[/caption]Student loan debt is the single greatest burden on this generation. The national student loan debt is now over $1.4 trillion. Time Money calculates that more than 25% of students graduate with excessive debt. The Atlantic as far back as 2009 compared student loan debt to indentured servitude noting that like indentured servitude, student loan debt is secured “…not by property but by personhood.” Like the debts of indentured servants, the contracts cannot be altered by the borrower, and can never be discharged by any means. And you know what? At least indentured servitude came with the guarantee that the job built into the contract would actually pay off the debt. There is no such guarantee for student debt.
This situation has left many feeling hopeless under the crushing weight of debt. There is some relief for those whose debt consists mostly of federal student loans. There are loan forgiveness programs for students in public service, and income-based repayment plans for students who don’t earn enough to make their monthly payments. There are not nearly as many protections for borrowers with private student loan debt. However in recent years a new class of lender has emerged, and they’re targeting students in need of relief.
The student loan consolidation companies featured in this ranking of the top student loan refinancing companies often offer borrower protections and services that the traditional student loan lenders don’t. Unemployment protection and services, co-signer release, lower interest rates, flexible repayment terms, and financial planning assistance are a few of the services offered by some of our top ten student loan refinancing companies. Many of these companies are socially conscious and have developed new and innovative ways to invest in their customers and society. This often takes the form of career counseling services, programs designed to help students find jobs if they become unemployed, or creating a supportive community comprised of employees and customers. Even those that don’t offer as many extra services still offer more favorable and flexible terms than many traditional lenders.
Not all borrowers will be eligible for consolidation through these companies. Many of them have somewhat strict credit and income requirements (although co-signers with good credit go a long way toward qualification). Students who do qualify for the student loan consolidation services we feature in our ranking can experience incredible savings, support, and increased financial security.
Earnest offers flexibility and services unparalleled in the student loan refinancing market. Customers can choose a custom term for their loan down to the month as long as it is between five and twenty years. After the first six months of on-time payments, customers can skip one payment per year with no penalty, as it just gets added to the end of the loan. Payment due date can be extended seven days, and once every six months customers can switch between fixed and variable interest rates. Earnest offers unemployment protection and services, and customers can defer the loan if they choose to attend grad school. Earnest even works with customers to refinance loans that were at one point defaulted and then rehabilitated. The one negative is that Earnest does not allow for the use of a co-signer so applicants must be able to qualify on their own.
Fixed Interest Rates: 3.35%-6.39%
Variable Interest Rates: 2.81%-6.19%
Loan Terms Flexibility: 180 options for personalized terms between 5 and 20 years.
Average Savings: $21,810
#2. Link Capital
Link Capital serves medical students exclusively. Though the market served by Link Capital is much more narrow than other services featured in our ranking, their services are tailored to meet the unique needs of medical students and thus merit inclusion in our ranking. One of the major benefits offered by Link Capital is deferment during residency. Link Capital offers a product that can be specifically designed to meet the needs of the borrower at any stage of their medical career. The rates, services, and flexibility of Link Capital are competitive with the many student loan refinancing companies which serve a more general market.
Fixed Interest Rates: 3.3%%-7.2%
Variable Interest Rates: 2.77%-5.67%
Loan Terms Flexibility: 3, 5, 7, 10, 15, 20 year plans
Average Savings: $33,400 over 10 years
Those who refinance their loans through SoFi gain a partner who is invested in their success. SoFi takes unemployment protection to another level. Not only do they pause your payments temporarily if you become unemployed, they will help you search for a new job. Even if you don’t lose your job, SoFi offers incredible support services including career coaching and wealth advisors. SoFi recognizes that a loan is an investment in their customer’s’ success and strives to help them achieve their goals. Customers returning to school will have the option to defer their refinanced loans. Another feature offered by SoFi is the ability to transfer Parent Plus loans to the child for whom the loan was taken as part of the consolidation.
Fixed Interest Rates: 3.35%-7.125%
Variable Interest Rates: 2.815%-6.740%
Loan Terms Flexibility: 5, 7, 10, 20
Average Savings: $22,359
#4. Laurel Road
Laurel road offers highly competitive interest rates in both the fixed and variable categories. Customers also have the option to consolidate a parent plus loan with their own, relieving their parents of that obligation. While the unemployment protection isn’t as fully-featured as that offered by some of the companies in this ranking, customers can receive up to 12 months of economic hardship deferment throughout the life of the loan. Like most of the other companies in our ranking, the initial credit evaluation is conducted through a soft credit pull. Laurel Road offers a flexible range of loan terms with five options providing borrowers plenty of flexibility.
Fixed Interest Rates: 3.95%-6.99%
Variable Interest Rates: 2.99%-6.42%
Loan Terms Flexibility: 5, 7, 10, 15, 20 year plans.
Average Savings: $20,000
LendKey is one of the only companies in the student loan refinancing business that offers a co-signer release after just 12 months of on-time payments. LendKey offers unemployment protection, allowing students to defer loans for up to 18 months total throughout the life of the loan when they are between jobs. LendKey also offers a resource center available to anybody considering refinancing their student loans to help them understand the process and make the decision that’s right for them.
Fixed Interest Rates: 3.25%-7.26%
Variable Interest Rates: 2.67%-6.31%
Loan Terms Flexibility: 5, 7, 10, 15, 20
Average Savings: $10,000
CommonBond offers a unique hybrid interest rate option which is only available for ten year loans. The rate is fixed for the first five years and becomes variable after that. CommonBond offers unemployment protection, allowing customers to pause their payments while looking for work. CommonBond is also a company committed to social change. For every loan they fund, they also fund the education of a child in need, and CommonBond has funded over $1 billion in student loans. CommonBond strives to bring together their employees and customers into a community that can change each other’s lives and the world. The community comes together across the country for networking, panels, speaker events, dinners, career assistance, and to support CommonBond’s nonprofit partners. CommonBond is one of a few new companies in the student loan refinancing space that recognizes a social obligation to their customers and the world.
Fixed Interest Rates: 3.35%-6.74%
Variable Interest Rates: 2.80%-6.73%
Loan Terms Flexibility: 5, 7, 10, 15, 20
Average Savings: $24,046
#7. Education Loan Finance
When you refer a friend to Education Loan Finance you get $400 for the referral, and your friend will also get $100. In addition, there is a fast track bonus that gives you $100 if your loan is approved and you accept the offer within 30 days of the initial application. Customers who encounter economic hardship or medical difficulty may be eligible for forbearance at the discretion of the bank. Co-signer release is available if the student is refinancing co-signed loans and qualifies for an ELFI loan based on their individual credit.
Fixed Interest Rates: 3.19%-6.69%
Variable Interest Rates: 2.39%-6.01%
Loan Terms Flexibility: 5, 7, 10, 15, and 20 year terms
Average Savings: N/A
EDvestinU offers co-signer release as long as the account is current after 24 consecutive months of on-time payments. The primary borrower must also have a credit score greater than 749 and make more than $30,000 per year to qualify for co-signer release. Customers who return to school may have their loans deferred as long as they are enrolled more than half-time. In the event of a borrower’s death, any amount owed on the loan will be discharged even if a co-signer remains on the loan. Deferment is also offered for up to 12 months throughout the life of the loan for customers facing economic hardship.
Fixed Interest Rates: 3.94%-7.54%
Variable Interest Rates: 3.17%-6.770%
Loan Terms Flexibility: 5, 10, 15, 20
Average Savings: N/A
#9. Citizens Bank
Most of the lenders featured in this ranking offer a 0.25% interest rate discount for customers enrolled in auto-pay. Citizens Bank also offers another 0.25% interest rate discount if you are already a qualifying customer of Citizens Bank. Once the borrower has made 36 consecutive on-time payments they can apply to release the co-signer from the loan. Citizens Bank also offers the option to transfer a parent plus loan to the child for whom it was taken out during the consolidation process. Borrowers can receive up to 12 months of deferment or forbearance during the life of the loan.
Fixed Interest Rates: 3.74%-8.24%
Variable Interest Rates: 2.78%-8.63%
Loan Terms Flexibility: 5, 10, 15, 20 year options
Average Savings: $132/mo, ($15,800 average total over ten years)
#10. College Ave Student Loans
College Ave Student Loans offers students the opportunity to decide whether or not to limit the payments to just cover interest for the first two years of the loan. This can provide much-needed breathing room while the student sets themselves up financially. College Ave is the only student loan refinancing service in this ranking to offer the two years of interest-only payments. Co-signers may be released from the loan after more than half of the payments have been made, the most recent two years’ payments were made on-time with no hardship forbearance, the borrower meets income requirements, and a credit bureau shows no late payments on any other obligations in the past two years. In the case of death or permanent disability the borrower’s loans will be forgiven.
Fixed Interest Rates: 4.65%-7.50%
Variable Interest Rates: 4.13%-7.13%
Loan Terms Flexibility: 5-15 years (11 options)
Average Savings: N/A
There are many good reasons to refinance your private student loans. Traditional lenders have very little incentive to negotiate the terms of your loan contract because there is no way out from under it except to pay them. If your private loans have a co-signer, then they really have you over a barrel because if you don’t pay, you may leave a loved one on the hook for your debt. These companies often offer very little in terms of unemployment protection or forbearance due to economic hardship. Refinancing with the companies featured in our ranking gives you the ability to opt out of this one-sided relationship. The loans offered through these companies are still student loans by nature, and can’t be discharged. But the interest rates, flexible loan terms, and other services like unemployment protection and deferment for returning to school can be a major relief and save you tens of thousands of dollars. So while refinancing may not be the best move for everybody, you owe yourself to at least explore the options available to you.
Why is There Such a Big Difference?
The staggering difference between a traditional student loan and a refinanced student loan can be difficult to understand. The differences actually have as much to do with you as they do with the lenders. When a student takes out private loans they are often very young, with no established credit of their own. Many 18 to 22 year olds don’t have a sophisticated understanding of finance and debt, and thus are more likely to opt into student loans that are unfavorable to them. Their limited options due to lack of established credit increases the chances of them ending up in an unfavorable loan. However, a year or two after a student graduates and has begun to establish their credit, things are quite different. Better to understand the challenges posed by your original loan contracts and can seek out better options. Companies featured in our ranking offer you, a more established, financially cognizant borrower, the option to correct the mistakes you made when you were younger. These companies also have the benefit of lending you money once you have completed your degree and proved somewhat that you can earn money and be financially responsible and stable. This puts them in a better position than many companies lending money to students still in college and allows them to charge overall lower interest rates.
Should I Refinance My Federal Student Loans?
While it’s possible to receive lower interest rates from some of the top ten student loan refinancing companies ranked here, in most cases it’s better to keep your federal loans in the federal programs. There are many federal programs, including consolidation programs that can benefit you. The federal programs are also incredibly flexible if you experience financial hardship and unemployment. And if you work in public service, there are programs that allow you to pay your loans for ten years based on your income, and then the rest is forgiven. Keeping your loans eligible for programs like income-based repayment can be a massive relief and let your prioritize your private loans in difficult situations. So in most cases refinancing your federal loans through a private company isn’t your best option.
How to Maximize Your Chances of Qualifying
The most important thing is to not miss payments or default on your current student loans. If you’re still in school, start researching your repayment options well before your graduation so nothing surprises you. Research the terms of your federal and private loans, and the various repayment options you have for each. If you don’t make enough to make your payments, try to enroll in income-based repayment for your federal loans as soon as your grace period is over. This will keep your federal loans out of default while you deal with your private loans. Even most private loans have a grace period, so use this time to secure the best job you can and research the minimum income requirements of these top ten student loan refinancing companies. If you determine refinancing is the correct path for you, do it as soon as possible. The faster you refinance, the better off you’ll be and the more you’ll save.
Rates, Terms, and Savings
The bulk of the points were determined by the interest rate ranges, flexibility of loan repayment terms, and average savings of customers who refinance through the company. The interest rates listed represent the ranges of the starting fixed and variable interest rates. Check with your company of interest to determine how high the variable interest rates can climb.
Fixed Interest Rates:
3.5% or less=3
6.5% or less=3
Variable Interest Rates:
2.5% or less=3
Loan Terms Flexibility:
1 point per option to a maximum of six
We also awarded points based on the features offered by the student loan refinancing companies. The number of points awarded per feature is tied to the usefulness of that feature.
Soft Credit Check: 1 Point
Lower Interest Rate for Auto Pay: 1 Point
Can you Transfer Parent Plus to Child?: 1 Point
Re-fi for Defaulted and then Rehabilitated loans: 2 Points
Unemployment Protection/services: 2 Points
Deferment for Return to School: 2 Points