There’s a lot going on right now with student loans, from relief offered due to the COVID-19 pandemic and discussions about potential student loan forgiveness, to extremely low interest rates which make student loan refinance seem appealing. You may be wondering how any of this affects you, and what you should do with your student loans. The answer isn’t simple, it will require you to look at your financial situation and make a decision on what makes the most sense for you. Here are a few things you should consider.
Learn more about the current Biden student loan forgiveness and repayment relief.
Types of Student Loans
Determining the type of student loan(s) you have is extremely important, and if you have federal loans you need to further break that down. You should also have an idea of how much student loan debt you have—it may be helpful to break down your debt by loan type.
The types of student loans you could have include:
- Federal loans under the FFEL program (generally not owned by the U.S. Department of Education, but some may be)
- Federal loans under the Direct Loan program (owned by the U.S. Department of Education)
- Federal loans under the Perkins program (generally not owned by the U.S. Department of Education, but some may be)
- Private student loans through a private lender
The student loan relief offered due to the COVID-19 pandemic has been limited to student loans owned by the U.S. Department of Education (ED-owned Loans). Federal student loans which are not ED-owned (FFELP loans) and private student loans haven’t been offered the same type of administrative forbearance and 0% interest. While your lender may allow you to postpone your payments, you are likely still accruing interest on your loans.
Student loan forgiveness discussions under Biden
Once you determine the types of loans you have, it’s time to consider if refinance makes sense based on current discussions about student loan forgiveness in the Biden administration. It’s extremely important to note that these discussions about student loan forgiveness are still discussions, nothing has been approved. There are a few key areas of the conversation which are extremely important. The first is the forgiveness amount. We have heard that President Biden has been supporting $10k in forgiveness while many student loan advocates and congressional members have been pushing for $50k.
The second area of discussion is which types of student loans would be eligible. Would forgiveness be offered to all federal student loans or just ED-owned loans, and will private student loans be eligible? The discussion regarding federal student loans is still ongoing, but there are many who believe that private student loan forgiveness is highly unlikely.
And finally, there is the issue of eligibility qualifications for student loan forgiveness. Could there be income cutoffs or will forgiveness be offered to all student loan borrowers. Again, there is much speculation at this point, but there have been discussions about using a household income cutoff of $125,000 per year, and then potentially prorated forgiveness for those who make more. What we don’t know is any of the actual details. How the income threshold is determined could be on an individual borrower basis, or household income.
Should I refinance my private student loans during the pandemic?
Interest rates are currently very low, starting at 4.47% APR. Private student loans aren’t eligible for relief under the CARES Act, so it is worth it to consider private student loan refinance to help you repay your loans with a potentially lower interest rate. If you have stable employment, now may be a good time to refinance your private student loans and cash in on potential savings.
Best Student Loan Refinance Lenders
College Ave Student Loans
- Variable rate range: 5.99% – 11.99% APR1
- Fixed rate range: 5.99% – 11.99% APR1
- No application or prepayment fees
- Apply in 3 minutes or less for instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a refi borrower who selects the Full Principal & Interest Repayment Option with a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $250,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
ELFI Student Loan Refinance
- Our customers have reported that they are saving an average of $278 every month or will see an average of $20,774 in total savings after refinancing their student loans with Education Loan Finance.1
- Variable and fixed rates starting from 5.28% APR and 5.48% APR2
- Prequalify in as little as two minutes
- Award winning customer service from your dedicated Student Loan Advisor who is matched to you from the moment you sign up
1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 01/03/23 and 03/01/23. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.
2Rates accurate as of 09/26/23. The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. To qualify for refinancing or student loan consolidation through Education Loan Finance, you must have at least $10,000 in qualified student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
SoFi Student Loans
- Rates as low as 5.09% variable and 4.49% fixed1
- No fees or prepayment penalties
- Unemployment protection
1Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. 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 is not required to receive a loan from SoFi.
Splash Financial Refinance Loan
- Rates as low as 4.74%1 Variable APR and 4.96%1 Fixed APR
- No pre-payment penalties, origination, or application fees
- See rates in 3 minutes without affecting your credit score2
1The rates displayed may include a 0.25% autopay discount.
2To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Earnest Student Loan Refinancing
- Variable rates starting at 5.72% APR (including 0.25% Auto Pay discount)*
- Fixed rates starting at 5.19% APR (including 0.25% Auto Pay discount)*
- Choose your own monthly payment
- No fees of any kind and exceptional customer service for the life of your loan
- Check your rate in under 2 minutes
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.44% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.97% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
*Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. Not all borrowers will qualify for our lowest rates, and your rate will be based on creditworthiness at time of application.
The information provided on this page is updated as of 11/28/2023. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.
Should I refinance my federal student loans during the pandemic?
Determining if you should refinance your federal student loans during the pandemic will depend on the type of federal student loans you have, ED-owned Loans or Federal Student Loans not ED-owned.
ED-owned Loans
If you have federal student loans which are held by the U.S. Department of Education, you may want to take some time to determine what actions you should take. As part of the CARES Act, loan payments were suspended, and student loans were granted a temporary 0% interest rate. These relief measures are set to expire on Dec. 31, 2022.
You have some time to determine your plan. However, during this time it would not be wise to refinance your federal student loans as you will not get an interest rate of 0% from a private lender.
Federal Student Loans not ED-owned (Some FFELP and Perkins Loans)
Your loans are not receiving any current benefits under the CARES Act. However, there is a chance your loans could be considered for forgiveness under the Biden administration. But we don’t know what, if, and when that will happen.
The best thing you can do is to keep your account in good standing. While you may want to give it a little more time to understand where student loan forgiveness is going, you want to come up with a strategy and method to make your decision on how to proceed with your student loan repayment.
You could consolidate your loans with a Direct Consolidation Loan. You will then be able to take advantage of the same benefits offered to ED-owned Loans. That would also help you buy some time to decide how you want to proceed.