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Read this article if you’re considering refinancing your student loans and aren’t sure which company to choose.
Estimated read time ~ 15 minutes.
Student loan refinancing, it’s something to consider if you’re looking to repay your loans quickly while minimizing interest. But there are so many questions to be answered. So I asked the questions for you and came up with my top four re-fi companies.
If you want the complete list sign-up here and I will email you the Refinancing Master List as soon as it’s ready. The Master List gives you the details for eleven of the most popular companies so you can find the best refinancing company for you. Fair warning this is an e-mail opt-in. I need your email address so I can get you the Master List when it’s finished and I won’t spam you to death or push for you to buy anything. I think if you’re careful enough to look at all the available options then we’re on the same wavelength and we should keep in touch!
How did I choose the top four refinancing companies from the eleven I contacted?
First I took into account their response time and quality of response to my questions. This is a direct marker of customer service. If you want crappy customer service you can stay with your current loan servicer and get the runaround all day long. A refinancing company should have excellent customer service. If they don’t, there’s always another company offering a good rate with better service.
Next, I looked at the benefits offered to borrowers including whether or not loan amounts were forgiven if borrowers died. Loan forgiveness upon death is important if you don’t have enough life insurance to cover your end of life expenses and your student loan debt. Federal loans carry significant benefits for borrowers so it’s important to know what you’re losing if you refinance. With the best companies you don’t lose much.
The last thing I considered was payment flexibility. I wanted to know what a borrower could expect if their income situation changed and they needed to alter their monthly payment. Federal loans offer incredible flexibility in monthly payments and the best refinancing companies can offer similar flexibility.
What questions did I ask of all the refinancing companies and how did they do?
I asked each company the exact same set of twelve questions. Below you’ll find their paraphrased responses and my summary of the three most important considerations, customer service, borrower benefits, and payment flexibility.
Will your company sell my loan to another company?
Laurel Road uses MOHELA as their loan servicer, however the loan is still owned by DRB.
How does your company protect my financial information and identity?
Laurel Road maintains physical, electronic and procedural safeguards that comply with federal standards to protect customer information, and continually evaluate new technology to improve those safeguards.
What borrower benefits does your company offer?
A 0.25% interest reduction is offered for automatic payments.
What happens to my loan if I die?
Laurel Road will forgive all of the amounts owed under the loan if the borrower dies, and some or all of the amounts owed under the loan if the borrower demonstrates to Laurel Road’s satisfaction a significant unanticipated permanent reduction in the borrower’s income due to permanent disability. Laurel Road began offering this forgiveness benefit in the spring of 2015 and only loans originated after that point are eligible for it. If you are a current Laurel Road borrower and are not sure if you are eligible for this benefit, please refer to your promissory note or contact Laurel Road.
Are there any application fees or fees for early repayment?
There are no application fees and no penalties for pre-payment.
How are extra payments allocated? I.e. are they allocated to principal only or to principal and interest?
Payments are allocated first to any fees, then interest, then to principal.
How flexible is your company with payment adjustments? What happens if I need to adjust my monthly payment?
Payments are pre-determined on borrowers final documents and are not adjustable.
If market interest rates change or my income increases am I able to re-finance through your company again for a better rate? If so what are the requirements and how does that work? Is there a fee for re-refinancing?
There is no fee for refinancing, and borrowers can refinance a Laurel Road refinanced student loan at any time. The requirements for refinancing a current Laurel Road loan are the same as all applications. Any documents that are not expired or time sensitive can be used for the new application.
Repayable’s play-by-play.
Laurel Road (formerly DRB) has been offering student loan refinancing since 2006. The customer service at Laurel Road responded within the hour to my email (55 min). Both the speed of response and quality of response were excellent. Their customer service clearly answered 11/12 questions the first time with no additional follow-up needed.
Laurel Road forgives your loan amount in the event of borrower death and loan amounts can be forgiven in the event of permanent disability. This is nearly identical to the benefit offered to federal loan borrowers.
When it comes to payment flexibility Laurel Road functions more like a traditional bank loan. Borrowers monthly payments are set out in the loan terms and aren’t adjustable. If you’re in a stable job and confident in your ability to maintain your payments at or above the minimum monthly minimum payment this is not a significant drawback.
Repayable’s overall assessment.
Laurel Road is a good option for someone looking for company that has been established for awhile and should be in the running for your consideration unless you need maximum payment flexibility.
Will your company sell my loan to another company?
Loans would only be transferred if your loan were to default and had to be send to a collection agency or lawyer.
How does your company protect my financial information and identity?
Information is not shared with any outside company.
What borrower benefits does your company offer?
A 0.25% interest reduction is offered for automatic payments.
What happens to my loan if I die?
There is death and permanent disability benefit on a refinanced loan.
Are there any application fees or fees for early repayment?
There are no application fees and no penalties for pre-payment.
How are extra payments allocated? I.e. are they allocated to principal only or to principal and interest?
Any amount you pay more than the minimum monthly payment goes to principal and pays the balance sooner.
How flexible is your company with payment adjustments? What happens if I need to adjust my monthly payment?
RISLA has an option for income-based repayment if your income (and that of your cosigner if you have one) drops significantly in the future.
If market interest rates change or my income increases am I able to re-finance through your company again for a better rate? If so what are the requirements and how does that work? Is there a fee for re-refinancing?
You can re-finance a refinanced loan for a better rate. The application is the same as the previous loan and there is not a fee.
Repayable’s play-by-play.
RISLA is a non-profit that’s been offering student loan funding (in the form of student loans or re-financed loans) since 1981. The customer service at RISLA was the fastest with a response time of 20 minutes (woah!). While the speed of response is excellent the quality of response is quite good too. Their customer service clearly answered 10/12 questions the first time with no additional follow-up needed.
RISLA forgives your loan amount in the event of borrower death and loan amounts can be forgiven in the event of permanent disability. This is nearly identical to the benefit offered to federal loan borrowers.
When it comes to payment flexibility RISLA leaves a little to be desired compared to the top two companies. If you’re in a stable job and confident in your ability to maintain your payments at or above the minimum monthly minimum payment this is not a significant drawback. However, RISLA does offer the option of income-based payments if your income significantly changes so there is some flexibility for you.
Repayable’s overall assessment.
RISLA is a good option for someone looking for company that has been established for awhile and should be in the running for your consideration unless you need maximum payment flexibility.
Will your company sell my loan to another company?
Loans refinanced through SoFi are labeled through SoFi.
How does your company protect my financial information and identity?
Everything done online is secure and protected.
What borrower benefits does your company offer?
SoFi members have access to career coaching, unemployment protection, member events, and an auto-pay discount of 0.25% if signed up for automatic payments.
What happens to my loan if I die?
If you die your power of attorney needs to upload a death certificate and the loan is forgiven.
Are there any application fees or fees for early repayment?
There are no application or origination fees, and no prepayment penalties.
How are extra payments allocated? I.e. are they allocated to principal only or to principal and interest?
Extra payments are applied to accrued interest first and then principal.
How flexible is your company with payment adjustments? What happens if I need to adjust my monthly payment?
If you experience unexpected unemployment SoFi offers a pause in monthly loan payments.
If market interest rates change or my income increases am I able to re-finance through your company again for a better rate? If so what are the requirements and how does that work? Is there a fee for re-refinancing?
You can re-finance your loan as many times as you would like to. You will need to fill out another application and there is no fee.
Repayable’s play-by-play.
SoFi is a refinancing company started by four Stanford graduates in 2011. The customer service at SoFi was the slowest to reply with a response time of around 24 hours. Unfortunately the customer service was also not the best quality. They answered 7/12 questions the first time and two of those answers needed additional follow-up on my part to clarify.
SoFi forgives your loan amount in the event of borrower death after a borrowers power of attorney uploads a death certificate. That means borrowers don’t need to carry enough life insurance to repay their outstanding loan balance.
SoFi has many options for payment flexibility. SoFi can pause payments if a borrower experiences unemployment. SoFi also offers up to six months of loan deferment for entrepreneurs. The entrepreneurial program is unique to SoFi. At the time of refinancing SoFi also offers multiple term and monthly payment options.
Repayable’s overall assessment.
SoFi is a good choice for any entrepreneur looking for a refinancing company and for anyone looking for a little payment flexibility. SoFi offers slightly more repayment flexibility than RISLA gaining them the number two spot. However, SoFi’s customer service took longer to respond and provided lower quality responses than the other top companies.
Will your company sell my loan to another company?
Earnest will service your loan for the life of the loan.
How does your company protect my financial information and identity?
Earnest has extensive security and privacy systems in place. You can review the details of this system here.
What borrower benefits does your company offer?
Borrower benefits include the ability to tailor your exact minimum monthly payment, increase payment to pay off loan faster, save on interest with optional bi-weekly payments, make extra or early payments without fees, skip a payment and make it up later, consolidate your private and federal loans, forbearance in certain circumstances (see more info here).
What happens to my loan if I die?
Earnest will forgive your loans fully.
Are there any application fees or fees for early repayment?
Earnest charges no fees of any kind.
How are extra payments allocated? I.e. are they allocated to principal only or to principal and interest?
In accordance with state law, all payments (including early and extra payments) are processed first to any interest that has accrued since the last payment. Earnest calculates interest at a simple daily rate. After the payment has been applied to the interest accrued, the remaining balance of the payment goes toward the principal balance of your loan.
How flexible is your company with payment adjustments? What happens if I need to adjust my monthly payment?
In case of financial hardship due to involuntary loss of employment, Earnest will work with you and provide either reduced monthly payment amount or suspend your monthly payment for a determined amount of time. Earnest has the most flexible payment selection of all the refinancing companies when you originally apply. They have a slider tool that calculates the interest rate and term as you adjust the amount of your monthly payment. They also give you the ability to increase your monthly payments or choose bi-weekly payments.
If market interest rates change or my income increases am I able to re-finance through your company again for a better rate? If so what are the requirements and how does that work? Is there a fee for re-refinancing?
Once you’ve made at least six months of on-time payments on your Earnest loan, you’ll be eligible to apply to refinance your Earnest student loan again. You will have to submit a new application. Your employment, income, assets and debt levels will be considered again before you receive a new loan offer. Market rates apply. No fees involved.
Repayable’s play-by-play.
Earnest is the new kid on the block and was founded in 2013. Their customer service responded quickly at 50 minutes and also gave the best quality and most thorough responses. They answered 12/12 questions the first time and none of their responses required follow-up clarification.
Earnest forgives your loan amount fully in the event of borrower death. That means borrowers don’t need to carry enough life insurance to repay their outstanding loan balance.
Earnest has the highest amount of payment flexibility of the refinancing companies. The unique slider function at the time of refinancing allows you to see the impact of different monthly payments on your interest rate and loan term. Earnest also offers reduced or temporarily suspended monthly payments if the borrower experiences job loss. Additionally Earnest offers the opportunity to make bi-weekly payments so you can minimize the amount of interest you pay.
Repayable’s overall assessment.
Earnest earned the top spot in all three of the major criteria used to assess refinancing companies. Earnest had the highest quality and prompt customer service, forgives student loans in the event of borrower death, and has the most payment flexibility. Earnest is a good choice for all borrowers considering refinancing.
Looking for More?
If you want the complete list sign-up here and I will email you the Refinancing Master List as soon as it’s ready. The Master List gives you the details for eleven of the most popular companies so you can find the best refinancing company for you. Fair warning this is an e-mail opt-in. I need your email address so I can get you the Master List when it’s finished. Don’t worry I won’t spam you to death or push a 5-step course on you. I think if you’re careful enough to look at all the available options then we’re on the same wavelength and we should keep in touch!
A Note about Referral Links
Some of the links in this article (right now Earnest and SoFi) are referral links. That means if you refinance with either of these companies we both get paid. With Earnest we both get $200 and with SoFi you get $100 and I get $300. I don’t rank any refinancing companies based on their referral fees or lack of them. I use the criteria described at the beginning of this post to provide you the transparent information used to rank these companies.
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