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How to Manage Your Law School Debt in 2018

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With average tuition and fees running around $38,000 a year, most law students take out student loans. And then there are books, fees, transportation and living expenses to consider. Even students who find high-paying summer associate positions may wind up with six-figure student loan debts to repay after graduation.

That’s a lot of debt, but it doesn’t need to be unmanageable. Attorneys can also find high-paying positions, and those looking to go into lower paying legal work may be eligible for a range of student loan forgiveness and repayment assistance programs.

Law school debt in the U.S.

The average student loan balance can vary greatly depending on the school you attend. U.S. News and World Report publishes a list of law schools with the average indebtedness (among those who took out law school loans). At the high end in 2017, graduates from the Thomas Jefferson School of Law in San Diego had an average of $198,962 in student loans. The least was for graduates from Brigham Young University (Clark) in Provo, Utah who had $53,237 on average.

How much debt do law students have?

Among all law schools, the average student loan debt is near or above the six-figure mark according to Law School Transparency (LST), a nonprofit that analyzes and shares data about the legal profession. It shared the average amount of federal student loans borrowed by 2017 law school graduates based on their type of school:

  • Nonprofit private law schools: 74.9% of graduates had federal loans. On average, they borrowed $130,224.
  • Public law schools: 76.2% of graduates had federal loans. On average, they borrowed $92,997.
  • For-profit private laws schools: 85.8% of graduates had federal loans. On average, they borrowed $122,296.

You also might wind up graduating with more than you borrowed as interest can accumulate if you defer payments while you’re at school. Students may have also taken out private student loans in addition to federal loans, and graduates could still be paying off undergraduates loans.

Starting salaries for a lawyer

According to a 2018 LST report, the median entry-level salary for the class of 2016 was $66,499. However, as with the cost of school, your earnings can vary greatly depending on where you went to school and whether you work in the private or public sector.

The National Association for Law Placement, Inc. (NALP), an association of legal career professionals, found that the median private-sector starting salary for first-year associates was $135,000 in 2017. On the high end, top candidates may be able to start at $180,000 a year.

Public-sector salaries paint a different picture. NALP reported the median entry-level salary in 2018 was just $48,000 for attorneys who work in civil legal services and $58,300 for public defenders. While pay increases with experience, even public defenders with 11 to 15 years of experience make $96,400 on average.

Is law school worth the cost?

A law degree can certainly pay off and may provide a secure and stable job in the future. The U.S. Bureau of Labor Statistics projects employment of lawyers will grow 8% by 2026, slightly higher than the average 7% projected growth for all professions.

A law degree isn’t a guarantee of a job, though. The American Bar Association (ABA) found that among 2016 and 2017 law school graduates, 7.9% are unemployed and seeking work. Others are employed but only working part time, or have short-term contracts with an employer or temp agency.

Whether a law degree is worth the cost isn’t simply a question of economics. Although you can use a JD to work in a wide variety of industries and professions, the debt you take out could push you toward higher-paying work even if you’re not particularly excited about it. In the end, statistics can help you determine possibilities, but determining if a law degree is worth it is a highly subjective question.

Law school forgiveness and repayment programs

While attending law school can be expensive, attorneys may also be eligible for federal student loan forgiveness programs and school, state, employer and federal student loan repayment programs (SLRPs) or loan repayment assistance programs (LRAPs). You may be able to significantly decrease how much money you repay by using one or more of these programs.

John R. Justice Student Loan Repayment Program

The John R. Justice (JRJ) student loan repayment program offers aid to eligible full-time state and federal public defenders and state prosecutors who agree to remain a prosecutor or public defender for at least three years.

If you qualify, you could receive up to $10,000 per calendar year, and up to $60,000 total. The money will be sent directly to your loan servicer and can be used to pay for federal Federal Family Education Loan (FFEL) and direct loans that are in good standing. The money may be considered income for tax purposes.

You must register for the Office of Justice Programs Grants Management System and submit an application to be eligible. Availability for grants can vary depending on state allocations, and the 2018 application period ended on May 21, 2018.

Department of Justice Attorney Student Loan Repayment Program

The Department of Justice Attorney Student Loan Repayment Program (ASLRP) is for Department of Justice (DOJ) employees who agree to at least a three-year service obligation. The program may be competitive as it’s intended to help the DOJ attract and retain high-quality attorneys.

You must have at least $10,000 in student loans to be eligible for the ASLRP. If you get it, the DOJ could match up to $6,000 in student loan payments that you make each year, with a cumulative maximum benefit of $60,000. Only federal student loans are eligible, and the payments you receive are considered income for tax purposes.

Check the key dates page to see when application periods open and close, and a timeline of the important ASLRP-related events throughout the year.

Herbert S. Garten Loan Repayment Assistance Program

The Legal Services Corporation (LSC) offers the Herbert S. Garten LRAP to eligible attorneys who are working at an LSC-funded legal services program. About 80 eligible attorneys are chosen each year through a lottery system, and if you’re chosen, you’ll be issued forgivable loans for up to three years.

The LSC will issue you an LRAP loan to repay your student loans, and if you fulfill a year of service the debt will be forgiven. You can choose to continue in the program for a second and third year if you want.

You must have at least $75,000 in outstanding law school loans and be below the annual income and net worth threshold ($62,500 and $35,000, respectively, for continental U.S. employees). The LRAP awards up to $5,600 a year, which you’ll receive in two disbursements and can use to repay federal and private law school and bar loans.

Learn more about the Herbert S. Garten LRAP on the LSC website.

Judge Advocate General’s Corps Student Loan Repayment Program

The U.S. Air Force’s JA-SLRP program offers up to $65,000 in student loan repayment assistance if you qualify and agree to at least a four-year active-duty service commitment. The payments will be made over a three-year period which begins at the end of your first year of service.

Federal and private student loans that you took out for undergraduate, graduate and law school are eligible. The payments will be sent directly to your lender, and federal income taxes will be withheld from the payments to the lender.

Public Service Loan Forgiveness

The federal Public Service Loan Forgiveness Program (PSLF) will forgive remaining student loan debt if you make 120 qualifying payments (10 years’ worth) while working full time at an eligible employer. The PSLF only applies to direct federal student loans, although FFEL loans may be eligible if you first consolidate them into a direct consolidation Loan.

Qualifying employers generally include local, state and federal governments, as well as nonprofits. If you’re using one of the student loan repayment assistance programs, which may have similar employment requirements, you could also be making qualifying payments toward PSLF.

Federal student loan debt that’s forgiven under PSLF isn’t taxable.

Income-driven repayment plans forgiveness

If you have federal student loans, you may be able to switch your repayment plan to one of the income-driven plans. With these repayment plans, your monthly payment amount can vary based on your discretionary income, which generally depends on the difference between your income and the poverty line based on where you live and your family size.

With four of the plans, the remainder of your student loan balance will be forgiven after you make qualifying payments for 20 or 25 years (depending on the plan and if the loans were for undergraduate or graduate school). While the forgiven amount is taxable income, you may be able to get a lot of debt forgiven if you’ve been making relatively small monthly payments.

Some of the small-print differences between the plans can make a big difference in how much you pay overall. For example, the revised pay as you earn (REPAYE) plan has an interest subsidy if your monthly payment doesn’t at least cover how much interest accrues each month. Other plans also offer a subsidy, but only during your first three years of loan repayment.

You can use the Department of Education Repayment Estimator tool to see how much your monthly payments could be, and how much debt could be forgiven, with different repayment plans. However, if you’re dealing with a lot of student loan debt and are interested in forgiveness via an income-driven plan, you may want to contact a student loan consultant or attorney who is familiar with the differences between the programs and can advise you of your best option.

School-based programs

Many law schools have funds set aside to help graduates who go into low-paying fields, which often means a public interest or government job. In some cases, you may also qualify if you participate in a fellowship or public service initiative. Equal Justice Works has a directory of more than 100 law schools with such programs.

State-based programs

Your state may also have student loan repayment assistance programs, or you may want to consider moving to a state that does if you could qualify for help with your loans. According to the ABA, there are 24 states offering 26 LRAPs for civil legal aid attorneys or other public interest attorneys. You can find more information on the ABA and Equal Justice Works state LRAP pages.

Employer-based programs

For-profit employers may offer student loan repayment programs or assistance as part of their benefits package for employees. Availability, eligibility and aid amounts can depend on the company and whether you’re a part-time or full-time employee.

4 strategies to pay back your law school debt

There’s no secret trick to quickly getting rid of your student loans, but having a strategy and following through on that strategy could save you money, keep you motivated and help you reach your debt-free goal sooner.

1. Pay as little as you can while working toward forgiveness or assistance

If you qualify for one of the student loan forgiveness or assistance programs, or plan to use one in the future, you may want to pay as little as possible in the meantime. This could mean switching repayment plans or only making the minimum loan payments.

Compared with making extra payments, this method could increase how much interest accrues on your loans. However, if your goal is to repay as little as possible overall, leaving more debt to be forgiven or paid off by someone else could be a sound approach.

2. Use the snowball or avalanche method

You may have multiple student loans from different terms at law school, or even from undergraduate school and law school. If you can afford to pay more than your minimum payments, you could take either the snowball or avalanche method.

The snowball method involves paying off the loan with the lowest principal balance first. Once you pay off one loan, you can put more money toward the next lowest balance loan. Continue the process and you can build momentum as you repay one loan after another.

With the avalanche method, you apply any extra loan payments toward the loan that has the highest interest rate. The avalanche method can help you save money overall, although if your high-interest loans also have high balances, it could take some time before you get to completely wipe out one of your loans.

3. Apply your extra payments to the loan’s principal balance

Whether you’re taking a dedicated snowball or avalanche approach, or just occasionally making extra payments on your loans when you can afford to, you’ll want to review how your loan servicers apply your extra payments. Without instruction, your servicer may apply your extra payment to a future month’s payment and spread it out among all your loans.

You might be able to target your payment to a specific loan’s principal balance if you make a payment online. Or, you could send your servicer instructions on how you want to apply all your extra payments in the future — the Consumer Financial Protection Bureau has a sample letter you can use as a template.

4. Refinancing to a lower rate

If you’ve established a good credit history and found employment (or have income from another source), you may be able to save money by refinancing your student loans. When you refinance your student loans, you’ll take out a new loan and the lender will pay off your current student loans.

Your new loan’s interest rate depends on your creditworthiness, and if it’s lower than your current loans’ interest rates you could save money if you continue making the same monthly payments.

You can pick and choose which loans to refinance, so even if the new loans rate isn’t lower than all your current loans’ rates, you may still be able to benefit from refinancing. However, your new loan will be a private student loan and won’t be eligible for federal student loan programs, including the forgiveness programs. Some of the LRAPs can also only be used to repay federal student loans.

Read more about refinancing and consider all the pros and cons because once you refinance you won’t be able to turn your student loans back into federal student loans. If you decide to refinance some or all of your loans, you can compare lenders to find the best rate and terms.

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.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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Couponing 101: How to Get Started So You Can Eliminate Debt

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.

Think couponing is a waste of time? Think again. Taking a moment to clip a coupon or ask for a deal can go a long way toward getting out of debt.

The Federal Reserve’s most recent Survey of Consumer Finances shows that 77% of Americans have some form of debt, with credit card debt being the most common. And, according to financial attorney Leslie H. Tayne, founder of Tayne Law Group P.C., there is no downward trend in sight. With the cost of goods on the rise, and income levels not keeping pace, the Melville, N.Y., lawyer says that people become trapped in the paycheck to paycheck cycle. Their debt severely limits their opportunities — both financially and in life.

Lauren Greutman, Syracuse, N.Y.-based consumer savings expert and founder of That Lady Media, once knew that struggle. With $40,000 in debt and an underwater mortgage, she turned to couponing to slash her grocery bill from $2,000 to $200 per month, allocating those savings to her debt. She coupled her couponing strategies with some side hustles and eliminated that burden in three years.

“By couponing, you can give yourself a $5,000-a-year raise that you can use to pay down debt or put towards your other financial goals,” Greutman said.

Here’s how to get your start.

How to start couponing

Greutman said that it’s important for you to first learn when to use a coupon and when not to. For example, she pointed out, buying a generic good may still be cheaper than buying a name brand good with a coupon. She adds that you should hold on to coupons until the items are on sale to increase your savings. Consumer.gov takes it a step further and advises you to avoid buying things just because you have a coupon. It’s not a good deal if you don’t want or need the item.

Next, Greutman encourages you to learn the couponing policies of your favorite stores. Do they let you double up on coupons? At one point, she was getting $500 worth of groceries for $40 by taking advantage of triple coupon sales that her preferred grocer ran once per month.

Greutman’s go-to strategy to get coupons? She emails her favorite manufacturers directly, who, nine times out of 10, send her free products or a high-value coupon. Tayne concurs and often asks companies what deals they have running. If it’s quick and simple, she “loves the idea of trying to pay less.” Consumer.gov says that coupons can also be found in newspapers, magazines, on manufacturer’s websites, or on websites specifically dedicated to coupons.

Couponing strategies from the pros

Greutman offers the following pro couponing tips:

  • Stack savings by pairing a store coupon with a manufacturer’s coupon to purchase a sale item that has a mail-in rebate.
  • Learn the sales cycles of your favorite brands (competitors will never have their goods on sale at the same time).
  • Meal plan around deals to feed your family for super cheap.

Tayne also likes the planning aspect of couponing. She said that the process helps you stick to a budget because you’re thinking about your purchases before you get to the store. This can prevent overspending and taking on additional debt. The Consumer Financial Protection Bureau (CFPB) encourages you to make frugal shopping a family endeavor and teach your children about the value of using coupons early on.

On her website, Greutman urges you to realize that couponing is a skill that takes time to hone. She encourages you to not give up just because you’re not scoring the mega deals right out of the gate. With patience, couponing, and meal planning, the whole frugal shopping experience can eventually become automatic to you.

A word of caution on couponing

On couponing, Greutman said that “short term sacrifice will give you long term gain.” However, both she and Tayne agree that extreme couponing may not be cost effective due to the time commitment. If the process is quick and simple, it absolutely makes sense to try and pay less, Tayne said. But, she cautioned, “don’t let [couponing] take over your life and impact your ability to earn money, which may be more valuable than couponing.”

Once Greutman mastered couponing, she started her business to help other women get out of debt using the tools that she learned. By doing this, she increased her household’s income, further hastening the process of becoming debt free. The moral? Your best way to get out of debt appears to be a two-pronged approach of saving money (through coupons or other means) and earning more of it.

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.

Laura Gariepy |

Laura Gariepy is a writer at MagnifyMoney. You can email Laura here

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7 Best Options to Refinance Student Loans –Get Your Lowest Rate

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Updated: December 2, 2018

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. We recommend you start here and check rates from the top 7 national lenders offering the best student loan refinance products. All of these lenders (except Discover) also allow you to check your rate without impacting your score (using a soft credit pull), and offer the best rates of 2018:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.90% - 8.02%


Fixed Rate*

2.56% - 7.30%


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

2.47% - 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

2.70% - 7.44%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on CommonBond’s secure website

LendKeyA+

20


Years

5.10% - 8.93%


Fixed Rate

2.68% - 8.96%


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

3.23% - 6.65%


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

3.00% - 9.74%


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

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.

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.
LenderMinimum credit scoreEligible degreesEligible loansAnnual income
requirements
Employment
requirement
 
SoFi

Good or Excellent
score needed

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on SoFi’s secure website

Earnest

660

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on Earnest’s secure website

CommonBond

660

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on CommonBond’s secure website

LendKey

680

Undergraduate
& Graduate

Private & Federal

$24K

Yes

Learn more Secured

on LendKey’s secure website

Laurel Road Bank

Not published

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on Laurel Road Bank’s secure website

Citizens Bank

680

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

$24K

Yes

Learn more Secured

on Citizens Bank (RI)’s secure website

Discover Student Loans

Not published

Undergraduate
& Graduate

Private & Federal

None

Yes

Learn more Secured

on Discover Bank’s secure website

Diving Deeper: The best 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 7 lenders offering the lowest interest rates:

1. SoFi

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on SoFi’s secure website

Read Full Review

SoFi : Variable rates from 2.56% and Fixed Rates from 3.90% (with AutoPay)*

SoFi was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. The only requirement is that you graduated from a Title IV school. In order to qualify, you need to have a degree, a good job and good income.

Pros Pros

  • Borrowers can refinance private, federal and Parent PLUS loans together: Through SoFi, borrowers have the ability to combine all of their student loans (private, federal and Parent PLUS) when refinancing. Along with the ability to refinance Parent PLUS loans, parents can also transfer the PLUS loans into their child’s name.
  • Access to career coaches: SoFi offers their borrowers access to their Career Advisory Group who work one-on-one with borrowers to help plan their career paths and futures.
  • Unemployment protection: SoFi offers some help if you lose your job. During the period of unemployment they will pause your payments (for up to 12 months) and work with you to find a new job. However, just remember that any unemployment protection offered by SoFi would be weaker than the income-driven repayment options of federal loans.

Cons Cons

  • No cosigner release: While they offer you the opportunity to refinance with a cosigner, it is important to know that SoFi does not offer borrowers the opportunity to release a cosigner later on down the road.
  • You lose certain protections if you refinance a federal loan: This con is not unique to SoFi (and you will find it with all other private lenders). Federal loans come with certain protections, including robust income-driven payment protection options. You will forfeit those protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

SoFi is really the original student loan refinance company, and is now certainly the largest. SoFi has consistently offered low interest rates and has received good reviews for service. In addition, SoFi invests heavily in building a “community” – which means you can start to get other benefits once you are a SoFi member.

SoFi has taken a radical new approach when it comes to the online finance industry, not only with student loans but in the personal loan, wealth management and mortgage markets as well. With their career development programs and networking events, SoFi shows that they have a lot to offer, not only in the lending space but in other aspects of their customers lives as well.

2. Earnest

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on Earnest’s secure website

Read Full Review

Earnest : Variable Rates from 2.47% and Fixed Rates from 3.89% (with AutoPay)

Earnest focuses on lending to borrowers who show promise of being financially responsible borrowers. Because of this, they offer merit-based loans versus credit-based ones. 

Pros Pros

  • Flexible repayment options: Earnest offers some of the most flexible options when it comes to repayment. They allow you to choose any term length between 5-20 years. 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.
  • Ability to switch between variable and fixed rates: With Earnest, 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.
  • Loans serviced in-house: Earnest is one of just a few lenders that provides in-house loan servicing versus using a third-party servicer.

Cons Cons

  • Cannot apply with a cosigner: Unlike many of the other lenders, Earnest does not allow borrowers to apply for student loan refinancing with a cosigner.
  • No option to transfer Parent PLUS loans to Child: If you are a parent that is looking to refinance your Parent PLUS loan into your child’s name, it is important to note that this cannot be done through refinancing with Earnest.
  • You lose certain protections if you refinance a federal loan: When refinancing with any private lender, you will give up certain protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

Earnest, who was recently acquired by Navient, is making a name for themselves within the student refinancing space. With their flexible repayment options and low rates, they are definitely an option worth exploring.

3. CommonBond

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on CommonBond’s secure website

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CommonBond : Variable Rates from 2.70% and Fixed Rates from 3.67% (with AutoPay)

CommonBond 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).

Pros Pros

  • Hybrid loan option: CommonBond offers a unique “Hybrid” rate option in which rates are fixed for five years and then become variable for five years. This option can be a good choice for borrowers who intend to make extra payments and plan on paying off their student loans within the first five years. If you can a better interest rate on the Hybrid loan than the Fixed-rate option, you may end up paying less over the life of the loan.
  • Social promise: 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.
  • “CommonBridge” unemployment protection program: CommonBond is here to help if you lose your job. Similar to SoFi, they will pause your payments and assist you in finding a new job.

Cons Cons

  • Does not offer refinancing in the following states: Idaho, Louisiana, Mississippi, Nevada, South Dakota and Vermont.
  • You lose certain protections if you refinance a federal loan: When refinancing with any private lender, you will give up certain protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

CommonBond not only offers low rates but is also making a social impact along the way. Consider checking out everything that CommonBond has to offer in term of student loan refinancing.

4. LendKey

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on LendKey’s secure website

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LendKey : Variable Rates from 2.68% and Fixed Rates from 5.10% (with AutoPay)

LendKey works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. 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.

Pros Pros

  • Opportunity to work with local banks and credit unions: LendKey is a platform of community banks and credit unions, which are known for providing a more personalized customer experience and competitive interest rates.
  • Offers interest-only payment repayment: Many of the lenders on LendKey offer the option to make interest-only payments for the first four years of repayment.

Cons Cons

  • Rates can vary depending on where you live: The rate that is advertised on LendKey is the lowest possible rate among all of its lenders, and some of these lenders are only available to residents of specific areas. So even if you have an excellent credit report, there is still a possibility that you will not receive the lowest rate, depending on geographic location.
  • No Parent PLUS refinancing available: Unlike several of the other student loan refinancing companies, borrowers do not have the ability to refinance Parent PLUS loans with LendKey.
  • You lose certain protections if you refinance a federal loan: As when refinancing federal loans with any private lender, you will give up your federal protections if you refinance your federal loan to a private one.

Bottom line

Bottom line

LendKey is a good option to keep in mind if you are looking for an alternative to big bank lending. If you prefer working with a credit union or community bank, LendKey may be the route to uncovering your best offer.

5. Laurel Road Bank

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Laurel Road Bank : Variable Rates from 3.23% and Fixed Rates from 3.50% (with AutoPay)

Laurel Road Bank offers a highly competitive product when it comes to student loan refinancing.

Pros Pros

  • Forgiveness in the case of death or disability: They may forgive the total student loan amount owed if the borrower dies before paying off their debt. In the case that the borrower suffers a permanent disability that results in a significant reduction to their income,Laurel Road Bank may forgive some, if not all of the amount owed.
  • Offers good perks for Residents and Fellows: Laurel Road Bank allows medical and dental students to pay only $100 per month throughout their residency or fellowship and up to six months after training. It is important for borrowers to keep in mind that the interest that accrues during this time will be added on to the total loan balance.

Cons Cons

  • Higher late fees: While many lenders charge late fees,Laurel Road Bank’s late fee can be slightly steeper than most at 5% or $28 (whichever is less) for a payment that is over 15 days late.
  • You lose certain protections if you refinance a federal loan: While not specific to Laurel Road Bank, it is important to keep in mind that you will give up certain protections when refinancing a federal loan with any private lender.

Bottom line

Bottom line

As a lender,Laurel Road Bank prides itself on offering personalized service while leveraging technology to make the student loan refinancing process a quick and simple one. Consider checking out their low-rate student loan refinancing product, which is offered in all 50 states.

6. Citizens Bank

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Citizens Bank (RI) : Variable Rates from 3.00% and Fixed Rates from 3.90% (with AutoPay)

Citizens Bank offers student loan refinancing for both private and federal loans through its Education Refinance Loan.

Pros Pros

No degree is required to refinance: If you are a borrower who did not graduate, with Citizens Bank, you are still eligible to refinance the loans that you accumulated over the period you did attend. In order to do so, borrowers much no longer be enrolled in school.

Loyalty discount: Citizens Bank offers a 0.25% discount if you already have an account with Citizens.

Cons Cons

Cannot transfer Parent PLUS loans to Child: If you are looking to refinance your Parent PLUS loan into your child’s name, this cannot be done through Citizens Bank.

You lose certain protections if you refinance a federal loan: Any time that you refinance a federal loan to a private loan, you will give up the protections, forgiveness programs and repayment plans that come with the federal loan.

Bottom line

Bottom line

The Education Refinance Loan offered by Citizens Bank is a good one to consider, especially if you are looking to stick with a traditional banking option. Consider looking into the competitive rates that Citizens Bank has to offer.

7. Discover

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Discover Student Loans : Variable Rates from 4.99% and Fixed Rates from 5.74% (with AutoPay)

Discover, with an array of competitive financial products, offers student loan refinancing for both private and federal loans through their private consolidation loan product.

Pros Pros

  • In-house loan servicing: When refinancing with Discover, they service their loans in-house versus using a third-party servicer.
  • Offer a variety of deferment options: Discover offers four different deferment options for borrowers. If you decide to go back to school, you may be eligible for in-school deferment as long as you are enrolled for at least half-time. In addition to in-school deferment, Discover offers deferment to borrowers on active military duty (up to 3 years), in eligible public service careers (up to 3 years) and those in a health professions residency program (up to 5 years).

Cons Cons

  • Performs a hard credit pull: While most lenders do a soft credit check, Discover does perform a hard pull on your credit.
  • No Parent PLUS refinancing available: Discover does not offer borrowers the option of refinancing their Parent PLUS loans.
  • You lose certain protections if you refinance a federal loan: Be careful when deciding to refinance your federal student loans because when doing so, you will lose access federal protections, forgiveness programs and repayment plans.

Bottom line

Bottom line

If you’re looking for a well-established bank to refinance your student loans, Discover may be the way to go. Just keep in mind that if you apply for a student loan refinance with Discover, they will do a hard pull on your credit.

 

Additional Student Loan Refinance Companies

In addition to the Top 7, 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:

Traditional Banks

  • First Republic Eagle Gold. The interest rates are great, but this option is not for everyone. Fixed rates range from 1.95% – 4.45% APR. You need to visit a branch and open a checking account (which has a $3,500 minimum balance to avoid fees). Branches are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City. Loans must be $60,000 – $300,000. First Republic wants to recruit their future high net worth clients with this product.
  • 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 4.74% and fixed rates starting at 5.24%. You would likely get much lower interest rates from some of the new Silicon Valley lenders or the credit unions.

Credit Unions

  • Alliant Credit Union: Anyone can join this credit union. Interest rates start as low as 3.75% APR. You can borrow up to $100,000 for up to 25 years.
  • Eastman Credit Union: Credit union membership is restricted (see eligibility here). Fixed rates start at 6.50% and go up to 8% APR.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve (or have served), the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 4.07% and fixed rates start at 4.70%.
  • Thrivent: Partnered with Thrivent Federal Credit Union, Thrivent Student Loan Resources offers variable rates starting at 4.13% APR and fixed rates starting at 3.99% APR. It is important to note that in order to qualify for refinancing through Thrivent, you must be a member of the Thrivent Federal Credit Union. If not already a member, borrowers can apply for membership during the student refinance application process.
  • UW Credit Union: This credit union has limited membership (you can find out who can join here, but you had better be in Wisconsin). You can borrow from $5,000 to $150,000 and rates start as low as 4.29% (variable) and 3.99% APR (fixed).

Online Lending Institutions

  • Education Loan Finance:This is a student loan refinancing option that is offered through SouthEast Bank. They have competitive rates with variable rates ranging from 2.80% – 6.01% APR and fixed rates ranging from 3.39% – 6.69% APR.
  • EdVest: This company is the non-profit student loan program of the state of New Hampshire which has become available more broadly. Rates are very competitive, ranging from 4.53% – 7.20% (fixed) and 4.58% – 7.25% APR (variable).
  • IHelp : This service will find a community bank. Unfortunately, these community banks don’t have the best interest rates. Fixed rates range from 4.00% to 8.00% APR (for loans up to 15 years). If you want to get a loan from a community bank or credit union, we recommend trying LendKey instead.
  • Purefy: Purefy lenders offer variable rates ranging from 2.82%-8.42% APR and fixed interest rates ranging from 3.75% – 9.66% APR. You can borrow up to $150,000 for up to 15 years. Just answer a few questions on their site, and you can get an indication of the rate.
  • RISLA: Just like New Hampshire, the state of Rhode Island wants to help you save. You can get fixed rates starting as low as 3.49%. And you do not need to have lived or studied in Rhode Island to benefit.

Is it worth it to refinance student loans?

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 student loans, 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.

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 refinancing, 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 your student loans 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.

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.

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.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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