LendKey Student Loan Refinance Review Overview

LendKey ranks highly in the Student Loan Sherpa Refinance Lender Rankings because they have a long track record of approving borrowers that other lenders reject and offering low interest rates.

However, there are some red flags with LendKey that borrowers should review before moving forward.

LendKey Basics

LendKey offers a wide range of loans and has very competitive interest rates.

Borrowers can refinance both federal and private loans with LendKey. Like most legitimate lenders, LendKey does not charge application fees, origination fees, or prepayment penalties.

How does LendKey Refinancing work?

The application is just like with any other lender: you provide some basic loan details and agree to a credit check. After that, LendKey connects you with a local credit union that actually gives you the loan.

This method helps small credit unions and local banks compete nationwide. By joining forces, they cut down on advertising expenses, which lets them offer very low interest rates. However, since these are local credit unions, they often have a bit higher acceptance rates compared to big national lenders.

The LendKey Pros

LendKey stands out mainly because it offers lower interest rates and easier approval criteria. Many people choose LendKey for their first refinancing. As their credit scores and incomes get better, they might refinance again elsewhere to get even lower rates.

LendKey offers the option to only pay interest for the first four years of the loan. While this might seem attractive, it’s generally not recommended. However, it could be a good choice for someone like a resident physician who expects to earn a lot more money later on.

LendKey also has a $150 bonus for new customers. While $150 might not be a deciding factor in choosing a lender, it’s a nice extra.

LendKey Refinance Reviews from Reddit, the BBB, and Others

In preparing the LendKey refinance review, I looked at consumer feedback from other sources to find common complaints.

When researching lenders, consumer complaints are expected. The major red flags come if the same complaint keeps coming in or if there are an unexpectedly large amount of borrower complaints. I observed no such red flags with LendKey.

Here is what I found at various resources:

The Consumer Financial Protection Bureau (CFPB) – The CFPB database on LendKey complaints looks fairly standard. LendKey has more complaints than some lenders, but not a concerning amount. The most common issues raised were from borrowers who had problems with payment processing and falling behind on payments due to financial hardships.

The Better Business Bureau (BBB) – For a lender that has been in business for a long time, I was surprised to see only four customer complaints on the BBB site. Some of the complaints were from people with rejected applications, but this trend applies to most lenders.

Reddit – Looking through the student loans subreddit posts about LendKey, most people seemed satisfied with LendKey and pleased with the interest rates offered. One person did complain about the time it took LendKey to process payments, which was also an issue raised in the CFPB database.

Student Loan Sherpa Readers – In general, reader feedback on LendKey is somewhat limited compared to other lenders. Generally speaking, fewer reader comments with complaints is a positive sign. I’d also add that when I have personally helped readers shop around, LendKey approval rates and offered interest rates have been very competitive. Often they are the best on the market.

A Warning About LendKey and Others…

LendKey refinances private loans with federal government loans. Going this route makes sense in some circumstances, but it could be a massive mistake in others. Because there is no way to “undo” a student loan refinance, it is essential that the borrowers know whether combining their federal and private loans is a good idea.

Borrowers who are worried about a possible job loss or income reduction in the future would be wise not to refinance their federal loans. Federal loans come with borrower protections that no private lender can match.

Switching from one private lender to another does not carry the same risk. Borrowers with private loans can utilize a refinance to lock in lower interest rates and lower monthly payments. For this reason, it is often advisable to only refinance private loans.

LendKey: Frequently Asked Questions

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

For some borrowers, it is the only way to get a loan. For others, it is a way to get a lower interest rate on the loan.

To sweeten the deal, many student loan lenders will also tell you about co-signer release programs that they have. The pitch essentially boils down to the following, “if you pay your loans on time for a year (or two), you become eligible to have your co-signer released from the loan.”

Sadly, the advertisements don’t match up with reality.

Skepticism About Cosigner Release Programs

For years, this site has been skeptical about these co-signer relief programs.

For starters, most lenders are vague about the precise requirements to secure a release, but most do require a credit check. Sadly, the details are usually few and far between.

Most concerning though, is the lack of incentive for lenders to grant a release. Suppose mom and son are on the same loan. Son graduates and gets a decent job, and makes his payments for the next two years. If they apply for a co-signer release, what incentive does the lender have to release mom?

With a co-signer, if the son falls behind on his loans or loses his job, they can still collect from mom. Without the co-signer, they may be out of luck.  As a result, it is pretty apparent that lenders have every reason to advertise a co-signer release program, but every reason to deny people who apply for said release program.

Sherpa Tip: Skip the co-signer release programs.

There are alternative approaches for co-signers to get removed from the loan without navigating a strict co-signer release process.

Consumer Financial Protection Bureau Data Confirms Fears

A report from the Consumer Financial Protection Bureau confirmed my skepticism.

The CFPB reports that most lenders and servicers fail to alert borrowers who may be eligible to have their co-signers released. As a result, a majority of borrowers never even apply for a co-signer release.

For the borrowers who are savvy enough to investigate the program and apply for a co-signer release, over 90% of co-signer release applications are denied.

Any Excuse to Deny

In addition to the obvious credit score and income reasons for denial, lenders have gotten pretty creative in finding reasons to deny a co-signer release application.

For many lenders, a forbearance means an automatic co-signer release denial for the life of the loan. The CFPB notes that this aspect hit recession-era grads especially hard. When they got out of school and could not find a job, lenders were happy to provide forbearances for the grads. Many of these grads have been employed for a while, so they are applying for co-signer releases. Instead of getting the release, they are informed that because they once needed a forbearance, they will never be able to release their co-signer.

Perhaps even more shady is the co-signer release denial for making extra payments. This issue can be attributed to some clever lending accounting practices. The prepayment problem is especially common for people who paid several months worth of payments and then never made payments when they got bills reading $0.00 due. The CFPB did note that such a practice may violate Federal Law, so borrowers may have options in that circumstance.

Many other borrowers also report being denied a co-signer release for no reason in particular. If the lender doesn’t give a specific reason for the denial, the borrower has no way to improve their application for a future attempt, nor can they complain if it was the result of an unethical or illegal practice.

What should I do if my co-signer release is denied?

When it comes to evaluating the co-signer release application, lenders have all the power. However, that does not mean that borrowers are unable to find a better situation.

This site has previously extensively detailed options for borrowers who were denied co-signer releases.

In short, your best bets are to file a complaint with the CFPB, publicly shame your lender into doing the right thing, or use your good credit to take your business elsewhere by refinancing your loans with a new company.

The post The Co-Signer Release Myth Exposed by Consumer Financial Protection Bureau appeared first on The Student Loan Sherpa.

In this article, we’ll explore the powerful act of filing a complaint against your student loan company—a crucial step towards holding them accountable and resolving your specific problem.

Working with the Consumer Financial Protection Bureau (CFBP)

The CFPB was created in response to the mortgage crisis and subsequent recession. The purpose of the CFPB is to protect regular people from being taken advantage of by financial institutions.

The CFPB complaint process was designed to make reporting issues simple and provide a quick path to a resolution.

Filing a complaint can help others

One of the best examples of the CFPB complaint process making a difference was when they exposed the practice of auto defaults. A number of people complained to the CFPB that even though they had never missed a payment, when their co-signer died, their loans were automatically placed into default. CFPB used these complaints, created a consumer alert, and brought some attention to this nasty process. It was a positive step for many borrowers.

The only way the CFPB can detect deceptive or fraudulent practices is if consumers complain. When a bunch of people raise the same issue, it increases the chances of something being done.

Here are a few examples of how borrower complaints made a difference:

• Service members complained about violations of the Service Members Civil Relief Act – As a result of the complaints, one loan servicer was forced to return $60 million to 77,000 service members.  Further, these complaints led to new specific policies that have automatically saved service members over $20 million since 2015.
• Improvements to signing up for Income-Driven Repayment Plans – Complaints about the difficulty of signing up for income-driven repayment plans led to the Department of Education strengthening contractual requirements for loan servicers. The end result was a more streamlined enrollment process.
• Reducing the practice of “auto-defaults” – By shedding light on the shady lender practice of “auto defaults”, the CFPB drew enough attention to the issue that the largest private lenders have stopped including auto-default provisions in new contracts and stopped trying to enforce “auto-defaults” on older loans.

Filing a complaint can help you fix errors or mistakes

Did your loan servicer make a mistake calculating your balance?

Was there an error processing your payment, and now you have a late fee?

Filing a complaint can also bring attention to your individual situation. When you file a complaint, your information is sent to your student lender. They will have 15 days to respond to your specific complaint. According to the CFPB, all but the most complicated complaints are expected to be resolved within 60 days.

The good part about this process is that you are getting a third party involved in your dispute with your lender. Obviously, the CFPB is not some magical entity that can fix any problem, but it is one step you can take to ensure you are treated fairly.

How do I file a complaint?

The CFPB has several different complaint forms for various financial institutions, including a student loan complaint form. The form is broken into 5 easy steps.

1. What Happened? – This is the step where you explain exactly what went wrong with your student loan.
2. Desired Resolution – For this part, you explain exactly how you think the situation should be fixed. (Tip: Be reasonable, if you ask for a million dollars and a unicorn, you won’t get it)
3. My information – This is your contact information, make sure you give them an email that you actually check.
4. Product Information – This is the part you submit information about your lender AND upload supporting documents.
5. Review

Tips for filing a complaint

You will get the best results if you are reasonable and have good supporting documentation. The best way to communicate with your lender is via email or letter. Phone calls may get the quickest results, but you have very little in the way of proof at the conclusion of a conversation (unless you have a recording). For this reason, lenders are hesitant to communicate via email or letter. Even if you are forced to communicate by phone, at the very least, you can take notes of your phone calls. Track the time you called, who you spoke with, and what was discussed.

If you are going to submit a complaint, you might be able to make it better by discussing it with others first. In addition to the people you may already know, there are Facebook groups dedicated to student loans and student loan discussion forums. Be careful not to share any personally identifying information, but going through the exercise of discussing it with others first can help you better articulate your complaint and help you identify the key issue or issues to focus on.

Start your complaint with the CFPB here.

The post How do I file a complaint about my student loan company? appeared first on The Student Loan Sherpa.

Among the most troubling was that many borrowers are reporting that lenders have put loans that were current directly into default when the co-signer dies or declares bankruptcy.

The scary part about these complaints and this practice is that it is perfectly legal. The good news is that the CFPB has come up with a clever idea to help you avoid the dreaded “accelerated default” if your co-signer dies.

Here is an example of how this could play out:

Suppose you needed a private loan to pay for a couple of years of college. Because you didn’t have the credit needed to get the loan on your own, you had a parent co-sign.

Let’s say you graduate college and make timely payments for five years and your loan is halfway paid off. If your co-signer parent passes away or has to declare bankruptcy, your lender could immediately place your loan into default status.

This means that they would expect the payment due in full or nothing else. It also means that they report the default to all the credit agencies… which would destroy any decent credit score. Thus, not only would you be grieving the loss of a parent, your credit would be destroyed, and you would have a huge bill that might be impossible for you to pay off.

Why would a lender do this?

According to the full text of the CFPB report, borrowers “submitted complaints describing how debt collectors threaten to place liens on property or other assets if the decedent’s family members or estate administrators do not immediately pay the loan in full.”

Roughly translated, this means that the lenders are using the death of a loved one as an opportunity to get the loan paid off in full. If a parent or a grandparent dies, lenders are trying to get their money before any family member gets their inheritance.

Who could be affected?

With over 90% of private loans involving a co-signer, the reality is that most private borrowers could be subjected to this outcome.

While the CFPB report does not specify which lenders are using this tactic, they indicate that it is not limited to just one or a few companies. At this juncture, it’s impossible to know unless you or your attorney read the full text of all your private loan contracts.

What can be done to prevent my bank from defaulting my loan if my co-signer dies?

The CFPB’s report and analysis has scored some major points with this writer, but perhaps the most impressive part of their work was the CFPB blog article on the subject. In their article, they discussed ways borrowers can be proactive in avoiding default in the event of a co-signer death.

Specifically, they suggested looking into a co-signer release program by sending a letter or an email to lenders with the following message:

I am writing to you because I am seeking the release of my co-signer on my loan. Please conduct a review of my account to determine if I am eligible for co-signer release.

If you determine that I am not eligible to have my co-signer released from my loans, please provide an explanation, including the following:

• What is your current co-signer release policy?
• For what reason(s) am I ineligible for co-signer release?
• If I am not eligible for co-signer release now, when will I become eligible?
• What steps do I need to take to qualify for co-signer release?
• Do you anticipate modifying these requirements in the future? Will any future modifications apply to me when I seek to release my co-signer?

If I am unable to exercise this option at this time, please update/annotate my account to reflect that I intend to seek co-signer release as soon as possible. Please contact me at the point-in-time at which I am eligible to have my co-signer released.

In addition, if you are unable to provide any of the information or documentation I have requested or otherwise cannot comply with this request, please provide an explanation.

Thank you for your cooperation.

This idea is great for several reasons.

First, getting your co-signer released from the loan is great for their credit score and a great way to thank them for helping you pay for college.

Second, having your co-signer removed from the loan eliminates the possibility of your loan going into default if they die.

Finally, if thousands of lenders across the country send out the same email/letter with the exact language from the CFPB, it may force the hand of the lenders. Suppose a company is engaging in this “accelerated default” practice. If enough people are sending the same email/letter, it will be apparent that the CFPB has gotten the word out. Because these companies value their bottom line above everything else, they may decide that the bad press and potential lost business could be worse than the money they would make by enforcing these terms.

Start a movement!

The more people who send this email/letter, the bigger effect it will have on the lenders. Also, people who are successful in getting their co-signers released can avoid the risk of the dreaded “accelerated default”.

Securing a co-signer release

Fortunately, there are many different ways to secure a co-signer release.

The CFPB report makes it clear that getting a release asap is ideal. If sending a letter or email doesn’t work, explore different alternatives to get your co-signer taken off the loan.

The post An email you need to send to your student loan lender ASAP appeared first on The Student Loan Sherpa.