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College Students and Recent Grads

Should I Upgrade My Student Credit Card When I Graduate?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Graduating from college is an exciting time filled with the promise of new challenges. Taking control of your finances is one of the more difficult challenges you’ll encounter, especially if you’re looking to build up a solid credit history.

While you were in school, you might have signed up for a student credit card. If you used your card responsibly while working toward your degree, you will likely graduate with a solid credit score and an important choice to make — should you upgrade your student card after graduation?

So long as your credit is strong, you’ll likely have the chance to upgrade to an equally good, if not better, credit card.

In this guide, we’ll help you decide if you should upgrade your student card and what to watch out for, as well as how credit card issuers handle student cards.

Should I upgrade my student card?

First of all, let’s discuss what upgrading your card really entails since you have several options:

Transitioning to a new card with the same issuer. If you like the issuer of your current credit card, you can request to transition your account to a new card they offer. For example, if you have the Discover it® Student Cash Back, you may decide the Discover it® chrome is more suited toward your spending habits. Call the number on the back of your card to request the transition, but keep in mind you’re not guaranteed the new card. Issuers look at various credit factors prior to the transition. If you are moved to the new card, the majority of the time issuers will issue your new card with the same account number.

Pros:

  • By simply transitioning to a new card, you aren’t closing your existing account. That means you won’t lower the average age of your credit, which can sometimes hurt your credit score.
  • Often similar terms and fee structure.
  • Familiarity with the online and mobile interfaces.
  • Typically, the ability to keep the same account number.
  • Don’t need to manage multiple credit card accounts.

Cons:

  • May have an annual fee.
  • May require a higher credit score.
  • Because you are technically applying for a new card in a sense, the credit issuer will have to pull your credit again. That will result in a new credit inquiry, which could lower your score by a few points.

Keeping your student card open and applying for a new card somewhere else. If you want a new credit card, a good option to consider is keeping your student card open and applying for a new card elsewhere, whether it’s a store card like Target or a card from another issuer. By keeping your student card open, you help your credit score in several ways.

Pros:

  • Improves your credit score by increasing your credit utilization rate (the amount of your total credit you use vs. the amount of credit you have available to you).
  • Doesn’t lower your average length of credit as significantly as closing your student card. This is likely your oldest credit account and when lenders calculate your credit score, they consider the average age of your credit accounts in that math. The older your accounts are, the better your score could be.
  • You may be able to find a card that offers rewards or benefits your student card does not

Cons:

  • New terms and fees to keep track of.
  • May have trouble managing two accounts.
  • Results in a new credit inquiry, temporarily lowering your score a few points.

Closing your student card and opening a new card. You may decide that you don’t want to keep your student card open anymore, and instead want to close it and open a new card. However, we don’t recommend closing your student card since it hurts your credit score. Most student credit cards don’t charge fees anyway, so you have nothing to lose by keeping your account open.

Pros:

  • Don’t need to manage multiple credit card accounts.

Cons:

  • Lowers your credit score by decreasing your average length of credit history.
  • Lowers your credit score because it will decrease the total amount of credit you have available to you. When that happens, it’s much easier for you wind up with a higher utilization rate. Your utilization rate is the amount of your total credit you use vs. how much you have access to.
  • Results in a new credit inquiry, temporarily lowering your score a few points

What if I have a poor credit score?

A poor credit score is typically considered to be anything under 669. It’s not impossible to qualify for credit cards, but you won’t have as many options as someone with good credit.

Applying for credit cards dings your credit score slightly, though it will bounce back. So, if your score is already less than perfect, applying for a new card or cards that you may have low approval odds for isn’t the best idea for a number of reasons.

Besides temporarily lowering your score for each application you submit, opening a new card lowers the average length of your credit history — which is an important factor in your credit score.

An alternative is to request a credit limit increase on your student card, which can help your credit score by improving your credit utilization (the amount of your total credit you use). Overall, it can be more beneficial to continue using your student card coupled with responsible credit management in order to improve your credit score. Then, when you’ve established good credit, consider applying for a new credit card.

But, if you’re eager to open a new card, check to see if the issuer offers pre-qualification. This allows you to check if you may be approved for a card without harming your credit score and can give you a good idea of where you stand. However, keep in mind pre-qualification is not a guarantee that you’ll be approved for the actual card.

What if I have good or excellent credit?

If you have good or excellent credit, you can apply for a new card or stick with your student card. Having good or excellent credit when you graduate is great, and opens you to the best credit cards on the market. If you want a different card that suits your spending more than your student card, shop around for different cards like rewards and cashback, then apply for the card of your choosing.

What to watch out for when upgrading to a new card

Annual fees. Your student card most likely doesn’t have an annual fee, but many non-student credit cards come with annual fees that can have lows around $39 but highs of $550. Since you’re still relatively new to credit, it may be a good idea to stick with no-annual fee cards until you can justify an annual fee card. Check out the best no annual fee rewards cards here.

APRs. APR stands for Annual Percentage Rate. This is the fee you may have to pay the bank on any overdue balances. Unless you pay your balance in full with each statement month, you’ll get charged your APR on top of whatever you owe. The majority of credit cards have variable APR ranges, and you won’t know yours until after you apply. That means if a card has a 12.24%-24.24% variable APR, you may get the lowest rate, a rate in between or the highest rate — and it can change at any time. Therefore, you should take note of the APR range before you apply. However, if you always pay your bill on time and in full, the APR you receive won’t be a major factor, though it’s something to note in case of an unexpected emergency.

Overspending. When you open a new card post-graduation, you most likely will have more income to report than during college (due to a full-time job). And, as a result, issuers may grant you a higher credit limit than you had with your student card. This increased line of credit may tempt you to overspend, but don’t fall into common debt traps. Try to spend only what you can afford to pay when your statement is due — or better yet, only spend what you can afford to pay immediately.

What should I do with my student card?

Don’t cancel it! If you decide to open a new card, don’t cancel your student card since that will hurt your credit score. Canceling your card lowers your average length of credit history and your utilization rate — two factors that make up 45% of your FICO® Score.

Continue to use it. Don’t put your student card in a drawer and forget about it. Most issuers will close your account if there is no activity for a while. To keep your card active, set up a small recurring payment for a monthly service, like Netflix or Spotify.

What happens to my student card when I graduate?

Many of the top credit card issuers offer a non-student version of their student card with nearly identical terms. Since the two cards are so similar, you may be able to keep the same student card without any action on your part, or your issuer will transfer you to a similar non-student card. Below, we list the student card you may have and what happens when you graduate.

Student card

 

Card when you graduate

Discover it® Student chrome

Discover it® Student chrome

No action required, card remains the same

Discover it® Student Cash Back

Discover it® Student Cash Back

No action required, card remains the same

Citi ThankYou® Preferred Card for College Students

Citi ThankYou® Preferred Card for College Students

No action required, card remains the same

Bank of America® Cash Rewards Credit Card for Students

Bank of America® Cash Rewards Credit Card for Students

No action required, card remains the same

Bank of America® Travel Rewards Credit Card for Students

Bank of America® Travel Rewards Credit Card for Students

No action required, card remains the same

Wells Fargo Cash Back CollegeSM Card

Wells Fargo Cash Back CollegeSM Card

Automatic upgrade to the Wells Fargo Cash Back Visa® Card when you graduate and meet the credit requirements.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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College Students and Recent Grads

6 Best Reasons to Refinance Student Loan Debt in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Like the beginning of a new year, student loan refinancing can offer you a fresh start.

And this time, you could enjoy a lower interest rate or reduced monthly payment, as well as choosing which lender or servicer helps you reach the finish line.

These are among the six reasons to refinance your student loan debt in 2019.

1. Reduce your rate

After staggering four rate hikes across 2018, upping its benchmark by a full percentage point, the Federal Reserve is expected to impose increases of roughly half a percentage point during 2019.

Although it’s difficult to pinpoint the perfect time to refinance your student loans, this year could be the right time for you, as banks, credit unions and online lenders are still offering relatively low rates.

Don’t simply rely on lenders’ advertising, however. To qualify for the bottom of their best rate ranges, you’ll need a strong credit score and a healthy debt-to-income ratio. A steady, well-paying job helps, too.

You might treat 2019 as the year to strengthen your refinancing application, even if you decide it’s not the year you’ll be able to snag that super low rate.

A lower rate equals greater savings. Say you refinance $30,000 on a 10-year term and manage to cut your original average rate of 8% down to 5%. You’d save $5,494 over the next decade — no small chunk of change.

Check out our student loan refinance calculator to see what your own numbers look like.

2. Stretch your paycheck

Some borrowers see refinancing as a way of lowering their interest rate, but others see it as a pathway to reduce monthly payments.

A smaller monthly due could stretch your paycheck, which could be helpful if debt repayment isn’t your only financial goal for the year ahead.

By refinancing your federal loans and their 10-year standard repayment plan, you could switch to a longer term with a private lender. Most lenders offer you the ability to choose a term anywhere between five and 20 years.

If temporarily lowering your payments via refinancing is your top priority, shop around. You might be surprised by what you find. LendKey, for example, offers interest-only payments for up to four years.

As you seek a lower monthly payment in 2019, keep a couple of caveats in mind. By choosing a longer repayment term, for example, your loan repayment becomes progressively more expensive. That’s because interest will accrue and capitalize onto the principal loan amount.

Say you refinanced that $30,000 loan to a longer, 20-year term. Despite lowering your rate from 8% to 5%, you’d pay an additional $3,839 in interest over the life of your loan.

Also, don’t forget about the federal government’s income-driven repayment plans. With a plan like income-based repayment, you could tie your dues to a percentage of your discretionary income — and hold on to government-exclusive protections, such as access to loan forgiveness programs. It’s a preferable alternative to refinancing for many borrowers.

3. Snag some perks

If you’re considering refinancing federal loans, you might be worried about what you’d be giving up. The list includes access to loan forgiveness, plus the ability to switch repayment plans or receive mandatory forbearance.

Although private lenders won’t offer the same protections, their benefits are getting better and better all the time.

Consider some of the recent innovations being offered by top-rated lenders:

  • SoFi’s Unemployment Protection program lets you pause your loan for up to 12 months, and it includes career coaching support to find your next gig.
  • Earnest allows you to choose your payment due date, select from a much wider assortment of repayment terms than at most lenders, and skip one payment annually.
  • CommonBond has pioneered hybrid loans for student refinancing, offering a loan that blends fixed and variable rates.
  • Laurel Road is among the group of lenders that give a parent the chance to refinance federal PLUS Loans in their child’s name.

If an atypical loan feature makes refinancing right for you, survey the landscape in 2019 to see if any reputable lender offers the benefits you seek.

4. Simplify your repayment

If you’re holding federal loans, you might be cautiously optimistic about NextGen, the Department of Education’s plan to reorganize how student loan servicing works. If it fulfills expectations when it arrives sometime in 2019, NextGen will allow you to make your monthly payments in one place at one time.

“Cautiously optimistic” are the operative words here. NextGen is a massive undertaking, and government projects can sometimes move more slowly then we’d like, so you might not want to count on the new platform simplifying your repayment.

On the other hand, refinancing offers you that simplicity now. By replacing your federal loans (and private loans, if you have them), you’re not just receiving a new interest rate and repayment term. You’re also simultaneously consolidating (or grouping) them by replacing them with a single refinanced loan.

5. Choose your lender

When you first borrowed federal loans, you weren’t given the option to select your loan servicer.

Refinancing, however, allows you to choose your lender based on whatever criteria matter most to you. For example, you might be seeking a lender that services its own loans or offers a unique perk (see point No. 3 above).

Regardless of what you want in a new lender, remember that this year, you’re in charge. Shop around and hold potential banks, credit unions and online companies accountable for what you want out of refinancing. If they’re unable to meet your needs, move on to a competitor.

6. Gain financial independence

Student loan refinancing is more accessible in 2019 than it has been at any point previously.

In mid-2018, for instance, CommonBond announced it would accept refinancing candidates who are visa holders who have graduated from a U.S. university. Citizens Bank has been refinancing debt for college dropouts. Plus, more and more lenders are removing employment and minimum income from their eligibility requirements.

If you’ve found refinancing to be out of your reach, you might now be in luck. As a creditworthy applicant, you could thank the cosigner on your original loans by removing their name from your refinance application.

If not — maybe your credit score still needs work — take the first months of 2019 to strengthen your application. A cosigner could help you do just that. Plus, through refinancing, you could release that cosigner within a relatively short period. Splash Financial and LendKey are among lenders that offer cosigner release after just one year of prompt payments.

That would give you greater financial independence by 2020 — and put you on a path to becoming debt-free on your own.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Andrew Pentis
Andrew Pentis |

Andrew Pentis is a writer at MagnifyMoney. You can email Andrew here

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College Students and Recent Grads, Pay Down My Debt

Student Loan Forgiveness Programs for Doctors

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

As a medical professional, you might have taken on a mountain of debt on your journey to becoming a doctor. The average indebted doctor left medical school in 2016 owing more than $189,000 in student loans, according to the Association of American Medical Colleges.

Even if you’re on your way to a six-figure income, your residency income will likely be far less — in 2017, residents earned an average of just over $57,000. During that time, the interest alone on all your student loans could be equal to your entire disposable income after room and board.

Fortunately, there are student loan forgiveness programs for doctors and other medical professionals that could pay off part or even all of your loans. If you’re looking to cure yourself of medical school debt, turn to these programs for assistance.

National Health Service Corps (NHSC)

The National Health Service Corps can provide up to $50,000 to repay your health profession student loan in exchange for a two-year commitment to work at an NHSC site in a high-need, underserved area. After completing your initial service commitment, you can apply to extend your service and receive additional loan repayment assistance.

In order to qualify, you’ll need to work at least half-time in a designated Health Professional Shortage Area (HPSA). Along with earning loan forgiveness, you could put your medical degree to good use by caring for an underserved community.

Indian Health Services Loan Repayment Program

This federal program offers up to $40,000 in exchange for two years of service in an American Indian or Alaskan Native community. You can also renew your contract and receive additional benefits that could pay off your entire student loan balance.

National Institutes of Health (NIH) Loan Repayment Program

If you work in medical research, you could qualify for $35,000 per year from the NIH Loan Repayment Program. To do so, you’ll need to conduct research at a non-profit organization in an eligible field, such as health disparities, contraception and infertility or pediatric medicine.

Students to Service Program

If you’re still in medical school, you can apply for a major award through the Students to Service Program. This program provides up to $120,000 to medical students who commit to providing primary health care at an approved site for three years after graduating.

Public Service Loan Forgiveness Program (PSLF)

The PSLF program is intended to encourage individuals to enter and continue to work full-time in public service jobs. You could receive forgiveness of the remaining balance of your federal direct loans after making 120 qualifying payments while employed by certain public service employers.

Since you’ll likely have to work for 10 years before you get loan forgiveness, you’ll have to move your student loans off the standard 10-year plan and onto an income-driven repayment or extended repayment plan — otherwise you’ll have already paid off your balance by the time you qualify for forgiveness.

You should also keep up to date with any developments around the PSLF program. While it was signed into law in 2007, the program is not guaranteed to be around forever, and it’s recently drawn controversy over the uncertainty around getting approved.

Military loan repayment programs

If you’re serving as a medical provider in the Army, Navy or Air Force, you could qualify for assistance toward your student loans. Here are some of the programs available for military personnel.

Financial Assistance Program (FAP)

The Army, Air Force and Navy all offer the FAP, a program that grants loan repayment assistance and a living stipend to medical residents.

If you’re a medical resident in the Army or Air Force, you could get at least $45,000 per year of service, plus a monthly stipend of at least $2,000. And although the Navy grant can change from year to year, Navy medical residents could also qualify for significant assistance from the Navy FAP.

Active Duty Health Professions Loan Repayment Program

This program offers up to $40,000 per year in student loan repayment over a set number of years. You must be a physician in the Army, Navy, or Air Force to qualify.

U.S. Navy Health Professions Loan Repayment Program (HPLRP)

The Health Professions Loan Repayment Program (HPLRP) provides medical personnel in the Navy with aid for their education loans. If you meet the program’s criteria, you could receive repayment assistance of up to $40,000 per year, minus about 25% in federal taxes.

State Loan Repayment Assistance Programs (LRAPs)

Many states also run programs that grant student loan repayment assistance in exchange for working in a high-need or underserved area. A good place to check the medical loan repayment and forgiveness programs available in your area is through the AAMC database.

Here are just two examples of the many state-specific programs:

  • The Arizona Loan Repayment Program offers up to $65,000 in exchange for a two-year commitment from physicians.
  • The Kansas State Loan Repayment Program offers up to $25,000 per year of contract toward your outstanding education debt. After completion of the initial two-year service obligation, you may be able to extend your contract in one-year increments.

Check with your state to find out if it has an LRAP for doctors, nurses or other medical professionals. Depending on where you live and work, you could qualify for significant assistance toward your student loans.

Do the math before committing to a loan forgiveness program

As you take a look at each loan forgiveness program, remember to weigh salary considerations against any amount you’d receive in student loan assistance. Opting for a job with a $75,000 salary to earn $25,000 in loan forgiveness wouldn’t be as lucrative as going after a job with a $200,000 salary and no loan forgiveness, for instance.

Unless you’re driven to work in a high-need area or with an underserved population, you might not benefit from sacrificing a high salary for the sake of qualifying for loan forgiveness. Consider your career goals and your wants and needs in a job.

Refinancing student loans can also help

Whether or not you’re working toward student loan forgiveness, you might also consider refinancing as a strategy for managing your debt. Through refinancing, you could reduce your interest rates and save money on your loans beyond whatever forgiveness you can get from these programs.

Because of their steady incomes, doctors tend to be especially strong candidates for student loan refinancing. Along with lowering your rate, you could choose new terms and adjust your monthly payments.

But refinancing with a private lender also means you’ll lose access to federal programs and repayment plans, so make sure you’re comfortable with this sacrifice before making any changes to your debt. If you decide refinancing is right for you — or simply want to learn more about the process — check out the best lenders to refinance student loans here.

Rebecca Safier contributed to this article.

Our Top Picks for Refinancing Student Loans

You can learn more about what these lenders have to offer by checking out the best options to refinance student loans here.

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.90% - 7.95%


Fixed Rate*

2.47% - 7.17%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on SoFi’s secure website

EarnestA+

20


Years

3.89% - 7.89%


Fixed Rate

2.57% - 6.97%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Earnest’s secure website

CommonBondA+

20


Years

3.67% - 7.25%


Fixed Rate

2.61% - 7.35%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on CommonBond’s secure website

LendKeyA+

20


Years

5.23% - 8.97%


Fixed Rate

2.68% - 8.77%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
Learn more Secured

on LendKey’s secure website

Laurel Road BankA+

20


Years

3.50% - 7.02%


Fixed Rate

3.24% - 6.66%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Laurel Road Bank’s secure website

Citizens BankA+

20


Years

3.90% - 9.99%


Fixed Rate

3.01% - 9.75%


Variable Rate

$90k / $350k


Undergraduate /
Graduate
Learn more Secured

on Citizens Bank (RI)’s secure website

Discover Student LoansA+

20


Years

5.74% - 8.49%


Fixed Rate

4.99% - 7.99%


Variable Rate

$150k


Undergraduate /
Graduate
Learn more Secured

on Discover Bank’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Steven D. |

Steven D. is a writer at MagnifyMoney. You can email Steven at steven@magnifymoney.com

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