Today, let’s walk through the analysis that goes into making this decision and explore the reasons why a borrower might choose to stay on SAVE or switch to another plan.

The SAVE Forbearance Problem

With Donald Trump winning the election, the SAVE repayment plan as we know it is likely coming to an end. The plan is struggling in the court system, and it is unlikely that the new administration will work to keep it in place.

With the SAVE litigation forbearance likely ending in the coming months, many borrowers want to know the next steps. The problem is that we don’t know what options will be available moving forward. IBR has a high likelihood of being available indefinitely, while ICR and PAYE could be returning before Biden leaves office. REPAYE might also reappear.

The biggest downside with the SAVE forbearance is that the time spent in this payment pause does not count toward student loan forgiveness. Initially, I hoped this rule might change retroactively, but the new administration is unlikely to take that approach. For many borrowers, switching to a plan that counts toward forgiveness could make the most sense.

What protections do borrowers have in place? Learn how Trump’s election could impact various federal repayment plans and forgiveness programs.

The Case for Staying on the SAVE Forbearance

For some borrowers, staying on SAVE might still make sense despite the uncertainty. Here’s why:

• 0% Interest: While the forbearance is active, borrowers enjoy a 0% interest rate on their loans. This is a considerable savings and it means the forbearance is truly a student loan pause.
• Unknown Resolution and Timing: We don’t know when the SAVE forbearance will end or what repayment plans will be available at that time. Waiting provides time to make a decision when more information is available.
• Payment Break: The payment break allows borrowers to save up for whatever comes next or build up an emergency fund.
• PSLF Buyback Potential: The buyback program could still benefit borrowers working toward Public Service Loan Forgiveness (PSLF).

The election is a big change and there is certainly temptation to “take action” in order to protect yourself moving forward. Being proactive might feel good, but in many cases, being patient might be the prudent approach.

Switching to IBR Now

One of the most stable options available is the Income-Based Repayment (IBR) plan. Here are some key considerations:

• Stability: IBR is statutory law and is expected to remain a reliable repayment option moving forward. This makes it a good choice for borrowers looking for long-term stability.
• Forgiveness Progress: By switching to IBR, borrowers can begin making qualifying payments toward loan forgiveness immediately.
• Tax-Free Forgiveness Window: Enrolling in IBR now may allow borrowers to receive forgiveness before taxes on forgiven balances return in 2026, potentially saving thousands of dollars in tax liabilities.

Drawbacks of Switching to IBR

Switching to IBR has some drawbacks that borrowers should be aware of:

• Higher Costs: For many borrowers, IBR can be more expensive than SAVE, particularly for those who don’t qualify for the more favorable terms of IBR for New Borrowers (2014 version). The older version of IBR requires borrowers to pay 15% of their discretionary income, compared to SAVE’s 10%. This difference alone can lead to significantly larger monthly payments. 
• Discretionary Income Definition Change: IBR defines discretionary income as the amount above 150% of the federal poverty level, whereas SAVE uses a more generous 225% of the federal poverty level.
• Eligibility Limitations: IBR comes with an income cap, meaning not everyone will qualify for this plan. Borrowers whose income exceeds the cap may be ineligible. These borrowers could be better off waiting to see what happens with SAVE/REPAYE.
• Income Recertification: Many borrowers have not recertified their income since before the pandemic. A new recertification could result in a significant payment increase if income has risen during that time.

Waiting for ICR or PAYE to Return

For borrowers not eligible for IBR but eligible for PAYE, waiting might be a smart move, as PAYE could soon become available for new enrollments again.

Income-Contingent Repayment (ICR) is also worth considering. It’s a good option for borrowers with higher incomes and smaller balances who are close to reaching forgiveness. ICR doesn’t get much attention, but it can work well in specific scenarios.

What we know for now is that the Biden administration plans to bring both of these plans back. Additionally, with SAVE unlikely to survive, bringing back both of these plans seems logical, and potentially legally required.

Holding Out Hope for REPAYE

I’m not ruling out the possibility that REPAYE could return.

There is also the potential for a REPAYE/SAVE hybrid plan, which might incorporate some changes from SAVE—such as the 10% discretionary income payments—but eliminate the earlier forgiveness and 5% discretionary income payments that are currently being litigated. This could end up being a compromise solution in the near future.

A REPAYE/SAVE hybrid is probably the optmistic outcome for borrowers, but I think it is a somewhat realistic outcome as well.

Final Thoughts: Two Things to Keep in Mind

If you decide to switch out of the SAVE forbearance, remember that processing times for IDR enrollments are still quite slow. Moving to IBR now and then switching to another plan in a few months might not save much time overall.

Above all, it’s important not to assume the worst. Borrowers’ fears about what could happen to their repayment options are justified, but assuming that all forgiveness and IDR plans will be eliminated is premature. The ideal strategy is to stay flexible and be ready to adjust as more information becomes available.

Stay Up to Date: Student loan rules are constantly changing, and temporary programs create deadlines that can’t be missed. To help manage this issue, I’ve created a monthly newsletter to keep borrowers up to date on the latest changes and upcoming deadlines.

Click here to sign up. You’ll receive at most one email per month, and I’ll do my best to make sure you don’t overlook any critical developments.

The post Should I Switch Out of the SAVE Forbearance? appeared first on The Student Loan Sherpa.

Over the years, refinancing has become far more common, and SoFi has grown into one of the biggest names in student loans and finance in general.

Despite all of these changes, the fundamental questions remain. Is SoFi student loan refinancing a good deal? What should consumers expect?

Meet SoFi in 2024

SoFi first started as a student loan refinance company, but they have significantly expanded.

SoFi now offers mortgages, personal loans, and investing services. The days of SoFi being the plucky underdog are over.

For borrowers focused on getting a lower rate on their student loans, this evolution has some advantages.

For SoFi to grow, they had to evolve from a lender that focused only on high earners to a lender willing to accept a wide range of borrowers. The good news for borrowers is that many of the perks that SoFi used to target the doctors and lawyers of the world still remain.

SoFi approved many borrowers with less than perfect credit in an attempt to expand. We have also seen borrowers with excellent credit shop around to compare rates and find that SoFi was the best option. As a result of SoFi’s ability to offer the best rate for a variety of borrowers, SoFi checks in at #3 in our student loan refinance lender rankings.

SoFi Refinance Rates and Options

SoFi offers a wide range of student loan refinancing options. As of November, 2024, the following rates and terms are available:

See SoFi disclosure Fixed rates range from 3.99% APR to 9.99% APR with 0.25% autopay discount and 0.25% direct deposit discount. Variable rates range from 5.99% APR to 9.99% APR with 0.25% autopay discount and 0.25% direct deposit discount. Unless required to be lower to comply with applicable law, Variable Interest rates will never exceed 13.95% (the maximum rate for these loans). SoFi rate ranges are current as of 10/04/24 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay and Direct Deposit are not required to receive a loan from SoFi. You may pay more interest over the life of the loan if you refinance with an extended term. for more. All rates are expressed as an APR with all discounts including a .25% autopay discount.

Borrowers can refinance federal student loans, private student loans, and Parent PLUS loans. SoFi, like most legit lenders, does not charge any application fee, origination fee, or prepayment penalties.

Looking at all of the SoFi possible rates and options, borrowers should be careful to tweak loan repayment lengths to find the sweet spot between getting the lowest rate and getting the best monthly payment.

For example, one strange aspect of the current SoFi options is the close rates offered for longer-length loans. The rate on a 10-year loan may be only a fraction of a percent less than the rate on a 15 or 20-year loan. Opting for a longer loan can result in an interest rate that is only slightly higher. The longer loan advantage is more flexibility.

Sherpa Tip: Having a 20-year loan does not mean that a borrower must take 20 years to pay it off. Opting for the longer duration loan gives the borrower the flexibility of low minimum payments. Additionally, the loan can still be paid off aggressively by making extra or larger payments.

The SoFi Advantages

SoFi offers competitive interest rates and flexible repayment terms. However, the advantages associated with SoFi go beyond the numbers.

To handle a large volume of applications and borrowers, SoFi has a streamlined system. The application process and loan funding is fast and simple.

SoFi also runs its customer support out of a California call center. Having the customer support team here in the United States doesn’t necessarily guarantee better service. Still, we do like to see them spending the extra money to make sure customers get the best treatment possible.

Borrower Beware – The Danger of Refinancing Federal Student Loans

If you have the credit score and income to qualify for SoFi, it is a great option. However, there is one warning that all borrowers need to consider carefully…

SoFi, like most other refinance lenders, is willing to consolidate federal loans with private loans. Though combining federal loans with private loans is a mistake for some, in other instances it is a good idea. The classic example would be high-income earners with strong job security.

The important thing for borrowers to realize is that the repayment plans and forgiveness programs of federal loans are eliminated upon private loan consolidation. Because there is no way to undo a consolidation or refinance, it is critical to make a smart decision when weighing the federal perks vs. the lower interest rate on the private market.

Outside of the traditional concerns that go with student loan refinancing, we see no additional concerns associated with SoFi.

How does SoFi work?

First, borrowers specify the loans that they want refinanced. SoFi creates a new loan and uses the funds from that loan to pays off the old loan. The borrower then pays off their debt to SoFi according to the terms of the new loan.

Borrowers typically refinance to achieve one of two goals:

• Lower Payments – Selecting a longer loan or getting a lower interest rate means a smaller monthly bill.
• Reducing Interest – Some borrowers select a short loan with an ultra-low interest rate. Going this route eliminates the loans as quickly as possible and minimizes total spending.

SoFi’s seems to have a goal of becoming the finance company for millennials. This is evidenced by their aggressive expansion into areas like banking and life insurance.

Helping people pay off their student loans seems to be SoFi’s way of securing long-term customers who continue the business relationship in more profitable areas such as wealth management.

From a student loan borrower perspective, this is probably a slight advantage because it means SoFi has an incentive to keep customers happy even after they have refinanced their loans. These long-term goals would also explain why SoFi can keep its rates lower than most of the other lenders in the marketplace.

SoFi Refinance Reviews from Actual Customers

When this article was originally published, we could only base our opinion on the black and white terms of the SoFi loans. Since that time, dozens of customers and would-be customers have taken the time to leave their thoughts in the comment section.

What we have learned is that SoFi customer satisfaction seems to revolve around whether or not the application was approved. Because of the originally tough underwriting criteria, many people have stopped by to share their disappointment with their denial. As one user summed it up, “people with high FICOs and high incomes sail right through while people with more moderate FICOs and incomes don’t seem to have the same experience.”

SoFi Complaints and Reviews from the BBB, Reddit, and Others

Most of the SoFi reviews from other experts have reached similar conclusions.

The Better Business Bureau gave SoFi an A+ rating, but there were numerous user complaints about SoFi. Some of the complaints dealt with SoFi’s mortgage and personal finance loans. The customer rating was 1.59/5 from a total of 311 reviews.

Reddit users generally have positive things to say about SoFi. However, when doing head-to-head rate checks with other lenders, SoFi at times did not offer the best interest rates.

The Consumer Financial Protection Bureau complaint database has about 50 complaints related to SoFi student loans. The issues were varied in the complaints. In terms of the volume of borrower issues, SoFi is comparable to other lenders, perhaps a bit better than average.

In short, the SoFi reviews are mixed, which is to be expected with any financial company.

SoFi Compared to Other Lenders

Pros:	SoFi is the biggest name in student loan refinancing for a simple reason – their rates are reliably among the best on the market.	LendKey works with a large network of smaller credit unions and banks. As a result, many applicants get the best offer from LendKey.	Splash has the best new customer bonus right now, and they have excellent rates and term opitons.
Cons:	SoFi has grown into a large company offering mortgages, personal loans, and investment services. They no longer focus entirely on student loan refinancing.	Going the LendKey route does require working with a local bank or credit union. For many, this is a plus, but it is an extra step.	Splash is a newer lender and getting approval may be more difficult for some borrowers.
Bonus:	NA	$150	Up to $500

Should I apply for a SoFi loan?

SoFi is an excellent option for student loan refinancing, but SoFi is far from the only option.

Borrowers looking for the best deal would be wise to check their rate with SoFi. However, checking rates with other lenders is also essential as many companies advertise rates as low or lower than SoFi. Each lender uses different underwriting criteria. Thus, it is impossible to say which of the top student loan refinance companies will actually offer the best rate.

Click here to check your rate with SoFi.

The post SoFi Student Loan Refinance Review appeared first on The Student Loan Sherpa.

ELFI Review Overview

ELFI has emerged as one of the best student loan refinance lenders on the market.

Our review of ELFI found two big advantages over most other lenders. First, the ELFI customer support is based in the US and has won several awards. Second, because ELFI is backed by a bank, its rates tend to be more stable than those offered by tech companies like SoFi, and Earnest.

That all being said, there is some cause for concern for borrowers considering refinancing with ELFI.

Getting Started: The ELFI Basics

At this time, ELFI currently offers the lowest advertised interest rate in student loan refinancing. Their 5-year fixed-rate loan is an excellent choice for borrowers looking to repay their debt as quickly as possible. Another highlight for ELFI might be the 15 and 20-year fixed-rate loans which are among the lowest rates on the market.

To qualify for an ELFI loan, a borrower does need to have a degree and pass a credit check. Like most legitimate lenders, there are no loan application fees, origination fees, or prepayment penalties.

One area where ELFI is a little more strict than other lenders is that they require a minimum student loan balance of $10,000 to refinance. Borrowers with smaller balances should look at lenders like SoFi and Laurel Road, who require a minimum of only $5,000.

ELFI does offer a co-signer release program, but co-signers can only be released if the borrower can pass a credit check on their own.

ELFI Advantages

ELFI offers more than just low interest rates. Their call centers are all located in Tennessee, and borrowers get a single point of contact with a direct number to call for support. This should make resolving any issues go significantly smoother.

ELFI student loans are serviced by Mohela and American Education Services (AES). Mohela has one of the better reputations among student loan servicers, while AES is just average. Unfortunately, borrowers do not have a choice in the servicer that they are assigned.

ELFI is currently running a promotion that provides new borrowers a bonus of $150 who sign up following this link. While $150 is a decent chunk of change, we should note that it is still critical to shop around — borrowers with larger balances will be much better off in the long run if they chase the lowest rate rather than the biggest bonus.

Borrower Beware: An Important ELFI Concern

The concern we have with ELFI applies to pretty much every student loan refinance company.

Even though it makes sense for some borrowers to consolidate their federal student loans with a private lender, this move can also be a mistake. Refinancing your federal loans means you lose federal perks such as repayment plans based upon your income and student loan forgiveness programs. We look at these programs as an insurance policy. The cost of that insurance policy is higher interest rates.

If you think you might lose your job or not be able to afford your student loans, it is best to keep your loans with the federal government. If you have no problem paying off the debt, locking in a low interest rate could be a smart move.

Do I have Federal Loans? If you are not sure if your student loans are federal or private, visit the Department of Education’s Student Aid Portal. They keep detailed records of all federal student loans.

Why Pick ELFI Over Refinance Lenders Like SoFi and Earnest?

After watching ELFI for several years, I’ve come to the conclusion that this is a lender that marches to the beat of its own drum.

Investor interest tends to move the rates at most tech-based lenders. If student loans are a popular investment, the tech companies can offer excellent rates. If nobody wants to make an investment, funds dry up, and lenders raise rates. Most refinance companies move rates up and down in a similar manner.

ELFI rates move around less. There are times when ELFI is a bit behind the rest of the market, and there are times when ELFI has by far the best rates. For this reason, ELFI is worth a look for any borrower shopping around.

ELFI Student Loan Refinance Review: The Final Thoughts

The ELFI option sticks out due to the low interest rate offerings in a variety of loan categories.

Ultimately, advertised rates are a tiny part of the refinance equation. What matters is the actual rate offered. Because ELFI combines the stability of a longstanding bank with very low interest rates, it is a lender worth serious consideration.

Click here to check your rate with ELFI.

The post ELFI Student Loan Refinance Review appeared first on The Student Loan Sherpa.

While it is fair to say that the election results were a setback for borrowers, it’s important to note that many borrower protections are in place to ensure the continued availability of these resources.

This article will provide a fact-based, unemotional analysis of what the next four years might hold for borrowers.

The Future of SAVE and the SAVE Lawsuit

At this point, it’s unlikely that the SAVE lawsuit will be resolved before the new administration is sworn in on January 20, 2025.

While this almost certainly means the end of the SAVE repayment plan, how it all plays out remains an open question with significant implications.

The SAVE rules didn’t just create the SAVE plan; they eliminated the REPAYE plan, limited enrollment in ICR and PAYE, and allowed the double-consolidation loophole for Parent PLUS Loans.

The Biden administration had already mentioned plans to reopen PAYE and ICR enrollments later this year to help borrowers impacted by the litigation. If they move quickly, one possibility is to modify the SAVE regulations to bring back PAYE, ICR, and REPAYE.

There is some concern that all the plans created under the ICR statute—ICR, PAYE, REPAYE, and SAVE—could be eliminated as a result of the litigation or the Trump administration taking office. However, significant barriers exist to eliminating these repayment options.

To understand how each repayment plan is impacted, we need to look at them individually.

IBR: The Safest Repayment Plan

The Income-Based Repayment (IBR) plan is the safest of all federal income-driven repayment plans. This safety applies to both the original IBR and the more generous IBR for New Borrowers.

Two key protections are in place for IBR:

1. Statutory Protection: IBR is guaranteed by statute. To change the IBR rules, Republicans would likely need a majority in the House and a supermajority in the Senate. Because the Democrats hold over 40 seats in the Senate, they can likely filibuster to block changes to the IBR statute. Even in scenarios where Republicans overcome a filibuster, existing borrowers would likely be grandfathered into IBR eligibility.
2. Master Promissory Note (MPN): The MPN is the contract between the federal government and the borrower. If Congress attempted to eliminate IBR for current borrowers, a lawsuit would almost certainly follow to assert borrowers’ contractual rights.

This combination of protections should provide borrowers with confidence in the continued availability of IBR.

Digging Deeper: If the MPN protects current borrowers from plan elimination, how was Biden able to eliminate REPAYE?

The move from REPAYE wasn’t challenged because the new SAVE plan had either the same or better terms for borrowers compared to REPAYE. Since SAVE only improved REPAYE’s terms, borrowers wouldn’t be eligible for relief in a potential lawsuit.

ICR and PAYE New Availability

The Department of Education has announced plans to expand ICR and PAYE access to help borrowers affected by the litigation. The election results should only add urgency to this plan.

ICR and PAYE were both created via the regulatory rulemaking process. In theory, the next administration could roll back these regulations, but borrowers still have some protections.

Most notably, the MPN includes language for both ICR and PAYE. Additionally, if there were a legal challenge to these plans, similar to the challenge to SAVE, that lawsuit would likely fail due to the six-year rule under the Administrative Procedure Act.

REPAYE: Making a Return?

The status of REPAYE differs from ICR and PAYE because SAVE regulations replaced REPAYE.

However, there is a strong likelihood that REPAYE could return in its original form if SAVE is eliminated.

Here again, the MPN and the six-year rule of the Administrative Procedure Act provide a degree of protection for current borrowers. Notably, during Trump’s first term, REPAYE was available, and the administration never challenged or attempted to eliminate it.

Non-SAVE Repayment Plans Are Unlikely to Change

Some borrowers fear that the Trump administration will make things difficult for borrowers. However, a simple cost-benefit analysis suggests this is unlikely.

While student loan forgiveness remains unpopular with Trump’s base, there aren’t widespread calls to redefine discretionary income or adjust the percentages borrowers pay each month. Changes like these would be legally complex, deeply unpopular with those affected, and unlikely to be seen as a win by his base.

It’s also worth noting that congressional offices—both Republican and Democratic—are filled with recent graduates struggling with student loans and living in an expensive city.

The potential “benefit” of making repayment more punitive compared to the potential downside makes such changes unlikely.

Public Service Loan Forgiveness Is Secure: Why PSLF Shouldn’t Change

When Trump was first elected, many borrowers feared it would mean the end of Public Service Loan Forgiveness (PSLF).

During the first two years of his term, Republicans controlled both houses of Congress, yet no plans to eliminate PSLF were seriously considered.

Because PSLF has been statutory law since 2007, eliminating it would require an act of Congress. Even if Democrats are in the minority, the Senate filibuster provides some protection. PSLF language is also included in the MPN.

Additionally, when proposals to eliminate PSLF have been made, they usually include provisions to grandfather in existing borrowers.

The One-Time Payment Account Adjustment

We’ve been waiting years for payment histories to be adjusted.

It was surprising that this adjustment wasn’t completed before the election. However, complications from the SAVE litigation likely consumed many Department of Education resources.

Finishing the one-time adjustment before January should be a priority. Even if it’s not completed by the time the new administration takes over, the new Trump administration may be legally required to complete it. Hopefully, it won’t reach the point where a lawsuit is necessary to force the Department of Education to provide the promised credit.

This will be worth watching closely over the next few months.

Policy Changes vs. Practical Changes

Thus far, we’ve only discussed potential student loan policy changes over the next four years. However, there are also practical considerations that borrowers should understand.

For example, when the first group of borrowers became eligible for PSLF during Trump’s first term, the initial rejection rate was over 99%. PSLF remained a valid program, but the many hoops borrowers had to jump through disqualified most.

The limited waiver on PSLF was intended to address these issues, as was the one-time account adjustment.

While qualifying for PSLF is now less difficult, the lesson remains: even if a program is in place, poor implementation can cause major problems for borrowers.

Borrowers working toward forgiveness in the coming months and years must pay close attention to every detail to avoid eligibility issues.

The Big Tip Moving Forward: Be Proactive

We don’t know what the future holds, but it’s possible that loan servicers could face less accountability and become less helpful for borrowers. Likewise, qualifying for forgiveness may become more challenging.

In this environment, borrowers need to be proactive. If you’re working toward loan forgiveness, make sure you understand all program requirements and document your progress.

It’s a good idea to download copies of all statements and communications with your servicers. If you make a call, take detailed notes—write down what you asked, what you were told, and when it happened. These notes might never be needed, but they could prove very helpful in the future.

Final Thought: Don’t Ignore Student Loan News

If the election didn’t go your way, it may be tempting to unplug and disengage from politics and news. That might even be the healthiest approach for some.

However, given the challenges borrowers might face, it’s important not to miss major developments.

Stay Up to Date: To help borrowers stay informed, I send out a free monthly newsletter with all the key information you need. The news isn’t always good, but the goal is to help make life with loans as manageable as possible.

Click here to sign up. You’ll receive at most one email per month, and I’ll do my best to make sure you don’t overlook any critical developments.

The post What Trump’s Election Means for Student Loans: SAVE, IBR, PSLF, One-Time Adjustment, and More appeared first on The Student Loan Sherpa.

If you have rate-shopped over the past couple of months, you probably don’t need to do it again this month — there hasn’t been much movement. However, if it has been a while since you looked at refinance rates, things are better now than they have been at any point during the last couple of years.

Important Note: To compile the best refinance rates for November 2024, nearly two dozen national student loan lenders were compared. The lenders listed below were the ones with the lowest verified rates.

The lowest rate listed below includes any available .25% rate discount for borrowers who enroll in autopay.

The Current Lowest Student Loan Refinance Rates for Variable Loans

Rank	Lender	Lowest Rate	Sherpa Review
T-1		4.86%	ELFI Review
T-1		4.86%*	Splash Financial Review
3		5.29%	Laurel Road Review

The headline interest rates now hover around 5% with most of the top lenders. We have seen these rates climb over the past couple of months, and all signs point to them continuing to increase.

It is important to note that even though Splash, Laurel Road, and ELFI have the lowest possible interest rates, they do not necessarily get the top spot in our student loan consolidation and refinance rankings. Borrowers are still best served by applying with 4-5 lenders, as each lender has a different formula for evaluating applications. The best-advertised rates do not always equal the best rate offered, but they do provide a useful starting point.

The Best 20-Year Refinance Rates for November 2024

Rank	Lender	Lowest Rate	Sherpa Review
1		6.08%*	Splash Financial Review
2		6.53%	ELFI Review
3		6.55%	Laurel Road Review

On the other end of the spectrum, the best 20-year fixed-rate loans are currently offered by Splash, Laurel Road, and ELFI. Most other lenders have significantly higher rates and are not included in this table. The lenders at the top of this list look a lot different than the lenders at the top of the 5-year lists. Borrowers should consider whether they want a longer loan prior to putting together an application strategy.

Borrowers who are looking for the lowest possible payment when they refinance usually opt for a 20-year loan. The advantage is an easy monthly payment, but the downside is that it comes with a somewhat higher interest rate.

However, it is worth noting that the gap between the 5-year variable loans and the 20-year fixed-rate loans remains tight. Opting for a substantially lower payment and a slightly higher interest rate could make sense for many borrowers. Locking in a fixed rate also prevents payments from going up in the future.

Sherpa Tip: The interest rate gap between 10, 15, and 20-year loans is especially small right now. Even if you don’t need the lower payment offered by the 20-year loan, it might still be the best choice.

Opting for a lower monthly payment gives you flexibility in the event of any financial hardship. It also frees up cash each month to focus on other goals like buying a house or saving for retirement.

For many borrowers, I think locking in a 20-year fixed-rate loan is the best option currently available.

The Lowest Fixed-Rate Student Loans Available

Rank	Lender	Lowest Rate	Sherpa Review
1		3.95%	Earnest Review
2		3.99%*	Splash Financial Review
3		4.88%	ELFI Review

For borrowers looking for the stability of a fixed-rate loan, but still in search of an ultra-low interest rate, the 5-year fixed-rate loan is usually the best bet.

Surprisingly, with many lenders, the interest rate on a 5-year fixed loan is actually lower than a 5-year variable loan. Typically, we see lower rates on variable loans, but this is a unique interest rate environment.

Other Noteworthy Interest Rate Changes

In the mid-length loans, specifically those at 7, 10, or 15 years in duration, Splash, SoFi, and ELFI perform strongly. However, most borrowers will be best served by either opting for a short 5-year loan at the lowest interest rate possible or choosing a 20-year loan to get the smallest payment possible.

For our overall rankings and lender reviews, be sure to check out our Student Loan Rankings page.

Tips for Getting the Best Rate

For student loan borrowers looking for a lower interest rate, it’s important to keep a few things in mind:

• Shopping around to find the best rate has never been more important. Interest rates are constantly changing, and some lenders are starting to get picky on approvals.
  
• You can always refinance again in the future. Unlike a mortgage where a refinance is time-consuming and costly, refinancing a student loan takes little time and doesn’t involve any transaction costs. If you lock in a fixed-rate loan today, you could always refinance that loan again next year if rates drop. This is the ideal strategy to use when rates are dropping.
  
• When you refinance you are picking a new monthly payment. Two loans at 5.49% are not necessarily the same. If you have 20 years to repay a loan, your monthly payment will be much lower than a 5-year loan. This can free up cash for building an emergency fund, saving for retirement, or buying a house.
  
• Play around with different repayment lengths. With some lenders, the interest rate for a 5-year loan is the same as for a 15-year loan. Lower monthly payments are preferable, even if you want to pay off your debt quickly.

Finally, if you have a variable-rate loan, you can get off the inflation roller-coaster by refinancing into a fixed-rate loan. No matter how much interest rates grow in the future, if you have a fixed-rate loan, your monthly bill won’t change.

The post The Best Student Loan Refinance Rates for November 2024 appeared first on The Student Loan Sherpa.

Overview: Brazos Student Loan Refinance Review

Let’s get the big limitation out of the way first: Brazos is only for residents of Texas. If you don’t currently reside in Texas — even if you went to a Texas school — you can’t refinance with Brazos.

Those who don’t live in Texas will have to shop elsewhere for student loan refinancing.

As for the Texans reading this article, Brazos is an excellent option for student loan refinancing. In fact, for most Texans, Brazos may be the very best student loan refinance lender available.

Brazos Student Loan Refinance Basics

Brazos will refinance private loans and federal loans, including Parent PLUS loans. The maximum balance that Brazos will refinance is $400,000 for graduate borrowers and $150,000 for undergraduate borrowers.

The minimum credit score for borrowers is 720. However, Brazos will accept credit scores as low as 690 if the borrower has a cosigner.

Like other legitimate lenders, Brazos does not charge any loan origination, prepayment, or application fees.

All Brazos loans are serviced by Firstmark servicing.

Reasons to Choose Brazos to Refinance

Unlike most national lenders, Brazos is a nonprofit, and they get major points for transparency.

If you visit the Brazos site, you can see a detailed table that shows the exact interest rate offered to borrowers, depending on their credit score. The for-profit lenders don’t share this level of detail with consumers.

It is also worth noting that the rates offered are excellent. They compare very well with the top rates on the national market.

Reasons to Avoid a Brazos Refinance

My number one concern with Brazos applies to every refinance lender: It isn’t always a good idea to refinance federal loans with a private lender. If you choose to refinance with Brazos, you permanently erase federal benefits like income-driven repayment and student loan forgiveness.

Borrowers should carefully weigh the federal perks against the benefit of lowered interest rates from refinancing.

The other big downside to Brazos is the strict requirements. In addition to only being available for Texas residents, the $10,000 minimum to refinance is higher than most lenders who only require $5,000. Likewise, the minimum credit score and income are relatively high for a refinance loan. Most national lenders have more forgiving underwriting requirements.

Brazos also does not offer a cosigner release program. The transparency is good because many lenders advertise a release but make it difficult to qualify. However, most cosigners will want an option to get released from the loan.

Final Thoughts: Brazos Refinance Review

Most borrowers won’t qualify for a Brazos loan because of their strict requirements.

However, those who qualify will receive excellent interest rates from a reputable lender.

If you live in Texas and have an excellent credit score, Brazos is a superb refinance opportunity.

The post Brazos Student Loan Refinance Review appeared first on The Student Loan Sherpa.

Earnest Review Overview

In a marketplace where all lenders blur together, Earnest sticks out as a legitimately different lender. 

Earnest evaluates applications differently and approves some borrowers that might get rejected by other more traditional lenders.

The Earnest sales pitch is that you will get better results with them because they are better at making lending decisions. Where some lenders look only to FICO and year income, Earnest looks at the big picture.

This big picture approach makes looking into Earnest a wise decision for many refinance shoppers. As a result, Earnest currently gets the 6th spot in our student loan refinance company rankings.

Meet Earnest Basics

Earnest Overview
Loan Terms	5 - 20 Years
Variable Rate Loans	5.89% - 9.74%^
Fixed Rate Loans	3.95% - 9.74%^
Minimum Credit Score	665
Minimum Refinance Amount	$5,000
New Borrower Bonus	$150^

Like most lenders, Earnest offers both fixed-rate and variable-rate loans. One thing that makes Earnest a little different is that they provide more than the traditional 5, 10, 15, and 20-year loans. Borrowers can choose repayment lengths that fall anywhere on the 5 to 20-year spectrum, meaning if 18 years is ideal for you, you get 18 years to repay your loan.

Earnest calls this feature “precision pricing.” This sliding scale may not appeal to everyone, but it has two main advantages. For long-term planners with specific deadlines, such as retiring in 12 years or buying a home in seven, precision pricing could be ideal. It also works nicely for people who know exactly how much they have in their monthly budget. If you can spare exactly $327.42 per month, you can get a plan that fits your specific need.

Like other legitimate lenders out there, Earnest doesn’t charge any pre-payment penalties or loan origination fees. Paying back your loan is just paying back principal and interest.

Help for more Borrowers: Most refinance lenders only accept borrowers with completed bachelor’s degrees.

Earnest will refinance borrowers with associate’s degrees and borrowers who didn’t finish school.

Navient Purchase of Earnest

When this article was first published, Earnest was a student loan startup out to make a name with their flexible repayment options.

As time went by, Earnest grew and was ultimately purchased by Navient, a massive student loan company with a questionable reputation.

Unsurprisingly, the $155 million purchase of Earnest has led to some changes. Some Earnest customers now complain that things are less consumer-friendly and less transparent.

Those looking to refinance their student loans to get away from Sallie Mae/Navient should look to other lenders offering refinancing services.

Earnest Advantages

One thing that we love about Earnest is that they service all of their loans. Many lenders will refinance your debt but then sell the loan to another company. The quality of the new service you get can be a mystery. Earnest keeps repayment in-house. It doesn’t guarantee better service, but it is better than the alternative.

The most significant advantage with Earnest, and the reason many people may choose to work with them, is their “big picture” approach to lending decisions. They believe that they can make a smarter decision on application approvals by looking at more financial information. We reached out to Earnest to get an example of someone who could benefit from their method, and they provided the following response:

“We have a client who is a librarian with a Masters in English Literature. She makes a public librarian’s salary and is incredibly financially responsible — she pays her bills in full and on time and saves a substantial amount of money in both investment and non-investment accounts. But she also doesn’t have a great credit score — it’s not bad, but not great — because she simply doesn’t use traditional credit cards and credit products. That’s someone who could be instantly denied by a lot of traditional lenders (as well as Earnest competitors), but when we look at that profile, we see someone who is tremendously responsible with her money and deserves our best rates. We think our approach unlocks access to credit for a lot of people who truly deserve it.”

A couple of things stand out from this example: a less-than-perfect credit because of a limited history and building a retirement account. If you are very careful with your money, i.e., saving more than you spend and putting money aside for retirement, Earnest is worth exploring.

However, it is worth pointing out that getting approved for an Earnest loan will still require a credit score of at least 680.

Cause for Concern

Earnest advertises a 2 min application for credit approval, but practically speaking, we do have some concerns about this process. The major advantage of Earnest, the big picture approach, could also become a big issue during the application and loan refinance process. Because Earnest examines more financial information, it means that Earnest will need access to more financial information. It means more records to verify and paperwork to put into place.

Ultimately, if sending in a little bit of extra information lowers your interest rate, it is time well spent, but it does increase the odds of headaches along the way.

Finally, Earnest refinances federal student loans. Refinancing federal loans with a private lender is a risky trade. Borrowers can get better interest rates, but they give up federal perks like Income-Driven Repayment plans and student loan forgiveness. While this can work for some borrowers, for others, it is a huge mistake. Before you refinance, make sure you know whether or not student loan refinancing is for you.

Frequently Asked Questions About Earnest

Earnest Refinance Review: Final Thoughts

Earnest is probably the ideal option for people who are responsible with their money but might not have a huge income or a perfect credit score. If you think your credit score or yearly income doesn’t tell the whole story, Earnest could be the best option.

Given that Earnest has loans with rates starting below 5% and a unique approach, they get a spot in the top five of our student loan refinance rankings.

To check out the rate you qualify for with Earnest, apply here.

—

^ The lowest listed rate for Earnest is a 5-year variable rate loan, and rates are listed as an APR. Please see the Earnest Disclosure for more details on rates and bonus terms.

The post Earnest Student Loan Refinance Review appeared first on The Student Loan Sherpa.

Ironically, due to an unusual series of events, the group of borrowers who may benefit most from the SAVE plan are not necessarily those in the most financial distress, but rather borrowers who are financially better off and able to repay their loans in full.

SAVE Repayment Plan Background and Litigation

The SAVE plan (Saving on a Valuable Education) was designed to fix some of the biggest complaints about previous federal income-driven repayment (IDR) plans. With SAVE, borrowers could protect a greater portion of their income from their student loan payments, and for those with lower balances or without graduate debt, forgiveness could be achieved sooner.

However, several state attorneys general challenged the legality of the SAVE plan, filing a lawsuit to block its implementation. As a result, a preliminary injunction was issued, preventing borrowers from making payments under the plan for the time being. This block will remain in effect until the litigation is resolved, and the case could drag on for years, potentially going all the way to the Supreme Court.

Despite the legal challenges, the Department of Education has offered some protections to impacted borrowers. Most notably, borrowers who signed up for SAVE are placed in an interest-free forbearance while the litigation is ongoing, meaning they are not accruing interest on their loans during this period.

The Big Winner is Borrowers Who Plan to Repay in Full

While SAVE was intended to help borrowers in financial distress, an unintended consequence of the litigation is that borrowers who are focused on repaying their loans in full may come out as the biggest winners. With the payment and interest pause in place, this situation mirrors the COVID-19 payment freeze, which allowed borrowers to make substantial progress on eliminating their debt without accruing interest.

For borrowers who are already in a strong financial position, this pause represents a unique opportunity. They can continue making voluntary payments, chip away at the principal balance, and ultimately pay less in total interest over the life of the loan.

How to Enroll in SAVE to Get 0% Interest

Despite the ongoing litigation, borrowers can still enroll in the SAVE plan, and by doing so, they will receive the 0% interest benefit. The enrollment process is once again available by signing up at studentaid.gov.

Unlike other IDR plans, there is no income cap for SAVE enrollment. Borrowers in any tax bracket can sign up for SAVE and take advantage of the interest relief.

Once enrolled, borrowers are placed in a special forbearance status, meaning that although they are not required to make payments, interest will not accrue on their loans either. This creates a window to plan your repayment strategy without the burden of growing debt.

Maximizing the Benefit

Borrowers looking to make the most out of this situation should consider taking an active approach to managing their loans. One of the smartest moves is to set aside the money you would have used for student loan payments into a high-yield savings account.

By doing this, you gain two key advantages. First, instead of paying interest on your student loans, you can earn interest on your savings. This allows you to turn the payment pause into a financial gain. Second, it gives you flexibility. If you encounter a financial emergency down the road, such as a car repair or unexpected medical expenses, the funds in your savings account will be readily available. In contrast, once a payment is made toward your student loan, that money is no longer accessible.

When the litigation finally ends and payments resume, you can use the money saved to make a lump-sum payment, potentially knocking out a significant portion of your balance or eliminating it entirely. Likewise, you can switch into a more appropriate repayment plan if the new SAVE payments end up being too high.

Final Thoughts

The ongoing SAVE litigation has created a unique opportunity for borrowers to improve their financial standing. Whether you’re aiming for debt elimination or just trying to get through the legal uncertainty, there are strategies you can implement to make the most of this situation.

For borrowers looking to pay off their loans in full, this is a prime opportunity to reduce your balance without accruing interest. By enrolling in SAVE, taking advantage of the interest pause, and using smart savings strategies, you can turn a period of uncertainty into a period of financial gain.

The post SAVE Plan Litigation: Why Higher-Income Borrowers Are The Big Winners appeared first on The Student Loan Sherpa.

Obtaining lower interest rates can save you hundreds or even thousands of dollars on your student loans.

Sign Up for Auto-Debit or Monthly Automatic Withdrawal

This route is the low-hanging fruit.

Signing up for automated payments saves .25% interest with pretty much every student loan company. Some lenders even offer a .50% reduction if you open a checking account. Saving a fraction of a percent in interest may not seem like much, but it can add up. For example, if you have $40,000 in student loans, that quarter percent savings is worth $100 per year. Not exactly huge savings, but a decent reward for minimal effort.

Even though this is an easy move that every borrower can make, we don’t recommend it for everyone. There are a couple of circumstances where it is best to stick with manual payments.

You can’t trust your lender – The automatic payments give your lender the green light to take money out of your checking account. Unfortunately, there is an element of danger here. This is especially true if your monthly payments might change, such as being on a variable-rate repayment plan. Taking out a fixed amount each month is one thing, but if there is a chance your lender takes out more than what you planned for, be cautious. Once your lender removes that money, it is hard to get back.

You can’t trust yourself – Smart student loan repayment is all about paying extra when you can and targeting high-interest student loans. The savings from this approach will far exceed the potential savings from a .25% interest rate reduction. If signing up for automated payments will cause you to be lazy when making extra payments, stick to manual payments. Lenders maximize profits when borrowers pay the minimum each month over the life of the loan. Don’t let a slight interest rate reduction bait you into maximizing your lender’s income.

Lender Rate Reduction Programs

Lenders seldom advertise or publicize interest rate reduction programs, but they do exist. Private lenders created these programs to help borrowers who had fallen behind on their debt. It is typically available only to those with an income insufficient to keep up with payments. A rate reduction program is rarely a term of the loan contract. As a result, lenders can change the requirements whenever they want.

The nice thing about rate reduction programs is that they can help. Lenders usually give most borrowers who cannot make a monthly payment the option of forbearance or deferment. Delaying payments is typically good for the lender and bad for the borrower, however. The balance on the account will grow due to unpaid interest. Once the deferment or forbearance ends, the borrower has a bigger student loan problem. Continuing to make payments with a lower interest rate allows a borrower to put a dent in the principal balance.

Perhaps the most notable rate reduction program is with Sallie Mae/Navient. Over the years, they have changed the requirements and tweaked terms several times. At present, borrowers can sign up for an interest rate reduction that lasts for six months. Qualifying requires a borrower to provide Navient a detailed accounting of their monthly expenses. Generally speaking, the further behind a borrower is in repayment, the more likely Navient is to help. We have also found that the quality of assistance depends upon whom you talk to you. If one call attempting enrollment is unsuccessful, a second or even third try might make a difference.

Pay Down High-Interest Debt First

On the surface, paying down high-interest student loans first might not seem like a method of lowering interest rates. However, we would argue that it does.

The math is relatively easy. Suppose you have two loans at $10,000 each. One has an interest rate of 8%, and the other has an interest rate of 2%. Your combined debt is $20,000 at an average interest rate of 5%. If you pay off the loans with equal payments, your average interest rate will stay at 5%. However, if you start to pay off the high-interest loan faster, your average interest rate will drop. So, if you eliminate the high-interest loan first, your average interest rate will become a very favorable 2%.

Many people realize that paying extra on their student loans is a great way to pay off loans faster and save money on interest. We like to call these people responsible borrowers. However, we found that when these responsible borrowers don’t focus on the high-interest debt, it can cost them.

Utilizing this approach doesn’t require an excellent credit score or enrollment in any program. If you just pay extra towards your highest interest rate student loan, your average student loan interest rate will drop over time. Finding that bit of extra money to attack high-interest debt can save a lot of money in the long run.

Enroll in the SAVE Plan

Signing up for SAVE can help you lower your interest rate in two different ways.

First, because the SAVE plan is currently being challenged in court, borrowers who sign up for SAVE can get there interest rate lowered to 0% as long as the case is pending. The case could take years to resolve.

Second, once the lawsuit is over, assuming SAVE survives, borrowers can receive the SAVE subsidy which covers the monthly unpaid interest each month on the loan.

Suppose your federal student loans generate $300 in interest each month, but your required monthly payment is only $100. As a result, your federal student loan balance is growing by $200 every month. Because the federal government doesn’t capitalize the interest each month, many borrowers think that their balance is just staying the same. Once an event that triggers interest capitalization occurs, the balance can jump by hundreds or even thousands of dollars.

Signing up for SAVE fixes this problem. Going back to our example, instead of growing by $200 each month, SAVE covers the extra $200, so your balance doesn’t move. For borrowers with significant student loan balances and smaller incomes, SAVE is an excellent option.

Even if SAVE were to be eliminated in the litigation, the older REPAYE plan would likely be reinstated. Like SAVE, REPAYE offers an interest subsidy. However, unlike SAVE, the REPAYE subsidy only covers half of the excess interest.

Join the Military

Choosing to serve your country can be a big boost in student loan repayment. For starters, numerous student loan forgiveness programs exist specifically for the military, such as the Military College Loan Repayment Program.

In the realm of interest rates, enlisting has immediate benefits as well. Military service can lower your student loan interest rates in two ways:

Servicemembers Civil Relief Act (SCRA) Interest Rate Cap – The SCRA limits all student loan interest rates for active-duty members of the military to 6%. This limit applies to both federal and private student loans. In fact, this interest cap applies to all debt, so long as the debt exists before you begin active duty. If you acquire new debt after active duty starts, it does not qualify for the interest rate cap. Federal law guarantees this rate cap, but you will probably have to contact your loan servicer to get things set up.

0% Interest for Service in a Hostile Area – Anyone who qualifies for special pay by serving in a hostile area doesn’t have to pay interest for up to 60 months. This benefit applies to all Federal Direct student loans issued after October 1, 2008.

Enlisting is obviously a major commitment. But, anyone currently in the military or considering joining should be aware of the potential opportunities to lower their interest rates.

Get Congress to Act

If you have student debt, it probably means that you don’t have millions of dollars to pay lobbyists or contribute to campaigns. However, borrowers as a group still wield enormous power in Washington.

Over the years, there have been proposals that would allow federal borrowers to lower their interest rates to the same levels that banks get when they borrow from the government.

Showing up to vote each November is critical to influencing DC. Think about the senior citizens. Seniors on Medicare and Social Security individually don’t have much money to spend on campaign contributions. But, they vote, and everyone in Congress knows it. Student loan borrowers currently number over 40 million. If they all voted for candidates who pledged to make a difference on student loans, lower interest rates could be just the beginning.

Refinance Student Loans at a Lower Interest Rate

Student loan refinancing is another excellent way to get a lower interest rate on your student loans.

When you refinance your student loans, a new lender pays off some or all of your old student loans in full. The borrower then agrees to repay the new lender according to new terms. The downside to this approach is that this eliminates the old loan’s terms and perks. So, if you like having income-driven repayment plans or loan forgiveness, it is best to skip refinancing and stick with federal loans.

The big advantage of refinancing is the enormous potential interest savings. College students without a job or a degree are risky bets and usually get charged higher interest rates by lenders. Graduates with a job and a degree are far less risky and generally more able to get better interest rates.

The more savvy a borrower is about the refinance process, the more they can save. There are multiple ways that a borrower can use refinancing to get lower interest rates…

Pick a Shorter Repayment Term or Loan Length

By refinancing student loans to a shorter-term loan, borrowers can significantly lower interest rates.

As an example, take a look at the best rates currently available on 5-year fixed-rate loans.

Rank	Lender	Lowest Rate
1		3.95%
2		3.99%*
3		4.88%

If we stretch things out to 20 years, the lowest possible rates jump considerably:

Rank	Lender	Lowest Rate
1		6.08%*
2		6.53%
3		6.55%

To see rates available for 5, 7, 10, 15, and 20-year loans, be sure to check out our best refinance rates by category page. These rates are updated monthly to provide a good idea of the best available rate for any given loan type.

The longer the loan repayment length, the riskier a variable-rate loan becomes. We typically suggest that all borrowers avoid variable-rate loans longer than ten years. However, if interest rates are at extreme highs, a longer-term variable-rate loan might make more sense.

Shop Around to Find the Best Rate

In the realm of student loan refinancing, the surest way to get the lowest possible rate is to shop around.

All lenders offer a range of loan types and loan options. What they don’t advertise is that all lenders evaluate applications differently. Lenders put different weights on different factors, such as the college you attended, how long you have been in your job, and your profession. A borrower with a high credit score and average income might get vastly different results than a borrower with an average credit score and high income.

Accordingly, the companies advertising the best rates may not be the company that actually offers you the best rate. Because there are so many variables in play, it is essential to check rates with several different lenders. We typically suggest investigating 5-10 lenders out of the many student loan refinance companies.

The good news about shopping around is that it takes very little time. Most borrowers can get a rate quote within 5 to 10 minutes.

Fortunately, shopping around does not hurt your credit score. The credit agencies treat multiple applications within the same window as a single application. This allows borrowers to shop around without fear of negative credit consequences. To be safe, try to keep your shopping around confined to a one- or two-week window.

Get a Cosigner

This option is a pretty lousy way to get a lower interest rate when you refinance. It can help borrowers with less than perfect credit qualify, but it is a massive obligation for the cosigner.

Getting a cosigner to help pay for college is one thing. Getting a cosigner to refinance is another story. Refinancing for some is more of a luxury. Obtaining lower interest rates is nice and saves money, but does it justify the risk that your cosigner is taking on?

That being said, borrowers who are struggling to get approved may be able to refinance successfully with the help of a cosigner. If that cosigner was on the original loan, this move might make even more sense. The cosigner’s obligation doesn’t change, but the borrower’s ability to pay it off faster is improved. This is a win for both parties.

Some borrowers use refinancing as a workaround to get their cosigner released from the loan. If the cosigner is on the original loan but not the refinanced loan, the cosigner has no further obligations when the refinance goes through.

Pay Off Existing Debt First

When refinancing, the two most significant factors in approval decisions are your credit score and your Debt-to-Income ratio (DTI).

Completely eliminating a debt can have a considerable impact on your DTI. Lenders usually don’t care about your current debt balances. For example, if you have a car loan, it doesn’t matter if you owe $20,000 or $5,000. The impact comes from monthly payments on your credit report. Lenders care about the $300 per month that you owe on your car loan. If you eliminate that monthly payment, your DTI improves. It also increases your chances of scoring the best possible interest rate.

If you are about to eliminate a monthly payment, be sure to let some time pass so that the debt doesn’t appear when lenders check your credit report.

Fix or Improve Your Credit Score

Lenders consider your credit score when determining the rates they offer you. Therefore, anything that you can do to improve your credit score will help your cause.

Correcting errors on a credit report is a quick way to get a boost, but that isn’t the only way to improve it. The impact of negative items on a credit report drops with time.

Find a New Job or Get a Raise

This tip probably falls into the easier-said-than-done category, but it can make a big difference to your debt-to-income ratio.

Different lenders have different requirements for documenting income and time required at a job, but a recent paystub is sufficient proof of income for many.

Refinance Again

The option to refinance a second or third time is something that many borrowers fail to consider.

The good news for consumers is that there is no rule or limitation on refinancing multiple times.

If you have had the good fortune of getting a higher-paying job, improving your credit score, or eliminating some old debt, there is a good chance that better rates may be available. Similarly, if the first time through the refinance process you skipped out on shopping around, a second bite at the apple might be an excellent opportunity to lock in the best deal.

With many lenders offering refinancing services, jumping around a few times can be an effective strategy.

Lowering Student Loan Interest Rates

The thirteen different approaches that can be used to get lower interest rates represent an opportunity for nearly all borrowers to get some help on their student loans.

Different strategies require different levels of effort, but for many, a minimal investment of time can result in major savings.

The post 13 Ways to Get a Lower Interest Rate on Your Student Loans appeared first on The Student Loan Sherpa.

The purpose of this article is to help borrowers identify and avoid student loan scams. Much of the advice contained below comes directly from the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB). I’ve also included details on some of the types of scams I’ve seen over the years.

Calling Out Scammers by Name: I’d love to make a list of known scammers as a resource for borrowers. Sadly, a scary experience dealing with a scam company makes going that route especially difficult.

What Does a Student Loan Scam Look Like?

The most effective scams that I have seen create a sense of urgency with borrowers. Act now before the opportunity disappears.

For many responsible borrowers, a limited offer is worth investigating. If there is even a chance that the offer is legitimate, the potential savings would be enormous.

While the rules for student loans do change, it never happens quickly, and it never costs any money to benefit. All federal student loan programs are free to enroll. Additionally, paying for expert help just to fill out paperwork is almost always a mistake.

This graphic from the FTC best summarizes some of the telltale signs of a scam:

Lower Student Loan Interest Rates: Real or Scam?

The good guys and the bad guys both promise lower interest rates.

What is Legitimate – There are many student loan refinance companies that can actually lower your interest rates. Most of them work with both federal and private student loans.

The legitimate companies make money by offering lower interest rates to borrowers who are highly likely to pay back their student loans. These lenders pay off your existing debt with your old lenders. Then, you pay back the new company at, what is hopefully, a lower interest rate. The aggressive advertising, lower interest rates, and sign-up bonuses often trigger the “too good to be true” alarm for many consumers.

The best way to know you are dealing with a legitimate company is that good credit will be required. They will need your credit report to determine if you are a borrower who pays back your debt and can afford the loan.

This service is normally advertised as student loan refinancing, and there are many lenders in the refinance business. I’ve ranked and reviewed the nationwide companies offering student loan refinancing. Note that although some lenders received negative reviews, they are still legitimate companies. They just provide rates and terms I think could be better.

When a Lower Rate is a Scam – One of the biggest red flags to be aware of is when a company promises you lower interest rates and student loan forgiveness. You can get lower rates by refinancing your federal loans. However, those loans become private loans and lose eligibility for federal forgiveness programs. Alternatively, you can pursue federal forgiveness, but the government won’t be cutting your interest rate.

If everybody gets a lower interest rate, it is also probably a scam. Refinance companies only make money if they are smart in choosing their customers. If they pay off the loans for people who won’t pay back their debt, they will lose money.

Obama, Trump, or Biden Student Loan Forgiveness

Scammers love to advertise forgiveness programs associated with the current president. They try to benefit from the harsh political climate by appealing to a particular point of view.

However, it isn’t fair to say that all federal forgiveness programs are a scam. It has just been my experience that if somebody attaches the President’s name to the program, it is more likely to be fraudulent in some way.

What is Legitimate – Many student loan forgiveness programs exist for federal student loans. The most common are the forgiveness programs offered through income-driven repayment plans and Public Service Loan Forgiveness. There are also programs for borrowers in certain occupations, such as teachers and military personnel.

You can enroll in the legitimate programs directly through your federal student loan servicer. No special expertise is required. Although, researching and understanding the programs is very helpful for preventing errors. Furthermore, there is no cost to signing up for any of the student loan forgiveness programs. Federal law created these programs and are often a term in your student loan contract with the government.

Legitimate student loan forgiveness does not immediately wipe away all of your debt. It takes years to reach. It is a good idea for some borrowers, while others are better off aggressively paying off their debt.

Student Loan Forgiveness Scams – One of the biggest giveaways to a student loan forgiveness scam is a high-pressure sales environment. If somebody is aggressively trying to push you into a program that will erase your debt, it should be a red flag. Another huge red flag is any fees associated with the program. Again, student loan forgiveness is federal law, and signing up costs nothing. There should be no enrollment fees or monthly costs.

Another common red flag is when a company advertises a special relationship with the Department of Education. Such a relationship doesn’t exist. Student loan programs are open to all federal borrowers. No outside company can change your eligibility.

Finally, if you are working with a company that requires your FSA PIN, now known as the FSA ID, you are likely getting scammed. The Department of Education makes it clear that the borrower is the only person who should have access to this number.

You can achieve enrollment in any student loan forgiveness program through your federal student loan servicer. Any third party that tries to enroll on your behalf likely has bad intentions. At best, they are charging you money to fill out forms that you could submit on your own. At worst, they are flat-out stealing your money or your identity.

Student Loan Consolidation Scams

Student loans are consolidated when multiple existing loans are combined into one new larger loan. There are two types of consolidation. One is federal student loan consolidation, and the other is private loan consolidation. For many borrowers, student loan consolidation is a helpful or even necessary step. Unfortunately, there are also scammers advertising student loan consolidation services.

Legitimate Student Loan Consolidation – Many borrowers elect to consolidate their federal loans to gain eligibility for certain programs. For example, FFEL loans are not eligible for public service loan forgiveness, but they can be included in a federal direct consolidation loan and gain public service forgiveness eligibility. You can consolidate your federal student loans only directly through the federal government. This process can only take place using the Department of Education’s consolidation site.

Student Loan Consolidation Scams – If you are paying for this service, it is almost definitely a scam. Whether you are consolidating your federal loans for program eligibility or consolidating on the private market for a lower interest rate, the cost to you should be $0. Another red flag is if the company you are working for asks for your FSA ID or FSA PIN.

$0 Per Month Student Loan Payments

Like many other scams, the $0 per month payment scams start with a legitimate federal program and use it to take advantage of borrowers.

What is Legitimate – Federal student loans do have income-driven repayment plans. If you don’t have any income or your income is below a certain level, your monthly payment could actually be $0. It is also possible that the government could eventually forgive your loan. This is something you can do directly with your student loan servicer and requires no expertise or special knowledge.

When $0 Payments are a Scam – If you see advertising for income-driven payments, the odds are pretty good that it isn’t legitimate. Loan servicers and the federal government don’t spend money advertising these options. They have no incentive to promote these programs. They simply make it available for the borrowers who need help. If you are seeing aggressive advertising from a company offering $0 payments, it is a huge red flag.

Private lenders don’t have income-driven repayment plans. If you see an advertisement for this, somebody is probably trying to sell you something, and you probably don’t want to buy it.

Personalized Student Loan Consultations 

There are numerous self-described student loan specialists offering personalized advice for individual student loan circumstances. This is a gray area in the world of student debt.

For the sake of transparancy, I should disclose that I am someone who falls into this category of self-described specialists offering individual guidance.

As such it probably isn’t fair for me to say who or what is legitimate and what might be a scam. What I will say is that when shopping for a service like this be wary of ongoing fees and lofty promises.

Paying someone for an hour of their time and insight is reasonable. There isn’t any reason for monthly charges, or charges based upon the amount of debt forgiven. Likewise, nobody can promise loan forgiveness or a specific outcome. Anyone engaging in either practice should be viewed with some skepticism.

Red Flags to Avoid

If the specific details covered so far don’t apply directly to your situation, the Consumer Financial Protection Bureau has some excellent general guidelines for identifying and avoiding student loan scams.

According to the CFPB, the following are all signs of a scam:

Pressure to pay high up-front fees. It can be a sign of a scam when a debt relief company requires you to pay a fee up-front or tries to make you sign a contract on the spot. These companies may even make you give your credit card number online or over the phone before explaining how they’ll help you. Avoid companies that require payment before they actually do anything, especially if they try to get your credit card number or bank account information.

Promises of immediate loan forgiveness or debt cancellation. Debt relief companies cannot negotiate with your creditors for a “special deal.” Federal law sets payment levels under income-driven payment plans. For most borrowers, loan forgiveness is only available through programs that require many years of qualifying payments.

Demands that you sign a “third party authorization.” You should be wary if a company asks you to sign a “third party authorization” or a “power of attorney.” These are written agreements giving them legal permission to talk directly to your student loan servicer and make decisions on your behalf. In some cases, they may even step in and ask you to pay them directly, promising to pay your servicer each month when your bill comes due.

Requests for your Federal Student Aid ID. Be cautious about companies that ask for your Federal Student Aid ID. Your FSA ID — the unique ID issued by the U.S. Department of Education to allow access to information about your federal student loans — is the equivalent of your signature on any documents related to your student loan. If you give that number away, you are giving a company the power to perform actions on your student loan on your behalf. Honest companies will work with you to develop a plan. Further, they will never use your FSA ID to access your student loan information.

A Couple Final Tips from the Sherpa

I once received a call from a student loan company that was going to fix my student loans. The glaring red flag was the fact that they didn’t even know my name. If you call me to offer a service and don’t even know my name, I know you are a spammer. Enough Americans have student loan debt that some scammers just call every phone number they can.

However, I’ve received mail from companies that had detailed information about my student debt situation. After some investigation, I determined that they were scams attempting to charge me for free federal student loan programs. The lesson: companies that have your loan information on file may not be legit. To this day, I have no idea how the scammers knew about my debt balance.

Finally, calls, texts, emails, letters, and ads about brand new laws and special programs from Congress are almost always scams. Any new student loan program from the government gets a ton of attention. These programs are easy to verify via a quick Google search. Don’t ever assume that some company has special access or information.

The post Student Loan Forgiveness Scams vs. Legit Programs – How to Tell the Difference appeared first on The Student Loan Sherpa.