College Ave is starting to generate a lot of attention and offers a student loan refinance service that is definitely worth considering.

Today we will look at how these lenders stack up and the key differences between the two services.

The Basics: SoFi vs. College Ave

SoFi and College Ave both offer pretty competitive interest rates. Variable-rate loans currently start at 6.24% with SoFi and 6.99% with College Ave.  On the fixed-rate loan side of things, SoFi starts at 5.24% and College Ave starts at 6.99%. As loan length gets progressively longer, SoFi takes the lead in the interest rate comparison.

As far as repayment length, the companies have some key differences. SoFi has repayment lengths of 5, 7, 10, 15 and 20 years. College Ave recently added a 20-year repayment plan, and they are now advertising a total of 16 different loan terms between 5 and 20 years.

Additionally, College Ave will allow for interest-only payments for the first two years of a new loan. College Ave probably has more flexibility, but for the average borrower, we don’t necessarily see a particular advantage to the many options.

Digging Deeper: SoFi and College Ave Differences

If you look out our student loan consolidation rankings, right now SoFi checks in at 3rd place while College Ave is in 9th place.

The interest rate and repayment differences only partially explain the differences in the rankings for these two companies.

SoFi gets a boost in our rankings because they actually have a career services department dedicated to helping SoFi borrowers who are underemployed or unemployed. The calculation here seems to be that SoFi thinks they will be better off financially if they help their borrowers get a good job instead of spending money on debt collection. We see this consumer-friendly approach as a big plus.

Bottom Line

There are a few reasons that SoFi gets an edge over College Ave in this comparison.  However, the true test for most consumers will be the interest rates.  Because the rate ranges of these two companies overlap, it is entirely possible that College Ave offers a rate better than SoFi.  It is for this reason that both companies should be considered.  In fact, the more student loan consolidation companies you apply to, the better you can feel about the rate that you eventually find.  A full list of the major lenders is available here.

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At some points, College Ave has been a hit and offered some of the best rates on the market. Other times College Ave has been a miss, offering rates that lagged behind other lenders. Right now, College Ave definitely falls into the hit category.

College Ave now offers very competitive interest rates with their refinancing options, making them a good option in certain circumstances. However, there are a few red flags that borrowers should know before signing up.

College Ave Basics

Variable-rate loans with College Ave start at 6.99%, while fixed-rate loans also start at 6.99%. The highest rate offered is 13.99%. As of the most recent interest rate update, College Ave now is among the very best.

Borrowers must either refinance a minimum of $5,000 of debt, while the maximum is $150,000 (graduates of medical, dental, veterinary, or pharmacy programs have a maximum of $250,000). Like most other legitimate lenders there are no origination or prepayment fees associated with these loans.

Borrowers have between 5 and 20 years to repay the loans, and College Ave does provide a little bit more flexibility on repayment than other lenders. For example, while most other lenders let borrowers choose a 10 or 15-year repayment term, College Ave also offers a 12-year term, should it be desired.

Interest-Only Payments

One unique feature of College Ave loans is that they offer interest-only payments for the first two years.

This loan feature is a point of emphasis on their website, but we see it as a bad option for most borrowers. By making interest-only payments for two years, you will be providing a huge profit to College Ave while not touching your principal balance. If your debt-to-income ratio is good enough to get approved for the loan, it means you can probably afford to pay more than an interest-only payment.

The only exception here would be for professionals who are on a low income for the next year or two but are certain to see a substantial increase in the near future. An example would be young doctors who are on a modest salary in the short term but are highly likely to experience a dramatic increase. Even then, paying something towards the principal balance is still the preferable choice.

The Red Flags

One bit of information that does not draw a lot of attention on the College Ave website is the connection to Navient/Sallie Mae.  College Ave was started by former Sallie Mae executives, and some of their loans are serviced by Navient.  For many borrowers, one of the perks of student loan refinancing or consolidation is getting away from Sallie Mae/Navient, but College Ave may put you right back where you started.  Starting in January of 2018 CollegeAve student loans will be exclusively serviced by Nationwide Bank.  CollegeAve borrowers who refinanced before 2018 will still have Navient servicing their loans.

CollegeAve has changed loan servicers several times over the past couple years.

CollegeAve originally had their loans serviced by Navient. They briefly stopped their student loan refinancing and when they returned to the market, the loans were serviced by Nationwide Bank. In late 2018, CollegeAve again paused lending. When they returned the loans were then serviced by UAS Accounting Services. UAS doesn’t have a great reputation as a student loan servicer and the movement from servicer to servicer is troubling.

Finally, as with all private student loan refinancing companies, College Ave will convert your federal loans into a private loan. The advantage to this move is that it lowers your interest rates and can lower payments, but it comes with a lot of risks.

By getting rid of your federal loans, you are giving up perks like Income-Driven Repayment, and certain student loan forgiveness programs. Before making this step, make sure private student loan refinacing is a good idea for you. However, if you only plan on refinancing private loans, this is not a concern.

College Ave Review: The Bottom Line

With College Ave, the rates are solid, and the repayment length flexibility is better than most.

College Ave falls a little short of the best student loan refinance companies, but if you are a smart shopper out to get the best rate, it is a company worth investigating to see what rate you qualify for.

While College Ave isn’t the best lender on paper, the actual rate offered could end up beating out other lenders, which is why we suggest shopping around.

Click Here to check your rate with College Ave.

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