Ben White

Student Loan Refinancing

The market for private student loan refinancing continues to grow with multiple options piling up over time. As a group, these companies are far more similar than they are different, and the main differentiating factor in most cases will be the rate each gives you on a given day.

Applications are short and surprisingly painless, so do yourself a favor and at least do the preliminary rate-check application for as many companies as fit your needs. The initial applications won’t even affect your credit until things look promising enough that you decide to actually move forward and agree to a real credit check (a “hard” pull). Almost all companies also offer a solid welcome bonus for refinancing via one of the links below.

Here is the landscape:

Laurel Road

Laurel Road (part of Darian Rowayton Bank or “DRB”) is a Connecticut-based bank and was one the first big players to return to the student loan game along with SoFi. In addition to conventional student loan refinancing for those with good debt/income ratios, they were the first to offer a program specifically geared toward residents (where payments during training are $100/month regardless of the total loan amount or your current income). Forbearance for up to 12 months (in 3-month chunks) are also available. Laurel Road refinances 100% of private and federal loans with a minimum of $5,000 and no maximum, no origination fees, offer fixed and variable interest rates, and flexible loan term lengths up to 20 years.

The welcome bonus is $300.

SoFi

SoFi (which stands for “Social Finance”) was the first company to make a name for itself in the current game of loan refinancing and is by far the most likely to send you pre-qualification letters in the mail. The “social” refers to the fact the company originally funded loans at select institutions using money invested by school alumni. Since then the company has grown and begun using conventional financing, but they still claim that some community money makes it into every loan. SoFi is the biggest shop in town.

For residents, SoFi offers a new program with $100/month payments for up to 4 years of training. You are eligible as a post-match MS4, but only if your training is 4 years or less in duration. The total reduced payment period is actually up to 54 months (with the final 6 months earmarked for the transition to becoming an attending).

If you apply to SoFi in your final year of residency with a signed contract, you’ll get the attending rate instead of the resident rate. Oddly, you will be placed in a mandatory forbearance during that year so that you won’t be able to get an autopay discount during that time.

Minimum loan amount of $5k, variable and fixed rates, and must have graduated from an “eligible” school.

Splash Financial

Splash Financial is a (previously doctors-only) refinancing company that used to have a uniquely affordable resident program that was a true forbearance alternative ($1/month for up to 84 months/7 years of training). Now the resident rate is the usual $100/month.

Splash offers terms from 5-20 years with pretty solid resident rates, particularly for those who plan to be aggressive once out of training.

The min/max loan amounts are $25,001 and $337,500.

Splash has a $500 welcome bonus for loans above $100k.

Brazos

Brazos Higher Education only lends in Texas but tends to offer super low rates. As I live in Texas, this is one of the companies I have personally used to refinance my student loans and had an effortless experience. Even when the rate ranges were similar to others I had better luck with Brazos. They offer the usual spread of term-lengths and variable/fixed options.

The cashback bonus is a generous $600.

Lend-Grow

Lend-Grow is the newest player in town. They exclusively partner with small banks to fund loans and have a generous $500 welcome bonus.

LendKey

LendKey (formerly known as cuStudentLoans, where “cu” stood for “credit union”) is the only lender to offer interest-only payments for a period of time. You can do the math with your own loans to see where that leaves you, but for some borrowers interest-only is the only private refinance that’s affordable early on.

While one should theoretically always put extra money toward paying down loans, having an interest-only option also gives you some month-to-month flexibility, particularly if you’re transitioning from lower to higher income and want to refinance but don’t want to start paying a ton immediately.

No origination fees, variable and fixed options are available. The maximum loan amount is $300k. If you apply with a cosigner, LendKey advertises their straightforward co-signer release program, which will help your parents get off the hook after 12 months of on-time payments.

The welcome bonus is $300.

CommonBond

CommonBond is unique in that they offer a “hybrid” 10-year rate plan which is fixed for the first 5 years and then variable for the last 5 (essentially analogous to a 5-year ARM [adjustable-rate-mortgage]). While hybrid rate range doesn’t look particularly impressive, the hybrid rate will fall somewhere between the variable and fixed rates and helps mitigate the anxiety of committing to a full variable rate (particularly if one hopes to be aggressive in paying down the loan and not keep it long into the variable rate period). No origination fees, but there is an accepted/eligible school list.

Another few unique facets:  Like Laurel Road, CommonBond also allows you to refinance and take on your parents’ Parent PLUS loans to get your parents off the hook. They also offer academic deferment if you decide to go back to school for that MBA. And lastly, they promise to fund the education of a child in need for every loan they refinance.

Trainees can receive an attending rate during their final year with a signed job contract.

Earnest

Earnest has some interesting unique features compared with the other players. The main one is totally arbitrary term limits (up to 20 years). You want 10.5 years? You got it! What this means is that you can choose a term length and pay that monthly amount, or you can decide on an exact monthly amount that works for you (and then pay that over the resultant calculated term). To get the lowest rate, however, the goal is really to choose the shortest term that you can afford/get approved for.

Other interesting features are biweekly payments (to help cut down on accrued interest) and the ability to quickly refinance/change between fixed and variable rates without charge or penalty. If you choose the variable and get skittish, you can lock down a reasonable fixed before it’s too late. Likewise, if your income increases such that it would be easier to pay more per month if rates went up, then you could switch to a variable rate and take on that risk. Additionally, if you need to lower your payments because of tough times, they offer rapid refinancing at a longer term to make it happen (of course you’ll also pay more and probably have a worse rate, but hey). Loans start at $5,000, no origination fees. Most but not all states are eligible.

The welcome bonus is $300.1

ELFI

ELFI, which stands for “education loan finance,” is a product from SouthEast Bank. Terms from 5-20 years, $15k minimum, no set maximum. Usual no fees. No resident program, but they do offer (but do not guarantee) a deferment to match your grace period if you have one. There is also an approved school list.

Citizens Bank

Citizens Bank offers new student loans in addition to loan refinancing. The maximum loan amount is 300k. The product is otherwise typical: No origination fees. Fixed or variable. Co-signer release available. Nothing special/unique, and I’ve also never seen them offer a welcome bonus to anyone.

Credible

Credible isn’t an actual lender, it’s a student loan refinance marketplace. When you apply through Credible, you apply to up to multiple lenders simultaneously, which would be a nice time savings and an easy head to head comparison. That said, several big players aren’t on their list, so you’d have to (and should) apply to those separately. Nonetheless, it’s undoubtedly still the fastest way to check out multiple companies at once.

Purefy

Purefy is another middleman and currently links up borrowers to PenFed (for loans up to $150k) and Citizens Bank. Their rate calculations use your credit score and degree more than current income. In my limited experience, the CB rate was a half-point lower through Purefy than through Citizens Bank directly, which is a huge difference. Go figure. Given that the CB website also leaves something to be desired, it’s definitely worth taking the two minutes to add Purefy to the initial rate checks, as they were able to offer one of the lowest rates around.

First Republic Bank

FRB is a private bank that entered the refinance game recently to lure high-income earners toward their banking business. In order to do that, their rates have thus far been lower than the competition. The FRB student loan is really just a gigantic personal loan, and as such, can be a little more flexible in its amount and what it pays off for you. It also means you may not be able to refinance again. Minimum of $60,000 and maximum of $300,000.

Another cool part:

First Republic will rebate the interest that has been paid on the loan, up to 2.00% of the original loan balance if the loan is paid in full within 48 months.

The downside? You must live “near” one of their physical branches to qualify: San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City. How near is near? Put your zip code into their website and find out if you qualify.

Again note that this is a personal loan and not a student loan, which means that it’s not discharged on death or permanent disability etc. That might make you very uncomfortable, so only pursue FRB if you’ve already purchased good disability and term life insurance.

Summary

There are never any fees or costs to refinancing with any of these players, so you can refinance, keep an eye on the rates, and refinance again if they go down, collecting referral bonuses all the while.

Always make sure to read the fine print on anything you sign.

And remember, most of all, while you can switch from private company to private company, you can never go back to any federal loan repayment plan once you refinance privately. If PSLF is a real possibility for you, then you probably shouldn’t be refinancing.