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.

What does all this movement mean for borrowers?

Regulators claim that the move is in the best interest of borrowers. However, the exact benefits are murky at best.

We do know that hundreds of Navient employees are becoming Maximus employees. It isn’t clear how a new corporate entity signing their checks will mean a better experience for borrowers.

The Creation of Navient

In 2013, student loan giant Sallie Mae split into two different companies: Sallie Mae and Navient. Sallie Mae tasked Navient with handling federal student loan servicing.

At the time, Sallie Mae faced significant regulatory pressures, and many consumer advocates criticized Sallie Mae for providing lousy advice to borrowers and failing as a servicer.

Borrowers were told that Navient’s split from Sallie Mae might actually be a good thing. Why? Because the Department of Education contracts were “very specific in what companies like Navient can and can’t do for borrowers.”

Instead, Navient repeatedly faced controversy, investigations, and lawsuits.

Navient’s Checkered Past – A Timeline of Failing Borrowers

Same People, Different Name

Aidvantage is supposedly different and better for borrowers.

Once again, we are told that the contract terms mean borrowers will get better servicing.

Borrowers who were around for the 2014 transition know that “strict” contract terms don’t necessarily mean better servicing.

Maybe this time will be different. Maybe the new contract terms are actually better for borrowers.

I’m not holding my breath.

The fact that hundreds of Navient employees are now Maximus/Aidvantage employees scares me. The name on the building couldn’t matter less. The guidance borrowers receive is what matters.

If the same people provide the same short-sided help for borrowers, nothing will improve.

Tips for Borrowers Stuck with Navient/Maximus/Aidvantage

New servicers are almost always an issue for borrowers. In some cases, it is a minor inconvenience. In others, the servicer transition causes major problems like missed payments and adverse credit reporting.

Sadly, borrowers don’t have the right to prevent a servicer transfer. Worse yet, borrowers have limited options for picking a new servicer.

There are several things Naivent borrowers can do right now to avoid major issues with the transition:

The post Navient’s Strange History and Student Loan Exit is a Warning to Borrowers appeared first on The Student Loan Sherpa.

They offer competitive rates and the opportunity for many borrowers to save money on their student loans.

Yet, the existence of NaviRefi is strange.

What is NaviRefi?

NaviRefi loans are offered by invitation only to Navient customers. The loans are issued by Earnest, which is another student loan refinance company owned by Navient.

It isn’t clear why these loans are not called Earnest loans. NaviRefi doesn’t appear to offer any advantage or disadvantage compared to Earnest.

If I were to speculate, I think Navient’s theory is that an invitation-only brand plus Earnest will generate more revenue than Earnest alone.

Ultimately, the reasoning behind NaviRefi’s existence doesn’t matter. The main concern for most borrowers should be how NaviRefi stacks up against other refinance lenders.

NaviRefi Review Basics: The Navient Rates and Rules

The advertised rates and terms with NaviRefi are fairly competitive.

Borrowers can refinance federal and private loans with NaviRefi. Like most legitimate lenders, NaviRefi does not charge borrowers any application, origination, or prepayment fees.

NaviRefi loans are all serviced by Navient.

NaviRefi Advantages

One area that separates NaviRefi from other lenders is the repayment length options.

Most lenders offer 5, 7, 10, 15, and 20-year loans. NaviRefi customers can select any number of years between 5 and 20. Thus, if you are looking for a 13-year repayment length, NaviRefi is a great choice. Perhaps unsurprisingly, Earnest is the other national lender that gives borrowers a wide range of repayment lengths.

However, the biggest advantage to NaviRefi is probably their interest rates. The lowest advertised rates with NaviRefi are competitive with the best refinance rates on the market.

A Note from the Sherpa: NaviRefi is not included in this site’s student loan refinance lender rankings. As an invitation-only lender, NaviRefi is not open to the general public. If NaviRefi starts accepting applications from all borrowers, they will get added to the list.

A Warning for Borrowers

NaviRefi, like nearly all refinance lenders, has a significant risk that all borrowers should understand.

NaviRefi allows borrowers to refinance their federal government student loans into a private loan. In some cases, this move makes sense. However, it is risky for other borrowers. Refinancing federal debt into a private loan permanently erases federal perks like income-driven repayment and federal student loan forgiveness.

NaviRefi is especially problematic in this regard because Navient is a federal student loan servicer. There is a warning about the risk of converting federal student loans into private loans on the NaviRefi site, but it is buried deep within a very large help and questions page.

I’d like to see NaviRefi, the private student loan refinance lender, do more to separate itself from Navient, the federal student loan servicer. If they called the loans Earnest loans, it would reduce the chances of borrower confusion.

NaviRefi Refinance Reviews from Reddit, the BBB, and Others

The reputation of NaviRei is limited but not great. Additionally, the connection between NaviRefi and larger companies like Navient and Sallie Mae is troubling.

NaviRefi loans are a product of Navient, and Navient was the subject of many lawsuits for failing to properly service federal student loans. Additionally, Navient was originally part of Sallie Mae, another lender with a negative reputation.

Shifting to NaviRefi specifically, the reviews are mixed at best.

The Consumer Financial Protection Bureau (CFPB) – The CFPB database on NaviRefi complaints only has two borrower complaints. Unfortunately, both complaints raise a serious issue about private refinancing of federal student loans. Consumers should use caution in the refinance process if they have federal student loans.

The Better Business Bureau (BBB) – The Better Business Bureau does not have a listing for NaviRefi, but they do include Earnest and Navient. Navient is not rated, but they have a 1/5 score from 95 BBB users. Earnest is A-rated by the BBB but has a 1.27/5 score from 26 users.

Reddit – Looking through the Reddit posts about NaviRefi, the feedback is mixed at best. Some readers were able to lower their interest rates with a NaviRefi invitation, but others took issue with the Navient affiliation and the application process. Those that shopped around seemed to find better rates elsewhere, but this information was limited.

Student Loan Sherpa Readers – I haven’t received much reader feedback on NaviRefi. If you do have a NaviRefi invitation, I’d be interested in hearing how the rates offered by NaviRefi compare to other lenders, especially Earnest.

NaviRefi Questions and Answers

The post NaviRefi Review: Student Loan Refinancing with Navient appeared first on The Student Loan Sherpa.

If the primary borrower falls behind on the loan, cosigners must step in and cover those payments. Furthermore, even if the primary borrower is managing the loan well, cosigners may find it more difficult to qualify for lines of credit or loans.

Fortunately, many cosigners can remove themselves from the student loan through a cosigner release. Securing a cosigner release isn’t always easy, but between the traditional route and a popular shortcut, many borrowers can secure a Navient Cosigner Release.

The Navient Cosigner Release Requirements

The basic requirements for a release on a Navient student loan are fairly straightforward.

The primary borrower on the loan must do the following:

• Make Payments: The borrower must make 12 consecutive, on-time payments of both principal and interest while on a standard repayment plan.
• Provide Proof of Completion: They must submit proof of graduation or successful completion of course of study.
• Provide Proof of Income: They must submit proof of income.
• Verify Status and Age: The borrower needs to be a U.S. citizen or permanent resident and reach the age of majority (18 in most states).
• Apply for Release: They must submit an official application for a Cosigner Release.
• Pass a Credit Check: The borrower must demonstrate their ability to pay the loan independently by passing a credit review.

It’s worth noting that the cosigner does not need to take any actions during this process. It’s entirely up to the primary borrower to fulfill these requirements. Typically, the challenge for most borrowers is making a year’s worth of payments and successfully passing the credit check.

If these requirements pose a significant challenge, borrowers might consider refinancing the loan. This refinancing shortcut can bypass the need for a cosigner release by replacing the existing loan with a new loan under different terms, effectively removing the original cosigner from any obligation.

The Navient Application

The full Navient cosigner release application is available here.

As part of the application process, Navient requires borrowers to provide proof of income. According to Navient, the following forms of proof are acceptable:

• current year W-2 or 1099-MISC,
• copy of a paystub issued within the last 60 days,
• SSI/disability award letters issued within the current calendar year,
• current year statement of retirement income or annuities, or
• most recent Federal tax return.

Navient may request additional information at their discretion. Thus, it’s important to be prepared to supply further documentation if needed.

While the application process might be tedious, it is generally straightforward. However, the credit check remains the biggest obstacle for most borrowers, even those those with high incomes and good credit scores. It’s this step that often determines whether Navient will grant the cosigner release, as it assesses the borrower’s financial stability and ability to manage the loan independently.

The Cosigner Release Timeline

According to Navient, when applying for a cosigner release, it typically takes about 30 days to process the application. However, if Navient requires additional documentation to support the application, this timeframe can extend.

Upon approval, it can take up to an additional 30 days before the cosigner’s credit report reflects this change. This is because Navient reports updates to the credit bureaus at the end of each month. Consequently, if Navient grants the cosigner release just after they update the credit bureaus, the cosigner will probably have to wait the full 30 days for the credit report to reflect the release.

However, if necessary, Navient can provide a letter documenting the release of the cosigner. The cosigner can use this letter to prove that they are no longer legally responsible for the debt. This can be helpful for immediate financial transactions or negotiations that require evidence of reduced debt obligations.

Passing the Credit Check and the Problem with Traditional Cosigner Releases

All borrowers applying for a cosigner release must undergo a credit check. This credit check includes a hard-pull of the primary borrower’s credit report. (A hard-pull, or hard inquiry, means that the credit check will count as a credit inquiry and can potentially hurt the applicant’s credit score.)

Navient does not publicly disclose the specific minimum credit score or income required to pass this credit check. This lack of transparency can make it difficult for borrowers to gauge their chances of success.

The challenge with cosigner release requests is that lenders like Navient have almost no incentive to approve them. Cosigners provide the lender with an additional layer of security. This is because two parties are legally bound to repay the debt. Releasing a cosigner leaves only the primary borrower responsible, reducing the lender’s security without any benefit to them.

Unlike new credit applications, where approving creditworthy individuals generates business, the cosigner release process involves no new loan issuance but merely adjusts the terms of an existing one. Hence, lenders gain little by approving these releases.

Perhaps unsurprisingly, cosigner release rejections have led to significant criticism. Furthermore, they have been the source of complaints to the Consumer Financial Protection Bureau (CFPB). One CFPB report found that cosigner release policies in the industry were “often opaque” and “created substantial roadblocks for borrowers.” The same report found a 90% rejection rate, though specific data for individual lenders was not provided.

Given these obstacles, many borrowers turn to refinancing their student loans as an alternative method to achieve a cosigner release.

A Shortcut to a Cosigner Release

When a borrower refinances their student loans, the refinancing company pays off the existing loans and replaces them with a new loan, usually with different terms.

Student loan refinancing traditionally appealed to borrowers because the terms of the new loan can include lower interest rates and lower monthly payments. However, with the challenges borrowers face in obtaining cosigner releases, borrowers have begun using refinancing as an alternate strategy for removing cosigners from the loans. Refinancing eliminates the need for a cosigner release by simply paying off the original loan, thereby releasing the cosigner from any further obligation associated with that debt.

Readers of this site have reported the most success using SoFi or Splash Financial to get approved without a cosigner. However, there are about 20 different national lenders that provide refinance services.

The Problem with Refinancing and Making a Decision

A new loan with new repayment terms is typically the advantage of refinancing. However, these new terms can potentially be a disadvantage.

Borrowers who have Navient loans with low interest rates may find that the refinance shortcut is not the best route.

If you’re uncertain about whether to refinance or pursue a cosigner release through Navient, it could be wise to explore both options simultaneously. Start by applying for the cosigner release with Navient to see if you can maintain your favorable rate without your cosigner. Meanwhile, initiate the refinancing process to compare the terms you might receive from different lenders.

At present, the best interest rate currently offered by refinance lenders is about 2%. Those who have interest rates with Navient below 2% may find that jumping through hoops to get the cosigner release is the best approach.

The post How to Qualify for a Navient Cosigner Release (Plus a Shortcut) appeared first on The Student Loan Sherpa.

Of all the reader emails we receive, the most common boils down to the following: Sallie Mae/Navient did X… they should have done Y… what do you suggest I do?

Fortunately, there are several ways of dealing with Sallie Mae and Navient complaints.

Getting Started with Compliant Management

When resolving any student loan issue, the best thing you can do is get all your ducks in a row. If you had conversations via email, have all of your emails handy. If it is a billing issue, have your lender statements and your bank statements ready to go. Your goal should be to have any document that might be useful at your fingertips.

Where do I go for help when Sallie Mae or Navient Ignore my complaints?

Normally the first call to make is to the general customer service number. The person on the other end of the phone should be trained to help you find a solution, or to put you in touch with the right person. Unfortunately, this is not always the case.

One practice that can be very helpful is to make sure that the person you are talking to has the authority to fix your problem. For example, suppose you submitted a payment over the phone and it was supposed to be applied towards loan A. Instead of applying it towards loan A, the service representative applied it towards loan B. When you call to have your issue fixed, make sure the person you are chatting with can help. You can ask them by saying: “I’m calling about a payment I made where funds were applied to the wrong account. Are you able to credit the proper account so that my payment is processed correctly?” If they cannot help you, ask to be connected to someone who has the authority to fix your problem.

Calling up the Navient and Sallie Mae Food Chain

If traditional customer service does not work, Sallie Mae and Navient both have customer service advocates. These individuals work for Sallie Mae or Navient, but they should be in a position to rectify any errors made. Think the customer advocate as ombudsman of sorts.

If you want to reach out to either customer advocate, their contact information is as follows:

Sallie Mae Advocate

Address:
Office of the Customer Advocate
P. O. Box 3349
Wilmington, DE 19804-4349

Phone:
(855) 342-2014

Navient Customer Advocate

Address:
Office of the Customer Advocate
P. O. Box 4200
Wilkes-Barre, PA 18773-4200

Phone:
(888) 545-4199

Email Address:
advocate@navient.com

What if Sallie Mae or Navient isn’t helping at all?

If you have done everything you can do with the company and not gotten anywhere, you still have options.

If you have Department of Education Loans (better known as federal loans), you can submit a Navient complaint to the Department of Education Ombudsman. The Ombudsman page with the Department of Education has a great explanation of the process, as well as contact information for getting things started.

If you have private loans, the Department of Education Ombudsman will not help.  Fortunately, the Consumer Financial Protection Bureau can be of assistance. If you file a complaint against your lender with the CFPB, they will be required to respond to explain their side of the situation. Having the CFPB act as an intermediary lets Sallie Mae/Navient know you are serious, and it also can help shed light on the issues to all parties involved. Here at the Student Loan Sherpa, we have previously discussed the steps to filing a Student Loan complaint with the CFPB.

In some circumstances, it may be possible to transfer your student loans to another lender or servicer. For example, borrowers denied a cosigner release by Navient may choose to refinance their loans with a new lender.

Organizing Your Thoughts and Getting Actual Help

Often getting an issue resolved comes down to your patience and ability to explain the problem. Yelling, losing your temper, or getting frustrated will only get in the way of getting your issues resolved. The best thing you can do for yourself is to get the person on the other end of the phone on your side.  If they want to help you, things will be much easier.

One thing to remind yourself is to focus on the facts, not your feelings. If you complain by saying something isn’t fair, you are not going to get very far. If you focus on the facts of your particular issue, you will get further. You should try to fill in the blanks on the following before you make your call:

I have an issue with Sallie Mae because they ______________________.

This was improper because ______________________.

In order to fix this issue, I need someone to ______________________.

If you are able to explain what your issue is, why it is an issue, and how to get it fixed, your odds of success will be much higher.

The post Resolving Complaints with Navient or Sallie Mae appeared first on The Student Loan Sherpa.

To some borrowers, refinancing Navient loans seems like the answer to their problems. The idea of taking their student loan business elsewhere AND getting a lower interest rate sounds like a no-brainer.

Unfortunately, refinancing isn’t the best approach for all Naivent borrowers. In some instances, it can be a huge mistake.

When Refinancing Navient Loans Makes Sense

To refinance wisely, borrowers need two things to come together: opportunity and strategy. Determining whether or not refinancing is a good idea is relatively simple.

• Strategy – A refinance only makes sense if it saves money. For private student loan borrowers, the question is simple: can I get a lower interest rate elsewhere? If the answer is yes, a refinance strategy makes sense. For federal student loan borrowers, the question is a bit more complicated. Programs like income-driven repayment and Public Service Loan Forgiveness can be great resources. If borrowers need these federal perks, dealing with Navient may be a necessary evil. If borrowers won’t ever use the perks that go with federal loans, opting for a lower interest alternative can make sense.
• Opportunity – Refinancing is a great option, but not everyone can do it. Lenders like Laurel Road and SoFi offer interest rates starting at about 2%, but the catch is that prospective customers need to have a decent income and credit score. For these lenders to make money on their low-interest loans, they must be sure that borrowers will pay it back in full. The good news for borrowers is that each lender evaluates applications differently. Several lenders may see you as a bad bet and reject your application, but it only takes one lender to see you as a good investment. For this reason, borrowers interested in refinancing should check out rates with at least 3 or 4 of the many student loan refinance companies.

Borrowers looking to remove a cosigner from their Navient loan may also consider refinancing. Navient offers a traditional cosigner release process, but refinancing is often a quicker and more efficient approach.

Will Navient Make Refinancing Difficult?

Jaded borrowers might suspect that Navient will try to make the refinance process as difficult as possible. The good news is that there is very little Navient can do to stand in the way. Most refinance lenders handle the payoffs to old lenders so that the borrowers have to do very little.

In short, when you refinance, dealing with Navient becomes your new lender’s problem.

Does Navient Refinance Student Loans?

In the past, Navient did not provide any student loan refinance services.

However, Navient does now offer refinancing to some borrowers through NaviRefi. Unfortunately, this service is limited to select borrowers invited to participate.

Earnest makes the NaviRefi loans. Earnest is the student loan company recently acquired by Navient. As a refi lender, Earnest has a reputation as one of the better student loan refinance companies, but it isn’t clear that the NaviRefi loans offer the same rates as Earnest. Unlike nearly all other refinance lenders, NaviRefi doesn’t advertise the interest rates they offer.

Borrowers considering a NaviRefi loan should also consider the many other companies do offer this service. Navient cannot prevent you from refinancing your student loans elsewhere.

Bottom Line

Dealing with Navient can be a headache. For some borrowers, refinancing can bring an end to dealing with Navient.

This financial move can save a small fortune in interest and get student loans paid off much faster. However, a student loan refinance only makes sense in certain circumstances. Borrowers need to carefully evaluate their options before taking the plunge. Once refinanced, there is no going back.

The post Should I Refinance My Navient Loans? appeared first on The Student Loan Sherpa.

Katie writes:

Dear Loan Sherpa,

I am a co-signer of my daughter’s student loans that we took out about a decade ago (she has a Ph.D. now, at least), and initially, they were Sallie Mae. Then they went to Navient, I guess. We had always assumed they were eligible for forgiveness for working in certain sectors — public loan forgiveness, I guess it is called. However, we were told that Navient loans are private, and therefore not eligible. Is there any way to convert them?

Thanks for any advice here!

Katie

Before Doing Anything: Verify the Loan Status

The tricky part about Katie’s question is that both Navient and Sallie Mae have managed private and federal student loans.

The only way to know the status of your loans for certain is to visit the Department of Education’s Federal Student Loan Database. If the loans show up on this database, they are federal loans. If you can’t find your loans in the database, they are likely private loans.

Can I Convert Private Student Loans into Federal Student Loans?

If your loan is private, it isn’t eligible for programs like Public Service Loan Forgiveness or income-driven repayment plans. Furthermore, there is no procedure or mechanism to convert a private loan into a federal student loan. Although some in Congress have made relevant proposals to resolve the issue, these proposals have received limited support.

Borrowers with Sallie Mae and Navient private loans can slowly convert them into eligible federal debt via creative repayment. However, this approach won’t provide the immediate fix that Katie seeks.

Fortunately, even if you are stuck with private loans, there are a couple of ways to make your payments go further.

Option 1: Take Your Business Elsewhere

One of the biggest developments in student loans over the past five years has been the private student loan refinancing market’s growth. There are now many companies that will refinance old high-interest loans at a lower interest rate. The catch is that you have to be a good credit risk for a new lender to take on your debt. That means a high credit score and sufficient income to pay all of your bills comfortably.

If Katie’s daughter fits the above description, she could refinance without having Katie co-sign. That means the loans fall off of Katie’s credit report, and her daughter potentially gets a lower interest rate and/or lower monthly payments. One benefit of this approach is that it would provide Katie with a cosigner release.

Option 2: See if Navient can help out

If Katie and her daughter are facing payments that are not affordable, they might be able to convince Navient to temporarily lower the interest rate on their loans due to their hardship. This could result in smaller monthly payments and a larger portion of the payment actually reducing the principal balance. Navient offers this relief through a program called the Navient Rate Reduction Program. The program exists to help borrowers who didn’t have the money to keep up with their student loans.

The problem with the program is that it isn’t a borrower’s right under the student loan contract. Accordingly, Navient can approve or deny you for the program at their sole discretion.

Final Thoughts on Converting Navient or Sallie Mae Private Debt into Federal Loans

Unfortunately, there is no method in place to turn a private loan into a federal loan. For private student loan borrowers, that means no income-based repayment plans or student loan forgiveness.

Fortunately, even if you’re stuck with a private loan, there are at least a couple of ways you can make your monthly payments go a little bit further.

Next Steps

• Visit the federal student loan database to investigate whether your debt is private or federal.
• For private loans, reach out to the lenders offering the best refinance rates.
• For federal loans, make sure your employer is eligible for Public Service Loan Forgiveness.

The post Can I Convert Navient/Sallie Mae Private Loans Into a Federal Loan? appeared first on The Student Loan Sherpa.

Typically your money first pays off the late fees, then existing interest, then it counts towards the principal balance of your loan. Paying extra money may lower the minimum payment the next month, or it may not change things. Put simply, just sending a check is not enough. You have to make sure your funds were processed correctly.

This week we received an email from a reader who had issues with how Navient applied his student loan payment.

He writes:

Basically, I was granted an IBR at the value of 0$ for 12 months. As the IBR was approved my unemployment deferment was ended and the IBR started. However, there were 91$ in late fees that had to be paid by Mar 22 so I called Navient and made the payment on time over the phone, specifying I wanted this payment to go to late fees.

Next time I check my account, only 2/3 of the 91$ went towards late fees and 1/3 towards unpaid interest so another 1/3 of the late fees is now due before April 22nd! I called back but they didn’t want to cooperate. In fact, I even asked for a letter to be sent testifying how they decided to apply the payment and they refused to send it.

How do you suggest I proceed? Should I write them a letter and threaten legal action? Is there a government body that can help me straighten them out?

A Few Initial Thoughts

Threatening legal action is probably an act of last resort. It is also something that you should only do if you are willing to back it up with a lawsuit. Most people think threatening to hire a lawyer will get results, but at a company like Navient, they probably hear these threats all of the time. Furthermore, this is a relatively straightforward issue.

Having dealt with loan servicers for a number of years on my loans, I’ve often found the best results come from playing nice with them.

Navient may be a company that you justifiably hold in low regard, but the person on the other end of the phone could be a very pleasant individual just trying to earn a paycheck. If you are kind over the phone, that person will be far more likely to want to help you.

Requesting a Payment Correction

Typically, if the borrower has an option for how the payment is applied, and there is a mistake, a simple correction can be made. In this case, it is very surprising that they even applied the payment towards interest instead of the late fees. It is even more surprising that they could not make this change per your request.

In a situation like this, the first call should definitely be to customer service. If you get a negative response, asking why is a powerful question.

• Does the service rep just not have the authority to make the change?
• Is there a form that needs to be filled out first?
• Is there a term of the loan at issue?

Navient can’t just do what they please, so if you ask why and get to the bottom of the issue, you may find your solution as well.

Escalating Things by Filing a Complaint

If working directly with Navient customer service does not get you anywhere, it still isn’t time to hire a lawyer. There are a few other steps that can be taken to resolve the issue.

• Call the Navient/Sallie Mae Customer Advocate – These people are employed by Navient/Sallie Mae but given more authority to address issues. They are employed to be problem fixers. If you can explain what this issue is and how to fix it, these advocates can potentially get it done.
• File a complaint with The Consumer Protection Bureau – The CFPB is a government agency tasked with protecting consumers. If you file a student loan lender complaint, the lender has to respond. Navient gets huge contracts from the government, so they have a huge incentive to participate in the process and find a solution.
• As a last resort, the Department of Education has an ombudsman tasked with addressing student loan issues. This again is another resource to consider trying.

The Bottom Line

Dealing with a payment applied incorrectly can be a monster headache.

While getting angry or threatening to file a lawsuit might make you feel better, Navient probably knows you won’t be hiring an attorney over a $30 issue.

There are free alternatives to get things addressed if you can’t solve things directly with Navient, and they may even be more effective.

The post What to do When Navient Applies a Payment Incorrectly appeared first on The Student Loan Sherpa.

The program is called the “Rate Reduction Program”. It is designed to give borrowers a break who are struggling with their private student loans.

The exciting part of this program is that it applies to private student loans. While there are great federal programs for lowering payments and student loan forgiveness, the Rate Reduction Program is somewhat unique in the private sector.

Rate Reduction Program Benefits

Borrowers who sign up for the Rate Reduction Program can get their interest rates lowered down to 3% or lower depending on individual circumstances. For those with double-digit interest rates, it is a huge break.

The major downside with the Rate Reduction Program is that Navient doesn’t want to make it too easy to sign up for or too popular. When people sign up, Navient makes less money on interest. The program is good for them, because it keeps people paying, and some money is better than none. However, Navient clearly has the motivation to keep this program as a last resort for borrowers.

Rate Reduction Enrollment

If you want to get signed up for the rate reduction program, try these steps:

1. Start out organized – Navient will have a ton of questions about your finances, so have detailed information about your income and all of your monthly expenses.
2. Talk to someone from the Rate Reduction Program – When you call the standard Navient number, they will first direct you to a customer service representative. This person may not even be aware of the rate reduction program. Asking to be transferred to the people who administer the Rate Reduction Program directly saves you a bunch of time and increases your odds of success. Speaking with the collections department may also work. Over the years enrollment in rate reduction has been something of a moving target, so persistence is key.
3. Work with the person on the other end of the phone – The interest rate reduction is not a term of your student loan or a legal requirement. Navient is under no obligation to lower your interest rate. Being nice instead of demanding will increase your odds of success.
4. Don’t forget to re-apply – The interest rate reduction is temporary. If you want to stay in the program, you must reapply. Be sure to set a reminder for yourself so that you don’t forget.

If you are denied…

If you cannot get your interest rate lowered, it is likely because Navient thinks you are making enough money to afford your student loans at your current interest rate.

It obviously sucks if they can lower your high-interest loans, but the good news is that you might be able to take your business elsewhere.

If Navient thinks you can afford your debt, other lenders may think the same thing. By refinancing your loans, you can permanently lock in a lower rate. There are a ton of companies offering student loan refinancing.

If you do get a lower interest rate…

If you can get a lower interest rate, through Navient or another company, take advantage of it.

Use the money you save each month and apply it towards your high-interest loans. The more you can attack the principal balance of your debt, the sooner it will be gone.

The post Getting a Lower Interest Rate with Navient appeared first on The Student Loan Sherpa.