Updated August 14, 2017
Laurel Road (formerly know as DRB – rebranded on June 15) is a division of Darien Rowayton Bank that offers a highly competitive student loan refinance product. In addition to a competitive interest rate, Laurel Road offers some decent loan perks that sets it apart from others.
According to Laurel Road, someone who refinances $100,000 has the potential to save up to $15,000 over the life of a 10 year loan. And in special circumstances like disability or financial hardship, the bank might completely forgive loans or allow for partial payments. Read on for the ins and outs of a Laurel Road loan to see if it’s the right refinance for you.
Laurel Road will refinance up to 100% of Federal, private and Parent PLUS loans. The minimum amount you can refinance is $5,000 and loan terms are available for 5, 7, 10, 15 and 20 years.
Fixed interest rates are available from 3.95% to 6.99% APR. Starting variable interest rates are available from 2.99% to 6.42% APR. If you choose a variable interest loan, the rate will fluctuate throughout the loan term depending on market conditions. Only consider variable interest if you can pay off your student loan refinance quickly. Otherwise, you might be taking too much interest rate risk since your interest has the potential to increase over time.
The interest rates above include a 0.25% discount for using auto-pay. You just need to set up automatic payment from any checking account in order to get the auto-pay discount.
You must be a working U.S citizen or permanent resident with a degree from an accredited U.S. school program to be eligible. In terms of creditworthiness, Laurel Road does not disclose its underwriting requirements. The requirements can change over time. However, Laurel Road is targeting people with good credit.
To have the best chance of approval, your existing student loans should be in good standing. You should be able to demonstrate affordability and have limited negative marks on your credit report.
A cosigner is not required to be eligible for refinancing although you’ll probably need one if you only meet the minimum credit score or income requirements above. Laurel Road does not have an official co-signer release program. However, a representative of Laurel Road confirmed to MagnifyMoney that Laurel Road will consider a co-signer release upon request of the borrower on a case by case basis.
Laurel Road will ask for documents to backup the details of your application like photo ID, pay stubs, proof of graduation and student loan pay off statements.
Fees & Gotchas
Laurel Road is very transparent with fees. There are no fees for origination or loan prepayment. There’s a late fee of 5% or $28 (whichever one is less) for payments that are over 15 days late. Laurel Road also charges $20 for returned checks or electronic payments whether it’s due to insufficient funds or a closed account.
Pros and Cons
Low interest is the major pro of refinancing with Laurel Road. Loan benefits like forbearance, deferment and loan forgiveness are other advantages. Laurel Road may forgive loans if you die or if you can prove a significant reduction in income due to disability. Hopefully these situations don’t occur, but it’s good to know you and your family is covered if it does.
On a less morbid note, Laurel Road offers full or partial forbearance of payments if you can prove that you’re going through financial hardship. You may also qualify to pay just $100 per month while you complete a full-time post-graduate training program like an internship, fellowship or residency. If you graduate less than 6 months before refinancing, Laurel Road may allow you to defer payments for up to 6 months.
There aren’t many disadvantages of going with Laurel Road other than it not having an official co-signer release program with explicit qualification terms. This may be a turnoff for cosigners since your loan will likely appear on his or her credit report until it’s repaid.
Student Loan Refinance Alternatives
How does Laurel Road stack up to other available student loan refinances?
SoFi has a higher rate cap for fixed interest and a higher starting rate cap for variable interest than Laurel Road. SoFi currently offers variable rates from 2.815% APR and fixed rates from 3.35% APR(if you sign up for autopay). However, the SoFi refinance does come with a benefit comparable to Laurel Road called unemployment insurance. If you’re laid off, SoFi will pause your payments and help you find a new job.
CommonBond has similar rates to Laurel Road. Fixed interest rates are available from 3.35% APR and variable interest rates are available starting at 2.81% APR (if you use autopay). Although to qualify for the CommonBond refinance you must have obtained a degree from one of the graduate programs on its eligibility list. On the other hand, Laurel Road will refinance any loan (graduate or undergraduate) from an accredited program in the U.S.
Who Will Benefit Most From This Refinance?
The Laurel Road refinance may work out really well for people who need to complete a post-graduate training program before finding a job in their profession. Since Laurel Road allows for reduced payments in this circumstance, you’re given some leeway until you can earn your full professional salary. Still, you should compare the benefits of any Federal loans you have to the benefits of a refinance before making a decision.
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