement is that you graduated from a Title IV school. You need to have a degree, a good job and good income in order to  qualify. SoFi wants to be more than just a lender. If you lose your job, SoFi will  help you find a new one. If you need a mortgage for a first home, they are there  to help. And, surprisingly, they also want to get you a date. SoFi is famous for  hosting parties for customers across the country, and creating a dating app to  match borrowers with each other.

Go to site

2. LendKey*: Variable Rates from 1.97% and Fixed Rates from 3.25% (with AutoPay)

lendkeyLendKey (read our full LendKey review) works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. If you like the idea of working with a credit union or community bank, LendKey could be a great option. Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders.

Go to site

3. Earnest*: Variable Rates from 2.14% and Fixed Rates from 3.50% (with AutoPay) 

EarnestEarnest (read our full Earnest review) offers fixed interest rates starting at 3.50% and variable rates starting at 2.14%. Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. You can choose your own monthly payment, based upon what you can afford (to the penny). Earnest also offers bi-weekly payments and “skip a payment” if you run into difficulty.

Go to site

3. CommonBond*: Variable Rates from 2.23% and Fixed Rates from 3.50% (with AutoPay)

CommonBondCommonBond (read our full CommonBond review) started out lending exclusively to graduate students. They initially targeted doctors with more than $100,000 of debt. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university (graduate and undergraduate). In addition (and we think this is pretty cool), CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education.

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In addition to the Top 4 (ranked by interest rate), there are many more lenders offering to refinance student loans. Below is a listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders. This list is ordered alphabetically:

  • Alliant Credit Union: In order to qualify, you need to have a bachelor’s degree. The minimum credit score is 680, and you need two years of employment and a minimum income of $40,000. Interest rates start as low as 3.75%. Anyone can join this credit union by making a $10 donation to Foster Care for Success.
  • Citizens Bank: To get the best deal, you should have at least a bachelor’s degree. They will look at your credit history, and want to make sure that at least the last three payments on your student loans have been made on time. If you don’t have your degree, you need to have made the last 12 payments (principal and interest) on time. You must make at least $24,000 per year. They offer fixed rates starting at 4.74% and variable rates start from 2.19%.
  • College Avenue: College Avenue offers fixed rates starting at 4.74% and variable at 2.50%, and only offers 15 year terms.
  • CommonWealth One Federal Credit Union: Variable interest rates start at 3.36%. You can borrow up to $75,000 and need to be a member of the credit union in order to qualify.
  • Credit Union Student Choice: This is a tool offered by credit unions. The criteria and pricing vary by credit union. The credit unions have restricted membership, but you can find out if you qualify on this site.
  • DRB Student Loan*: They will refinance undergraduate, Parent PLUS and graduate loans including MBA, Law, Medical/Dental (Post Residency), Physician Assistant, Advanced Degree Nursing, Anesthetist, Pharmacist, Engineering, Computer Science and more degrees. Variable rates as low as 3.64% and 4.20% fixed.
  • Eastman Credit Union: They don’t share much of their criteria publicly. Fixed rates start at 6.5% and you must be a member of the credit union. Credit union membership is not available to everyone.
  • Education Success Loans: You must be out of school for at least 30 months, and you must have a degree. You also need a good credit score, with on-time payment behavior. Variable and fixed loan options are available, with rates starting at 4.99%.
  • EdVest: They offer refinancing options for private loans used to finance attendance at a Title IV, degree-granting institution. If the loan balance is below $100,000 you need to make at least $30,000 a year. If your balance is above $100,000 you need to make at least $50,000. Variable rates start at 3.180%, and fixed rates start at 4.740%.
  • First Republic Eagle Gold. It’s hard to beat these rates – starting at 1.95% fixed and 1.87% variable. But you need to go in person to a First Republic branch to complete your account opening. They are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich, and New York City. Loans must be $60,000 – $300,000 and you need a 750 or higher credit score with 24 months experience in your current industry.
  • IHelp: This service will find a community bank. Community banks can actually be expensive. You need to have 2 years of good credit history, with a DTI (debt-to-income) of less than 45% and annual income of at least $24,000. Fixed rates are available, starting at 4.65% fixed, and 3.21% variable.
  • Mayo Employees Credit Union: You need at least $2,000 of monthly income and a good credit history. Variable rates are available, starting at 5.15% and you would need to join the credit union.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve, the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 2.89%.
  • RISLA: You need at least a 680 credit score, and can find fixed interest rates starting at 4.49% if you use a co-signer.
  • UW Credit Union: $25,000 minimum income required, with at least 5 years of credit history and a good repayment record. Fixed and variable interest rates are available, with variable rates starting at 2.23% and fixed rates starting at 4.04%. You need to join the credit union in order to refinance your loans.
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 3.74% and fixed rates starting at 6.24%. Wells Fargo does not have a tradition of being a low cost lender.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance. You can also email us with any questions at info@magnifymoney.com.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

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College Students and Recent Grads, Featured

How to Make a Payment On Your First Student Loan Bill

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

So, you just received an email about your first student loan bill and need to make a payment? Don’t panic. Student loan payments are not as big and bad as they seem … if you’re prepared for them.

If you’re facing your first student loan payment due date and have no idea how to make a payment – or you don’t know if you can even afford a payment – this guide is for you.

Where did this student loan bill come from?

For the first six months after you graduate, your student loans are in a six-month grace period. That means you won’t have to make any payments. When that grace period ends, it’s time to start paying back your loans.

Here is an example from the FedLoan Servicing (PHEAA) website.

Get to know your loan servicer

The loan servicer is the company you will pay each month. The government has contracts with nine different loan servicers. You may have all of your loans with one servicer or several.

The servicer handles all of the billing and services associated with your loan, such as alternative repayment and consolidation. They can also give you general information about how, when, and how much to pay each payment period.

You can find out who your loan servicer is by creating an account or logging in to the federal student aid site. When you’re logged in, you’ll have access to information about your loan servicer and how to contact them.

It’s important to understand who they are and how to get in contact with your servicer. Be sure you sign up for electronic notices and add their email to your “safe” list so your important correspondence won’t wind up in your spam filter. Maintaining a good relationship with your servicer by responding to emails, letters, and calls from them and making each payment on time is helpful in the event that your circumstances change and you need to ask for deferment or forbearance.

Making your first payment

All of the loan servicers allow you to make payments online, by mail, or over the phone. Some servicers, such as Great Lakes, FedLoan Servicing, and Nelnet, even let you pay with a mobile app. You can go to your loan servicer’s website and create an account with them to find your payment options. The amount you pay will vary depending on the principle, length, interest rate, and the repayment plan that you choose.

BONUS: Many servicers offer up to .25% off of your loans’ interest when you set up automatic payments.

How much should I pay each month?

You should at least make your minimum payment, if you can. Many people will have multiple loans to repay, and you should at least meet the minimum payment for each loan. If you miss a payment, you will badly damage your credit score. That can make it difficult to get approved for new credit, get an auto loan, or even be approved to rent an apartment.

When is my bill due?

Your due date will be on your first bill statement. Lenders often allow borrowers to choose a due date that better suits their finances.

Should I pay more than I owe?

The quicker you pay back your loan, the less you will pay in interest charges. Use this tool to see how making larger or smaller monthly payments will impact the cost of your loan. You can make larger payments if you want to pay off your loan faster, but make sure you have paid off expensive debt like credit card debt first. Credit card debt likely has a much higher interest rate than your federal student loan debt, and it doesn’t come with all the flexible repayment perks as your student loans.

If you have extra cash on hand — after you have met your minimum payment requirement, you’ve met all of your other debt obligations, and you’ve set aside cash for savings  — it could be wise to put it towards your student loan debt.

Target the loan that has the highest interest rate with extra payments you make. As pictured on PHEAA’s site below, you can specify exactly which loan you would like to pay. Speak to your servicer before you make extra payments so that your extra birthday money or cash from your tax refund doesn’t go toward the accrued interest for your other loans. Tell them the money is not intended to be put toward future payments, but toward the principal of the specified loan.

What if I can’t afford my payment?

Don’t avoid your loan servicer because you can’t afford the monthly payment. You have options.

Standard repayment plans for federal student loans are set up to last a period of ten years. If you can’t afford your payments, you might be eligible for a longer income-based repayment plan that will give you a longer period to pay back your loans and reduce your monthly payment amount. Enrolling in an income-based plan can reduce your payments to as low as $0 per month. If you are an employee in the public or nonprofit sector, you may qualify for public service loan forgiveness. The program allows your balance to be forgiven after making 120 consecutive payments.

Find out more about all the different types of repayment plans here.

If you have private student loans, the federal programs will not be available to you. Your best bet is to either refinance your debt at a lower interest rate or call your lender to see if you can work out a more affordable payment.

What if I miss a payment?

Your loan will be considered delinquent if you don’t make a payment by the due date. It stays delinquent until you make up the missed payments. The loan will go into default if you go more than 270 days (9 months) without making a payment. If the loan goes into default, you may face some pretty stiff consequences, including wage garnishment. Wage garnishment allows your lender or debt collector to take a portion of your paycheck automatically every pay period.

A last resort: deferment and forbearance

If none of those payment options work for your situation, you can ask your servicer about delaying payments by placing your loans in deferment or forbearance.

Deferment

If you are having a hard time making your loan payment each month, you can ask your servicer to put the loan in deferment status. Deferment allows you to delay making a payment on your loan for up to three years, or longer if you’re actively serving in the military. If you have a subsidized loan or a federal Perkins Loan, the government will cover your interest payments during deferment. If you have an unsubsidized loan, your interest will continue to accrue.

Forbearance

You can apply for forbearance if you don’t qualify for deferment. Forbearance allows you to delay or cut down the amount of your loan payments for up to one year. The interest will still accrue on your loans, but you’ll get a break from paying each month. There are two types of forbearances: mandatory and discretionary.

You’ll need to keep making payments on your loans until your servicer grants your request for deferment or forbearance. If you stop making payments before deferment or forbearance is approved, your loans will become delinquent and you might default on them.

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College Students and Recent Grads, Reviews, Student Loan ReFi

LendKey Student Loan Refinance Review

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

LendKey Student Loan Refinance Review

Updated November 17, 2016

New, lower interest rates announced on November 17, 2016. LendKey now offers variable rates as low as 1.97%, as prices continues to drop. 

Could you imagine trying to find the best student loan refinancing rate from community banks and credit unions on your own? How would you do it? Would you call every bank and credit union and ask for help? What a nightmare.

LendKey has relationships with 300+ community banks and credit unions all over the United States. LendKey* can issue loans to residents in any of the 50 states. This keeps you from having to pound the pavement by your lonesome. LendKey’s website will show you the best rate for refinancing your student loans.

Since 2007, LendKey has been a one stop shop for student loan refinancing. It also offers other types of loans. But for the sake of this review we’ll be focusing on how LendKey takes care of graduates looking to improve their debt situation. Fixed APRs range from 3.25% – 7.26%. Variable rates start as low as 1.97%. LendKey is one of the top four lenders in MagnifyMoney’s survey of where to refinance your student loan.

Who can benefit from using LendKey? Anyone hoping to refinance their student loans should consider LendKey. It is easy to apply:

Lendkey

Apply Now

 

If you’re on the fence about refinancing, here are some of the benefits to be gained:

Lower Payments

Refinance your way to a more manageable monthly payment.

Lower Rates

Spend less on interest by getting a lower rate than the aggregate of all individual student loans.

Simplified Finances

Making payments on multiple loans to multiple institutions at different times of the month can be quite the hassle. It’s much easier to remember just one payment. Many lenders even let you consolidate both private and federal loans.

Different Repayment Options

Different lenders offer different repayment options. It’s wise to explore all the options to determine what makes the most sense for your particular situation.

Pros of Using LendKey

A Unified Application Process

This is hugely important. With LendKey, you’re not shuffled through tons of screens on different domains – all using different logons and different (confusing!) user interfaces. Within 5 minutes, a person can navigate through LendKey’s application process. This means after 5 minutes, you can see how much you can save by refinancing. You can even choose what loan you want.

Cosigner Release Available

Yes, you can secure a low interest rate and then cut loose your cosigner. Once you prove you are responsible – LendKey no longer needs a cosigner tied to your account. This may help convince a cosigner to work with you initially. They won’t need to be on the hook for long. Once you’ve made 12 full and consecutive on-time payments, your cosigner may be released. LendKey does a credit check and examines your income to see if you are free to go it alone.

No Origination Fee

This is helpful since it means you are free to shop around without feeling committed.

Further Interest Rate Reduction

1% interest rate reduction once 10% of the loan principal is repaid during the full repayment period. This is subject to the floor rate.

0.25% ACH Interest Rate Reduction

Many lenders reduce interest rates by a quarter percent for borrowers who agree to automatic payments.

Federal and Private Loans Can Be Consolidated Together

However, you lose some federal benefits in doing so. Things like free insurance (provided with federal loans if you are killed or severely disabled), public service forgiveness and military service forgiveness as well as income-based repayment plans. Grace periods will likely be omitted when writing the new consolidated loan.

Over 40,000 Borrowers Serviced

As of January 2016, 40,000 people have used LendKey’s services.

Excellent Customer Support

According to cuStudentLoans (which LendKey owns so take this with a grain of salt), 97% of customers are satisfied. Customer support comes out of New York and Ohio. Phone support is available each day from 9AM to 8PM EST.

For what it’s worth, I called into support 5 times at random. The support I received from the sales team was really great. Even the gentleman with only 6 months of experience was quite knowledgeable.

Eligible Schools

This list of eligible schools is 2,200 and growing. Chances are your school is on the list. However, LendKey doesn’t encourage students to submit eligibility requests as other student loan refinancers do.

Return Policy

Yes, you can ‘return’ your loan. LendKey offers a 30 day no-fee return policy to allow you to cancel the loan within 30 days of disbursement without fees or interest. That’s pretty incredible.

Cons

LendKey Doesn’t Give You the Complete Picture

LendKey doesn’t help a lot with stacking institutions against each other. I suppose this is meant to not to play favorites. However, it would be nice to be able to read about each institution within the LendKey interface. I’d still advise opening up another tab to research the banks you are considering.

The Fine Print You May Miss

Since LendKey is a loan matchmaker, there isn’t a lot of fine print on the site. This means a person still needs to review the fine print of each institution before finalizing his or her loan as mentioned before. LendKey does a fantastic job of getting you 90% of the way. But that last 10% of fine print is between you and your lending institution. Read through everything before signing up for a new loan.

I read the Better Business Bureau complaint log for LendKey. There are only 11 complaints in the past 3 years. SoFi (a competitor) has 18 and another competitor, Earnest, has no complaints. These complaints were mostly small misunderstandings between the LendKey support team and the borrowers.

The Application Process

There are four steps to the simple application process. Step 1 is for estimating monthly payments for a private student loan. It’s simple. You identify the amount you’d like to borrow and fill in a radio button indicating your credit is fair, good, or excellent. The last part is where you enter which state you live in. This is because many programs are state specific. Step 1 takes 1 minute.

Step 2 takes 2 minutes. This is the step where you compare the rates and offers available to you. Choose what works best for your unique situation.

Step 3 again only takes 1 minute. This is the actual application. As mentioned earlier in this article, this process is done through the LendKey interface. And don’t worry, information inputted into LendKey is safe (privacy policy).

Step 4 takes 10 minutes. This is the step where a person verifies identity, school, and income (screenshots/pictures work so there’s no hassle with scanning!). You will know if you are approved during this step.

As with any company, there are competitors. Here are two worthy rivals also worth considering:

Alternatives to LendKey

SoFi

SoFi stands out with a job placement programs, free wealth management for borrowers and even a dating app. More importantly, SoFi has low interest rates, with variable rates starting at 2.24% and fixed rates starting at 3.50%.

SoFi logo

Apply Now

Earnest

If you have a low credit score but have potential to earn a good income, Earnest will treat you well. Earnest looks beyond a simple credit score. The application process examines employment history, future earning potential and overall financial situation.

Earnest seems to take a very personal approach to each customer. A customer states an amount they can pay each month and Earnest will give them a loan, accordingly. Earnest also lets borrowers skip a payment each year. This could come in handy if money gets tight around the holidays. Just keep in mind, this can increase your future payments to compensate for the missed on.

Fixed interest rates start at 3.50% and variable interest rates start at 2.14%.

However, Earnest isn’t available for all US residents.

Earnest

Apply Now

Final Thoughts

LendKey runs a fantastic student loan refinancing division. The company offers many, many customizable options with very few downsides. With no application fee, it’s worth seeing what this student loan refinancing powerhouse can do for you.

Lendkey

Apply Now

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College Students and Recent Grads, Featured

Don’t Miss This Deadline to Renew Your Income-Driven Student Loan Repayment Plan

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Income-Driven Repayment (IDR) Plans can be a lifeline for borrowers who are struggling to make their student loan payments on their current income. IDR plans take into account your household size and income and can reduce your monthly payments to as little as $0.

In order to enroll in an IDR plan, you must call your lender and apply. What many borrowers don’t realize, however, is that enrolling in IDR is not a one-time task. Borrowers must renew their enrollment each year by submitting a new IDR request form.

This annual update, in which you report any differences in income and household size over the last 12 months, is called a renewal or recertification. The new information is used by loan servicers to recalculate your monthly loan payment for the upcoming year.

The consequence of not renewing your IDR Plan before the annual deadline is severe. Your payments will no longer be based on your income. As a result, your loan payment can increase substantially.

Here’s how to renew each year to keep your payments manageable:

Step 1: Make sure you qualify for an Income-Based Repayment Plan

There are four Income-Driven Repayment Plans available, including:

  • The Revised Pay As You Earn (REPAYE) and Pay As You Earn (PAYE) Plans – Payments are generally 10% of your discretionary income
  • The Income-Based Repayment (IBR) Plan – Payments are generally 10% to 15% of your discretionary income depending on whether you’re a newer or older borrower
  • The Income-Contingent Repayment (ICR) Plan – Payments are the lesser of either 20% of your discretionary income, or what you would pay on a repayment plan with a fixed monthly payment over 12 years

If you’re interested in an IDR Plan, the first step is seeing if your student loans are eligible. You can find out what student loans qualify for each IDR Plan here.

Step 2: Ask for your renewal deadline

Your loan servicer may or may not notify you before the renewal deadline. So, be sure to call your loan servicer if you’re unsure when you need to update your family size and income.

When you get the date, put a reminder on your calendar to begin investigating the renewal process a few months before the deadline. Getting a head start on renewing the plan will give you time to reach out to your loan servicer if you have any questions or need help filling out the paperwork.

Step 3: Gather renewal documentation

Renewing your IDR Plan is similar to the initial application. You need to report the size of your family and the taxable income you’re bringing in. Examples of taxable income include:

  • Employment income
  • Unemployment income
  • Tips
  • Alimony

Examples of income that isn’t taxable and that won’t be considered when calculating your IDR payment include:

  • Supplemental Social Security income
  • Child support income
  • Federal or state public assistance

You can submit a tax return to report earnings if your income hasn’t significantly changed since you last filed taxes. If your income has changed significantly since your last tax filing, you need to submit other documents such as pay stubs or a letter from your employer to show what you’re currently earning.

For other sources of income, you can submit a separate statement.

Step 4: Renew online or with the paper form

There are two ways you can go about renewing your IDR Plan. You can go online through the StudentLoans.gov website or you can get the Income-Driven Payment (IDR) Plan Request form from your loan servicer to send in.

Renewing online

To renew online, go to the Income-Driven Payment page of StudentLoans.gov here. This page will look familiar. It’s the same webpage you go to when initially signing up for an IDR Plan. Returning users click on “Submit Re-certification.”

Using the online form can make your life easier in two ways. You can grab your IRS tax forms electronically for submission through the StudentLoans.gov online dashboard. And if you have multiple loan servicers, StudentLoans.gov will notify each one of the updates you submit.

Sending in the IDR request form

The other option for renewal is completing the paper Income-Driven Repayment (IDR) Plan Request form and mailing it or faxing it to your loan servicers. Some loan servicers like Navient allow you to upload paper documents to your online account as well.

The drawback of using the paper form instead of the StudentLoans.gov website is that you need to submit the request to all loan servicers separately.

Step 5: Follow up

After turning in your IDR request, you’re not in the clear until your renewal has been processed. You may not hear back right away if additional documentation is needed to process your renewal. So, follow up to make sure your request doesn’t get held up beyond the deadline because of missing information. Even if online it shows the status of your request as received, you should call to confirm you’re all set for the next year.

What should you do if you miss the renewal deadline?

As previously mentioned, your monthly payment will no longer be based on your income and family size if you miss your annual IDR renewal deadline. If you receive a student loan bill that’s much higher than you expect and realize your IDR renewal request didn’t go through, take a deep breath.

If you followed the submission instructions and confirmed the processing of your IDR renewal beforehand, call your loan servicer to see if there is a system error. Some borrowers on IDR Plans have reported errors in the renewal process that caused their payment to increase by mistake.

On the other hand, if you forgot to send in your IDR request altogether, ask what options are available. You can recertify after the deadline if you’re under the PAYE Plan, the IBR Plan, or the ICR Plan.

If you’re under the REPAYE Plan, you’ll be booted off to an alternative plan that’s not based on your income, but you are able to apply for another IDR Plan if you qualify.

The problem with renewing late (or applying for another plan if you were on the REPAYE Plan) is you may get stuck with an increased payment for a month or two until you get approved for reduced payments again.

Forbearance may be a short-term solution if you cannot afford the higher payment. Forbearance postpones your payments and can hold you over until the IDR Plan begins. The drawback of forbearance is that during this period interest on your loan may be capitalized. This means interest may accrue and increase your loan balance.

Speak with your loan servicer about the implications of forbearance and what alternatives there could be if you cannot afford your loan payment without the IDR Plan you had.

Final word

For borrowers taking advantage of an Income-Driven Repayment Plan, the recertification deadline is one of the most important dates of the entire year. Set multiple calendar and mobile reminders if that’s what it’ll take for you to remember it.

Also, be sure to review the information you need to provide for renewal a few months beforehand if it’s your first time around. Finally, don’t be afraid to call your loan servicer before the renewal deadline to double- and triple-check that the information you submit is sufficient for recertification.

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College Students and Recent Grads, Featured

(RISLA) Rhode Island Student Loan Authority Refinance Explained

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Rhode Island is one of several states that has launched a student loan refinance program over the last few years. Refinancing your student loans is essentially paying off your current loans (federal or private) with another loan that has a better interest rate. A refinance can save you a bundle on interest. In some cases, it may even lower your monthly loan payment.

What sets the Rhode Island Student Loan Authority (RISLA) refinance program apart from some of the other state-run initiatives is that it’s open to anyone. You can qualify even if you live in a different state.

In this post we’ll cover:

  • The RISLA refinance loan terms and eligibility criteria
  • The type of student loans you can refinance
  • The implications of refinancing federal loans
  • Pros and cons

RISLA loan terms and eligibility requirements

RISLA offers loan terms of 5, 10, and 15 years. You can refinance $7,500 to $150,000. This refinance has no origination or prepayment penalty fees.

You need to apply with a co-signer to qualify for the lowest rates this program has to offer.

With a co-signer, fixed-interest rates range from 4.49% to 5.99% APR. Without a co-signer, fixed-interest rates range from 5.74% to 7.24% APR. If you sign up for direct deposit to make your monthly loan payment, RISLA offers an additional 0.25% interest rate reduction.

As for the RISLA eligibility requirements, you must:

  • Be refinancing loans that were used for education
  • Be refinancing loans that are in payment status
  • Have a credit score of 680 or above
  • Earn at least $40,000 per year
    • If you live with your co-signer, you can collectively earn $40,000 per year
    • If you live separately from your co-signer, you each need to make $40,000 per year

Student loans you can refinance with RISLA

You can refinance private student loans and federal student loans through RISLA.

Federal student loans you can refinance include parent PLUS loans, Stafford Loans, and both unsubsidized and subsidized Direct Loans.

Refinancing private student loans

Private student loans can be good candidates for refinancing because rates and loan terms offered by private lenders can vary widely. Some private student loans even have variable interest rates.

Keeping a variable interest loan for a long time can be risky. Variable interest rates can start off very low. The trade-off is variable rates can also increase in the future and impact your monthly payment.

Refinancing a private student loan that has high or variable interest with RISLA can stabilize your payments and save you money.

Refinancing federal student loans

Unlike private student loans, interest rates for federal student loans are set by the government.

For example, the interest rate on undergraduate subsidized and unsubsidized Direct Loans for 2016-2017 is fixed at 3.76%, which is a decent rate. If you took out undergraduate federal loans within the last few years, you may find your interest rate is already close to (or lower than) what RISLA is offering for a refinance.

Federal student loan borrowers who may benefit the most from the RISLA refinance are those with lingering undergrad loans from the early 2000s, and those with graduate or parent PLUS loans. These federal loans can carry an interest rate in the 6% to 8% range. In this case, a refinance with RISLA may be able to get you a lower interest rate.

RISLA has a calculator on its website you can use to check how much a loan refinance can save you. You can access that calculator here.

We also have a student loan refinance calculator at MagnifyMoney you can use to compare costs here.

Should you refinance federal student loans?

Savings is important, but it’s not the only factor to think about when deciding whether refinancing your federal student loans is the right move.

Refinancing your federal student loans can cause you to forfeit student loan borrower benefits like forbearance, deferment, income-based payment, and loan forgiveness.

Here’s a quick summary of these benefits and how they can help you:

  • Forbearance and deferment – Forbearance and deferment can postpone your student loan payments for a short period of time while you get back on your feet if you fall on hard times or experience an illness.
  • Income-based repayment plans – Income-based payment plans cap your monthly payment based on your income and family size. After 20 to 25 years of making payments within an income-based program, the balance of your loans can be forgiven.
  • Public Service Loan Forgiveness – The Public Service Loan Forgiveness Program is an initiative that anyone who plans to pursue a career in public service should consider. If you get an approved public service position and make 120 consecutive loan payments while serving (about 10 years), the remaining balance of your Direct Loans can be forgiven.

One thing to note is RISLA does offer some borrower benefits, including 12 months of forbearance and a payment plan program in certain circumstances. However, the extent of the borrower benefits that you get with federal student loans goes beyond what RISLA provides.

Pros and cons

Pro: The competitive interest rates. If you apply with a co-signer, the RISLA refinance offers low and fixed interest rates.

Con: The lowest rates require a co-signer. You can’t qualify for the best interest rates this program has to offer without a co-signer. We’ll discuss a few lenders below that may offer you a low rate without a co-signer.

Pro: Anyone is welcome to apply. Being a resident of Rhode Island is not required.

Con: Refinancing forfeits student loan borrower benefits. This con is irrelevant if you’re planning to refinance private student loans since they typically offer limited borrower protections anyway. But refinancing federal student loans will cause you to miss out on the protections covered above. Make sure you’re comfortable with the implications of no longer having these perks before moving forward.

Pro: No fees. The RISLA refinance has no origination fee or prepayment penalties.

Should you consider the RISLA refinance?

The RISLA refinance is open to borrowers outside of Rhode Island, so it’s yet another refinance option that students and parents across the country can consider. But it’s also important to shop around before making a decision.

The downside of the RISLA refinance is that the most competitive rates require a co-signer. If you don’t have a co-signer, here are a few other lenders you can turn to that offer low rates:

  • CommonBond – Fixed rates starting at 3.50% APR
  • Earnest – Fixed rates starting at 3.50% APR
  • LendKey – Fixed rates starting at 3.25% APR
  • SoFi – Fixed rates starting at 3.50% APR

Keep in mind, the very best rates are given to those with strong credit scores. You may need to work on strengthening your credit history first before getting approved for a low rate on your own with CommonBond, Earnest, LendKey, or SoFI.

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College Students and Recent Grads, Featured

How Does Student Loan Deferment or Forbearance Affect Your Credit Score?

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LendKey Student Loan Refinance Review

According to the latest annual report from the Institute for College Access and Success, 2015 college graduates showed a 4% increase in student loan debt over 2014 graduates. Among 2015 seniors, 68% who graduated had student loan debt, with the average balance being $30,100 per borrower.

With more college students graduating with student loan debt and balances continually increasing, it’s no wonder many are seeking deferment or forbearance. But if you are considering these options, there are some things you need to know first, including how it might affect your credit score.

What Is Deferment?

Student loan deferment is a period of time when the repayment of your loan’s principal and interest is temporarily delayed.

Unlike forbearance, when your student loan is in deferment, you do not need to make payments. And in some cases, the federal government may even pay the interest portion of your student loan payment. In order to qualify, you must have a federal Perkins Loan, a Direct Subsidized Loan, or a Subsidized Federal Stafford Loan.

Interest on your unsubsidized student loans or any PLUS loans will not be paid by the federal government. You will be responsible for interest accrued during deferment (if it’s not paid by the federal government), but you don’t have to make payments during the deferment period. If you’re not paying interest during deferment, it’s important to know interest may still be added to your principal balance. This may result in higher future payments.

There are several situations in which you may be eligible for student loan deferment:

  • If you are enrolled in college or career school at least half-time
  • If you are in an approved graduate fellowship program
  • During a period where you have qualified for Perkins Loan discharge or cancellation
  • During a period of unemployment
  • During a time of economic hardship (including Peace Corps)
  • During active military duty
  • During the 13 months following active military duty

Most deferments are not automatic, and you will need to submit a request for deferment to your student loan provider. If you are still in school at least part-time, you can apply through your school’s financial aid office.

What Is Forbearance?

If you are unable to make your student loan payments and don’t qualify for deferment, your loan officer may allow forbearance. When your student loans are in forbearance, you may be able to make smaller payments or skip payments altogether for up to 12 months.

However, before you apply for forbearance, keep in mind that interest will continue to accrue on all types of loans. This means your balance will grow, increasing the amount of time and money it will take to pay off your student loans. You can choose to pay the interest-only portion during forbearance. If you choose not to, the interest may be capitalized and added to the principal balance of your loan.

According to the Federal Student Aid office at the U.S. Department of Education, there are two types of forbearance, discretionary forbearance and mandatory forbearance.

Discretionary forbearance is when you, the borrower, request forbearance from your lender due to financial hardship reasons or illness. Ultimately, the lender decides whether or not to grant your discretionary forbearance request.

With mandatory forbearance, your lender is required to grant you forbearance on your student loans if you request it. However, you must meet the following criteria:

  • You are completing a medical or dental internship or residency program, and meet specific requirements.
  • The total you owe each month for all the student loans is 20% or more of your total monthly gross income.
  • You are serving in a national service position and received a national service award.
  • You are a teacher and qualify for teacher loan forgiveness.
  • You qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
  • You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.
  • Similar to deferment, forbearance doesn’t happen automatically. You must apply for forbearance and may be required to show proof of these situations in order to be granted forbearance.

What Happens to Your Credit Score When Your Student Loans Are in Deferment or Forbearance?

As long as you continue making your student loan payments on time and in full until your request for deferment or forbearance is approved, your credit score should not be affected.

According to Rod Griffin, Director of Public Education at Experian, “When a student loan is in forbearance it is not in a repayment status. As a result, the late payments would not be reported. If it is reflected as current and not in repayment, it likely would not have a negative effect on credit scores.”

What Happens if You Default on Your Student Loans?

If you miss a payment between the time you apply for and are approved for deferment or forbearance, you will be considered to be in default on your student loans, and your credit score could be negatively impacted by this missed or late payment.

“Defaulting on a student loan is no different than defaulting on any other installment loan. Failing to pay as agreed will severely damage your credit history and, therefore, your credit scores,” Griffin said.

Being 60 days late or more on a student loan or credit card payment could damage your credit score as much as 100 points.

The Bottom Line

If you are unable to afford your student loan payments, deferment or forbearance may be options to consider. However, it’s important to remember that your student loans will continue to accrue interest, which could result in your paying more over the long run. Between the time of application and the time you are approved for deferment or forbearance, you must continue to make your student loan payments in full and on time in order to avoid potential damage to your credit score.

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College Students and Recent Grads, Featured

Where Students Can Cover College Tuition with a Part-Time Job: Study

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Students Studying Learning Education

Affordability was a major factor when 19-year-old Bintou Kabba was considering colleges to attend after high school.  She enrolled at CUNY Lehman, a four-year public university in her native Bronx, N.Y. The 10-minute commute from her home, where she lives with her parents and six siblings, was part of the allure. But the low cost of tuition was essential for Kabba, an ambitious student with dreams of becoming a neonatal gynecologist but without the financial means to afford a pricey university. Most CUNY Lehman students pay just $2,374 out of pocket for a year of schooling.

But before she began classes, Kabba needed a job. “I was broke and I needed money so badly,” she told MagnifyMoney. So, she joined the ranks of so-called “working learners” attempting to counter the costs of college with part-time jobs. About 40 percent of undergraduates and 76 percent of graduate students work at least 30 hours a week throughout the school year, according to the Georgetown Center on Education and the Workforce.

As college costs have skyrocketed in recent years, the old adage “Work your way through college” has become increasingly out of touch with reality. Students who work rarely earn enough to truly cover the costs of their education.

MagnifyMoney sought to find out which colleges are still affordable enough for working students to afford on part-time wages. In a new study released Nov. 9, we found a student earning the federal minimum wage ($7.25/hr) would have to work full-time — nearly 44 hours per week — to afford the average annual net tuition at a four-year public institution today.

We then wanted to see how far a student working 20 hours per week at their state’s minimum wage could get toward covering their net tuition. Their post-tax annual earnings were compared with the net tuition price at more than 2,500 public and private non-profit institutions.

Key findings:

  • We found it is impossible to cover the tuition gap at most four-year schools, both private and public.
  • Students can afford to cover their net tuition costs with a part-time job at only 50 out of 645 (7.75%) of four-year public institutions. Students can feasibly cover net tuition costs with a part-time job at just 24 out of 1,208 private nonprofit four-year institutions (2%).
  • Two-year public institutions were significantly more affordable — it was feasible for part-time working students to cover net tuition at 287 out of 656  two-year public schools (43.75%). On average, a student earning the federal minimum wage would only need to work roughly 25 hours per week to cover net tuition costs at a two-year public institution.
  • Less than 5% of private two-year and private four-year institutions are affordable enough for a part-time working student, MagnifyMoney found.

The cost of going to college has outpaced the rise in wages by a staggering amount over the last decade. When faced with a gap in college costs and earnings, families typically have just one place to turn – student loan debt.

Kabba wanted to avoid student debt at all costs. That drove her decision to enroll at CUNY Lehman. The school is the fourth most affordable four-year public college on our list. Earning the New York state minimum wage of $9/hour, a part-time working student could pocket more than enough to cover their expenses.

Still, working long hours to cover college expenses is far from the ideal college experience.

Research has shown demanding work schedules can all too easily conflict with student’s academic performance. Georgetown’s Center on Education and the Workforce warns against any job that demands more than 30 hours per week from a full-time student.

On a tip from her high school counselor, Kabba landed a $10/hour gig soliciting telephone donations at a midtown-New York charity. During her freshman year, she worked 20 hours most weeks. With a full course load to juggle as well, it wasn’t long before Kabba started to feel the pressure of conflicting responsibilities.

“It was just too much,” she said. To get to work each day, she took a 45-minute train ride from the Bronx to midtown. Rather than working around her class schedule, she had to work her class schedule around her job, because the charity had strict guidelines on when workers could call donors. By the end of her freshman year, her grades started to reflect her strain.

“I decided I’d rather be unemployed and actually do well in school,” says Kabba. She quit before her sophomore year.

Not long after leaving her inflexible charity job, Kabba found another solution. Through a special program offered at CUNY Lehman, she landed a job on campus that paid $9/hour and only required 10 hours of work per week. Reducing her hours and pay meant smaller paychecks, but a better chance she’ll earn the grades she needs to achieve her goal of going to medical school. “It’s on campus and it’s convenient,” she said.

Behind the data

To make our findings more exact, we used the minimum wage of the state in which each school resides to determine the annual earnings of working students. Next, we analyzed data from the National Center for Education Statistics to determine the net tuition costs of each school. The net price is more accurate than a college’s sticker price because it factors in financial aid, scholarships and grants. The net price is what students and families actually pay out of pocket.

We stuck to a 20-hour part-time work schedule because we thought it was unrealistic to assume students could juggle a full-time course schedule and a full-time job. In fact, Georgetown recommends students work no more than 30 hours per week in order to maintain good grades in college.

public-nonprofit-4-year-finalpublic nonprofit 4 year final

public nonprofit 2 year final

 

Student Loan Payoff Calculator

Use this calculator to find out how long it will take you to pay off your student loans.

Tips for working college students

It is virtually impossible to “work your way through school” anymore. The old adage just doesn’t apply to today’s college students, who are paying more than ever for college tuition and can’t feasibly cover their expenses with part-time income alone.

However, there are still benefits to working while in college. Here are some tips on how to maximize savings as a working student.

How to save on college costs with a part-time job

  1. Start small. Try going to a lower cost community college and transferring your credits to a larger institution later. As our study shows, it’s possible for students working part-time to cover net tuition at the majority of two-year public institutions 43.75%). By covering tuition and fees with a part-time job at a two-year school, you can reduce your need for financial aid by half and still graduate from a four-year institution.
  2. Work part-time at a campus job or through a work-study program. Jobs tied to campus are more likely to work around your course schedule and be flexible during unusually demanding times of year, such as quarterly exams and finals.
  3. Stay close to home. Not only will you save on tuition by enrolling at an in-state school, but if you are close enough to continue to live with your family while you’re studying, you could save big on housing expenses. If living at home means commuting by car or public transit for classes, factor in those additional costs.
  4. Don’t rely on student loan debt for expenses you can cover with part-time work. Save the student debt for tuition and other fees that are usually required in one lump-sum payment at the beginning of the semester. When it comes to extra expenses, like your trip to Key West for spring break, or moving to an off-campus apartment, lean on income earned from a part-time job. If you move off campus, you might find it is possible to afford rent (with support from roommates) with income from a part-time job.
  5. Choose your job wisely. If possible, find work in your area of study, which can give you an early jump start in the job market before you even graduate. If you have several years of job experience under your belt at graduation, you’ll be light years ahead of your peers graduating with a comparatively thin resume. Another study by Georgetown’s Center on Education and the Workforce found college students who worked or took internships while in college were more upwardly mobile after graduation and more likely to move into managerial positions.
  6. Take advantage of in-state tuition rates even if you are not a permanent state resident. Each state has its own residency requirements for students looking to qualify for in-state tuition rates, which can be significantly lower than out-of-state rates. Some states will allow students to qualify for in-state tuition if at least one of their parents has been a resident for at least one full year before the student enrolls. If the student is independent — meaning they do not receive financial assistance from a parent to attend college — most states require at least one year of residency in the state. There are other documentation requirements, which can be found at FinAid.org.
  7. Don’t sacrifice your studies for a paycheck. At a certain point, the financial benefits of working part-time might not be worth the additional stress and attention a job might demand. The majority of working students ages 16-29 work 20 hours or less per week. However, research has shown both working and non-working college students graduate with similar levels of student loan debt — 34% of working college students graduate with $25,000 or more in student loan debt, compared to 37% college students who don’t work while in school.
  8. Graduate early (or on time). Dragging out your time in college is a quick way to add thousands of dollars to your student debt load. And it happens more often than you might think. Only 40% of students graduate within four years of enrollment across all types of institutions, according to the Department of Education. Less than one-third of college students graduate on time at public institutions. Save additional tuition expenses by completing your degree in four years or less.

 

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College Students and Recent Grads, Life Events

Will You Get Real Value from an Online Degree?

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Will You Get Real Value from an Online Degree?

In search of higher education, lucrative careers and better credentials, nearly 6 million Americans are enrolled in some kind of online course, according to data from the Online Learning Consortium. Distance learning programs tout online courses as an efficient and low-cost way to complete a degree. But are they worth the time and financial investment?

Here’s what to consider before you enroll in an online learning program:

What it really costs

For students looking to complete distance learning programs at in-state schools, the cost probably won’t vary much from traditional students attending classes in person. However if you’re comparing for-profit online schools to out of state public universities, for-profit schools tend to have lower tuition costs on average ($15,610 vs. $23,893 per year). Before you enroll in a for-profit university you should note that it is more difficult to obtain scholarships and grants when studying at a for-profit school.

Degree mills (for-profit schools that aren’t accredited such as American Central University or Golden State University) offer the lowest degree prices, but these institutions offer little in the way of education, and they drag down the appeal of all online degrees. Check to see if your school is accredited here.

A lower sticker price for an online degree might not translate to a lower out of pocket to you as a student. Before committing to an online institution, consider cost saving measures such as attending a Community College for two years and applying for scholarships at an in-state, public school. In many cases, this will end up being your lowest cost option.

However, if distance learning is right for you, you will qualify for subsidized loans if you attend any accredited school (this includes some for-profit online schools). If the school you plan to attend is accredited by one of the national or regional accrediting commissions (see this list to learn more), you will be eligible to receive the Pell Grant and Stafford or Perkins loans.

Online Degree Completion

Students in online only programs complete courses and degrees at a slightly lower rates than students in traditional programs. This may be due to a lower level of student support for online students, or the fact that more distance learners have both career and family demands in addition to their education.

Because online degrees have lower completion rates, you should ask yourself whether you have the time and resources that you need to complete your degree; if you don’t, it’s not worth the money. If your primary goal is to learn and continue your education, you may that Massive Open Online Course (MOOCs) through Khan Academy or Coursera fit your needs with negligible out of pocket costs.

What you won’t get from an online program

If you earn an online degree through a traditional university, employers will perceive your degree as on par with traditional degrees from that school. For example, a Master’s Degree in Statistics from Texas A&M is equally valuable if you earned the degree through their distance education program or while attending class on campus. However, not every employer views online for-profit universities favorably. Top tier online schools are working to change sentiments, but you should research the acceptance in your field before pursuing a degree from a for-profit institution.

Distance education programs offer fewer networking opportunities compared to traditional schools. Online students do not have as much access to professors or peers as traditional students which is a drawback during the learning process and the job search process, but recently, high quality online schools offer new technology to help their students network and job search.

You also shouldn’t expect as much hands-on help in your coursework as an online student. Distance learners need to be self-directed, and able to pick up complex concepts on their own. Students may need to teach themselves computer programs, and they will be expected to do labs or other physical projects on their own.

Advantages of online degrees

Online programs from top-tier online universities and not-for-profit universities offer high quality education that may increase your marketability. You can earn your degree with greater flexibility than in a traditional education model, and you may be able to earn your bachelor’s degree even while you hold down a full-time job and raise your family.

Depending on the school you choose and your financial aid package, an online degree may have a lower out of pocket cost compared to a traditional classroom setting. Online universities accept more transfer credits than traditional universities which can help you complete your degree faster and reduce your costs.

Especially for adults hoping to complete a degree, distance learning and online universities offer advantages that traditional schools cannot.

Is an online program for you?

The value of an online degree depends upon how you want to use it. If a degree will allow you to advance in your company or your industry, and you want to earn your degree while working then an online degree offers value above what a similarly priced brick-and-mortar school offers. Distance learners have increasing opportunities to study in a field that aligns with their personal and career goals.  Popular degrees for distance learners include healthcare administration, business administration, information systems and psychology, but hands on fields like nursing and elementary education continue to make inroads for students pursuing their degree online.

On the other hand, if you’re not a self-directed learner, or your industry frowns on online education then the money will be wasted. Degrees from non-accredited universities aren’t going to be worth the money for most people.

If you choose to pursue an online degree, be sure to compare the out of pocket cost to you (including fees), consider whether you have the time and resources to complete the degree, and line up your funding ahead of time. It’s also important to weigh your expected increase in income against the cost of the degree. Online degrees aren’t a slam dunk in value, but you may find that it’s the right choice for you.

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College Students and Recent Grads, Featured

What To Do if a Student Loan Refinancer Rejects You

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

What To Do if a Student Loan Refinancer Rejects You

After researching the pros and cons of refinancing student loans, you might be excited to go through with the process. Perhaps you’re looking to lower your interest rate, or you want to release a co-signer from a student loan.

While you may be set on refinancing your student loans, submitting an application isn’t a guarantee of approval. When you apply, the lender will likely take your credit, income, other debts, employment status, and possibly other factors into account.

But a denial on your first application doesn’t mean you’re locked out from ever refinancing. Instead, take the time to understand what influenced the decision and determine your best next step. 

Find Out Why Your Application Was Denied

Student loan refinancers look at many aspects of an applicant’s personal and financial life when deciding whether or not to approve a loan. The process sometimes starts with prequalification, when you share information about yourself and the company performs a soft inquiry on your credit. A soft inquiry lets the company examine your credit reports, but doesn’t affect your credit score.

You could find out you won’t qualify for refinancing during the prequalification phase. For example, based on your income and debt obligations, you could be turned down because you don’t have enough free cash flow — your monthly income minus monthly debts. Usually, lenders like to see your debt-to-income ratio under 40%.

Phil DeGisi, chief marketing officer at student loan refinancer CommonBond, says the company will tell you why you were denied if you don’t meet the company’s criteria. “If the person has questions or doesn’t understand what that means, they can call customer service and we’ll answer any questions they have about their application,” DeGisi said. Taking time to figure out why your application was turned down can help guide your path toward approval in the future.

You could prequalify for refinancing but wind up getting declined during the underwriting process. It’s at this point that the lender is likely to do a hard pull on your credit, which could affect your credit score. (Check with the lender before submitting for prequalification to see if it performs a hard or soft inquiry.) Amanda Wood, director of business and product development at online lender SoFi, says that could happen if “something you shared with us initially doesn’t match up after you’ve submitted more information, like pay stubs and identity verification.” Common examples include a recent bankruptcy or insufficient free cash flow. 

Try Again with Another Lender

You could still be approved from a different lender, even if you were handed a rejection already. “Everyone looks at different factors, and we all make different judgments on eligibility,” DeGisi said. However, there are some basic rubrics, and “the type of person that’s generally going to be most successful is someone who can afford their monthly payments.”

If you have terrible credit and poor cash flow, the chances of getting approved are quite small with any lender. You could get denied even if you have a stellar credit score because of poor cash flow, or if you have great cash flow but a poor credit history. Approval isn’t everything either; in some cases you might get approved, but the interest rate is so high it doesn’t make sense to go through with the refinancing.

Wood points out that regardless of whether or not you’re approved, “it’s a good idea to check out all your options and see not only who will approve your loan, but what companies offer the best rates and terms, and have low or no fees.” You may be able to determine a company’s fees by reading the fine print before submitting an application or going through prequalification.

Be cautious when applying for refinancing with multiple companies as the resulting hard inquiries could impact your credit score. However, it makes sense to go ahead and shop around within a certain time frame. Depending on the credit-scoring system, multiple hard inquiries for student loans made within 14 to 45 days are weighted as a single inquiry for credit-scoring purposes. That means the damage to your credit score will be kept at a minimum.

Increase Your Eligibility and Try Again Later

Take steps to improve your chance of being accepted later by working on the factors that you believe, or the company told you, impacted the denial decision.

Employment is often a requirement to qualify for refinancing, and if you don’t have a job, that’s where you’ll likely want to start. In the meantime, consider alternative federal student loan repayment plans mentioned below.

If you have a job but not enough free cash flow, you’ll need to focus on decreasing your monthly payments, increasing your income, or both. Perhaps you could negotiate a raise or take on an additional part-time job. The extra income will help one side of the equation, and you could increase your cash flow even more by putting the money toward debt payments.

Picking up a contractor side gig, such as driving for a ride-sharing company, might not factor into your income unless you’ve had the job for at least two years because the lender wants to see two years’ worth of tax returns. However, paying down debt with the extra money will still help your cash flow.

Your credit history and score are often important factors as well. Learning how your actions affect your credit, and what will help your credit going forward, are valuable lessons that can help you now and in the future.

Building a strong credit history filled with on-time payments can take a long time, but a few actions can have a more immediate effect. Start by reviewing your credit reports — you can get a free copy from each bureau at AnnualCreditReport.com — and disputing errors that could be hurting your credit. If you often have a high balance on your credit cards, keeping the balance below 20% to 30% of the available credit might help your score.

Look into Alternative Federal Repayment Plans

If you’re having trouble making student loan payments, refinancing might not be your only option. Both Wood and DeGisi recommend looking into the different federal repayment plans available to borrowers with federal student loan.

There are several income-driven plans that base borrowers’ monthly payments on their income. You may also be able to put your federal loans into deferment or forbearance, which lets you temporarily halt payments — although interest may still accrue. 

The Bottom Line

Refinancing student loans can help you save money on interest, lower your monthly payments, and allow you to release a co-signer from your loan. Receiving a denial letter is disappointing, but it doesn’t mean you’re boxed out for life. Try again later after improving your financial profile. In the meantime, if you’re having trouble making federal student loan payments, consider switching to a different payment plan.

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College Students and Recent Grads, Featured

With $655 Malaysia Trip, This Student Proves Gap Years Don’t Have to Cost a Fortune

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With $655 Malaysia Trip, This Student Proves Gap Years Don’t Have to Cost a Fortune

Brandon Stubbs isn’t your typical 18-year-old high school graduate. In addition to graduating valedictorian from his Grass Valley, Calif. high school, he’s joined the ranks of a growing number of students embracing the concept of taking a gap year before starting college.

While other college freshmen began their first classes this Fall, Stubbs, who plans on attending Brown University, kicked off his gap year with a trip to Malaysia.

A gap year is usually more than just a nice break from calculus exams and book reports. Many students choose to focus on personal growth and incorporate travel abroad or participation in volunteer projects. That growth can come at a high cost. Some programs, like the $35,000 Global Gap Year offered by Thinking Beyond Borders, can cost more than what some students pay for a four-year college degree.

But, there are plenty of ways to trim costs and still have a great gap year. We reported on some here, which is how we met Stubbs.

We asked Stubbs to share his budget so far. Take a look at how he’s financing the first leg of his gap year in Malaysia:

Brandon's Malaysia Budget

We caught up with Stubbs to see how his budget is holding up in Malaysia and how he intends to spend the rest of his gap year. Here’s what he said.

MagnifyMoney: Where are you now?

Brandon Stubbs: I’m taking two months of my gap year in Malaysia, one of the most diverse countries in the world. Right now I’m in Johor Bahru, the southernmost city of Malaysia, just across the bridge from Singapore.

MM: What drove your decision to take a gap year?

BS: After my high school graduation, I was definitely, to an extent, burnt out and, while I was excited to attend Brown University, I wasn’t as ready or enthusiastic to start college this fall as I will be next fall.  This gap year has provided me the opportunity to gain experience in the real world while simultaneously recharging my mental battery.  I’m learning a lot in an entirely different way than in the classroom.  And my enthusiasm and excitement for next fall has only increased as I’ve grown as an individual throughout this gap year.

MM: Why Malaysia?

BS: As a student going into archaeology, it’s really important for me to be getting this exposure to this blend of Eastern cultures as well as to the geography and climate. Tropical rainforests thrive here, so I’ve been able to go on some real Indiana Jones-esque expeditions into the jungle. I’ve also visited some incredible Buddhist and Hindu temples throughout the country that have proven to be very enlightening experiences.

MM: How did you you save up for this trip?

BS: I had $2800 saved up for this trip, which I earned working as a tutor throughout high school and as a music camp counselor during the summer. I paid for my flight through StudentUniverse [ a site that offers affordable fares to students ]. I booked a flight on AirChina for $535.

MM: How do you stay on budget?

BS: My room and board is covered in exchange for my volunteer service [at the hostel where I am staying] so I only have to spend money on food and transportation.  Often, I’ll only spend money on brunch and dinner during a day, but I’ll spend a little more for excursions into Malaysia or Singapore.

MM: What are you doing for money out there?

BS: I’ve done some street performing in the past on my trumpet at the local “Cornish Christmas” celebrations and other outdoor festivities. On top of that, I am focusing on the style of New Orleans Dixieland jazz, which lends itself quite well to solo street performance. I intended to bring my trumpet, anyway, if just to practice, so the idea of playing it in public was natural.  So far I’m earning about 160 [Malaysian Ringgit] a week, which translates to $40 USD, for playing five nights a week. But the money is enough to cover most of my daily expenses in Malaysia.

MM: What’s your typical day like?

BS: I have two days a week off from my work at the hostel.  On those days, I’ll either go into Singapore and visit some of the attractions and districts of that amazing city or explore the nature and culture of Malaysia, hiking or visiting new towns.  On my work days, I’ll spend a few hours cleaning and checking guests in and out and on my downtime work on my second book or street perform on my trumpet.

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MM: Did your parents help you with any expenses?

BS: My parents did help pay for some of the preparatory expenses, like my typhoid shot or general supplies – flashlight, mosquito repellent, etc.  Aside from that, I am covering all of my own expenses.

MM: When do you get back?

BS: I’ll return to the States toward the end of November.

MM: Will you have any funds left when you return?

BS: I expect to return with $1800 or $1900 remaining. I shouldn’t spend more than $1000 on the entire two-month trip, all expenses included.

MM: What will you do for the remainder of the gap year?

BS: Once I return to the U.S. I intend to spend several months publishing and advertising my first book, The King of Kamaahr.  My plans for the spring are still not set in stone, but right now I think I’ll go to Sydney, where I have some family and Australian citizenship, and spend a few months living there.  I’ll try to find work there as a musician and/or an actor as well as advertise my book outside the U.S.

Do you want to share your gap year story? E-mail us at info@magnifymoney.com. 

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