Education Loan Finance: Student Loan Refinance Review
As long as you qualify to refinance your student loans, you may be able to combine multiple student loans into one new loan, lower your interest rate and decrease your monthly payment. Doing so could save you money and make it easier to manage your loans. But remember, if you want to refinance your student … Continue reading Education Loan Finance: Student Loan Refinance ReviewThe post Education Loan Finance: Student Loan Refinance Review appeared first on MagnifyMoney.
Posted — UpdatedStudent loan refinancing companies may offer you different interest rates, loan terms and benefits, which is why it can be important to compare lenders before deciding which one to use.
In this review, we’ll cover:
What is Education Loan Finance?
Education Loan Finance student loan refi in a nutshell
What it takes to qualify with Education Loan Finance
How Education Loan Finance compares with other lenders
Who is Education Loan Finance best for?
Learn More
Taking a closer look at the online platform
The fine print
What to expect during the application process
How to compare student loan refinance companies
What is Education Loan Finance?
In 2012, SouthEast Bank was bought by Education Services of America (also known as Edsouth Services), a nonprofit that’s been in the student loan space for 30 years. SouthEast Bank went on to create Education Loan Finance, or ELFI, a division of SouthEast that offers student loan refinancing. ELFI is based in Knoxville, Tenn., which is also where the customer service representatives are based.
Education Loan Finance student loan refi in a nutshell
Fixed APR range3.09% to 6.69%
Variable APR range*2.69% to 6.01%
Loan terms offeredFive, seven, 10, 15 and 20 years
FeesThe are no application, origination or prepayment fees.The late fee is the lesser of $50 or 5% of the amount past due.There’s a $30 returned check or insufficient funds charge.
Maximum loan amountYou must refinance at least $15,000 in student loans. The maximum loan amount varies by applicant.
CosignersYou can apply with a cosigner.You can reapply to refinance the loan in your name and release a cosigner.
Savings opportunitiesNone
Other perksELFI will mail you a $100 bonus if you accept your loan offer within 30 days of your application date. You can earn $400 for referring new ELFI customers.
*Although the interest rate will vary after you are approved, the interest rate will never exceed 9.95% for the 5-year, 7-year, 10-year, 15-year, or 20-year term.
What it takes to qualify with Education Loan Finance
Credit score680
Income/employmentYou or your cosigner must make at least $35,000 a year.
- Federal and private student loans
- Parent PLUS loans that were taken out to pay for your education.
How Education Loan Finance compares with other lenders
You may find that there are a lot of different lenders that offer student loan refinancing. ELFI stands apart from some of the other top lenders with its relatively low interest rates and somewhat strict eligibility requirements.
In general, if you can qualify, ELFI may be one of the better options because the lender doesn’t seem to sugarcoat its offering. For example, ELFI doesn’t offer an interest rate discount if you sign up for automatic payments. Other lenders may offer you a discount, such as 0.25% off your interest rate, while you’re using autopay — and they may advertise this lower rate on their website.
While the lack of a discount may sound like a drawback, it isn’t necessarily a bad thing. If ELFI approves you for a lower rate than other lenders, then you’ll receive this lower rate whether or not you use autopay.
There are other potential advantages and drawbacks to consider as you’re comparing lenders.
Advantages of refinancing with Education Loan Finance
Soft credit pull preapproval. You can check your eligibility and get estimated loan rates with a soft credit check, which won’t hurt your credit score.
Open to residents of every state. While other lenders aren’t able to offer refinancing to residents of some states, ELFI’s refinancing is available to everyone in the U.S.
You can include multiple types of student loans. ELFI lets you combine your federal and private student loans. You can also include a parent PLUS loan, as long as your parent took out the loan to pay for your education.
Forbearance option. You may be able to put your loans in forbearance and temporarily stop making payments for up to 12 months. Eligibility is handled on a case-by-case basis.
Up to a 20-year loan term. ELFI offers five loan terms with both its variable- and fixed-rate loans. While the longest, a 20-year term, may lead to paying more interest over your loan’s lifetime, it may also lower your monthly payment. Having that option is a plus because some lenders don’t offer a 20-year term.
Bonus opportunities. ELFI offers three potential bonuses: a $100 bonus if you’re referred by an ELFI borrower, an additional $100 bonus if you accept a loan within 30 days of submitting your first application and $400 for each new ELFI borrower you refer.
Drawbacks of refinancing with Education Loan Finance
You must earn at least a bachelor’s degree. Other lenders may let you refinance your student loans once you earn an associate’s degree, or if you didn’t graduate.
No cosigner release option. If you add a cosigner to help you qualify for refinancing, or secure a lower interest rate, you may want to remove the cosigner later. Some lenders let you apply for a cosigner release (removing the cosigner without refinancing) after making a series of consecutive on-time payments. While you may need to agree to a credit check and meet all the requirements to take over the loan on your own, you’d keep the original loan terms if you qualify. ELFI does not offer such a cosigner release option.
The only way to remove a cosigner from an ELFI loan is to refinance again, without a cosigner. However, interest rates may have risen since you originally refinanced.
There isn’t a clear policy for death or permanent disability discharge. Some other lenders will always discharge the remaining loan balance if the borrower dies or becomes completely and permanently disabled. ELFI doesn’t have a clear policy and handles situations on a case-by-case basis.
Relatively high minimum credit score requirement. ELFI requires a 680 credit score, which is in line with some other refinancing companies, but a bit higher than a few other lenders that only require a 660 to qualify.
Relatively high minimum income requirement. ELFI requires you, or your cosigner, make at least $35,000 a year to qualify for refinancing. Some lenders only require a $24,000 a year income or don’t have an explicit minimum income requirement.
$15,000 minimum loan requirement. Other lenders may let you refinance as little as $5,000 in student loan debt, but ELFI requires you to refinance at least $15,000.
Who is Education Loan Finance best for?
Since it won’t hurt your credit, there’s no downside to applying for preapproval with ELFI to see if you qualify and check your estimated rates. Even so, the lender may be a better fit for some types of borrowers.
Creditworthy applicants with a high income relative to their debts may pass the eligibility requirements and lock in one of ELFI’s low interest rates. These types of applicants may get the best rates from many student loan refinancing lenders, but they they may not be eligible with other lenders based on where they live or which loans they want to refinance.
ELFI may not be the best option if you need a cosigner because it doesn’t offer a cosigner release, unless you reapply for refinancing again with either ELFI or a different lender. It also might not be a great fit for those who don’t have a lot of outstanding private student loan debt.
Borrowers may want to only refinance their private student loans to avoid losing the benefits on their federal student loans. But ELFI’s $15,000 minimum threshold could be difficult to reach with just your private student loans.
Taking a closer look at the online platform
Education Loan Finance’s website is intuitive to navigate and focused on its student loan products. There are pages devoted to each product, a few pages about the company or recent company-related news, a blog with personal finance posts and a page with testimonials.
There is also a calculator, several checklists that you can review to see if you’ll be eligible for refinancing and to prepare for the application process and an FAQ page. The FAQ page is broken down into six sections, ranging from general questions to sections about rates or the ELFI bonus programs.
Starting an application is also simple — we detail the process below — and if you want to take a break and start again later, you can log in to your account and pick up wherever you left off.
The fine print
However, there were also a few fine-print items that were difficult to find on the website. A representative from the company confirmed the 12-month potential forbearance period and the case-by-case nature of the death or permanent disability discharge.
What to expect during the application process
ELFI’s online application process straightforward, and you may be able to complete it in just a few minutes.
Create your account
You’ll need to create an account to start your application. After entering your name, email address and password, you’ll be sent an email with a verification code. Submit the code, and you can then fill out your profile with your:
- Name, address, date of birth and citizenship status
- The school you attended, highest degree you attained and date of graduation
- Your Social Security number
- Whether you own a home, rent or live with family, as well as your monthly housing expense
- Your gross income
- The loan amount you’re requesting
You also must agree to a soft credit pull and read the Education Loan Finance’s communication policy before continuing.
Choose a loan term
If you qualify for preapproval, you can now choose between a fixed- or variable-rate loan with a term of either five, seven, 10, 15 or 20 years. You’ll see an estimated interest rate and monthly payment for each loan type.
The final loan offer may vary from these preapproval rates, and you can choose a different interest-rate type and loan term later if you want.
Complete your profile
The next step is to complete your profile by entering your mailing address and choosing three security questions and answers.
Read the loan disclosure forms
There are three loan disclosure forms you must read, and acknowledge that you read, before continuing:
- The federal loan disclosure form goes over the differences between federal and private student loans.
- The application disclosure fixed-rate form discusses the fixed-rate loan that Education Loan Finance offers. It will tell you your potential interest rate range, the fees associated with the loan and eligibility requirements, and it has examples of repayment times and amounts.
- The application disclosure variable rate form is similar to the fixed-rate form, but for Education Loan Finance’s variable-rate loans.
Apply for refinancing
Once you reach this point, you can complete the official application for refinancing. Some of the information will be filled in for you based on what you’ve already entered.
It can take about 30 to 45 days for your current loan servicer(s) to receive the payments for your student loans. You should continue making your loans payments as usual during this period to avoid missing a payment. And don’t worry, if you overpay your loan, the overpayment will decrease your loan balance with ELFI.
If you refinance with ELFI, a company named MOHELA will service your loan. MOHELA should reach out to you so you can set up an account, and you’ll send your monthly payments to MOHELA.
How to compare student loan refinance companies
There are many factors to consider when comparing student loan refinancing companies. The most important ones may be the eligibility requirements so you can rule out potential lenders, and the interest rates that the lenders offer you. The lower your interest rate, the greater your potential savings.
However, there may be other details to compare as well. For example, some lenders may not offer a 20-year term, which you may want if you’re looking to lower your monthly payments. And there are lenders, including SoFi and CommonBond, that give borrowers extra perks, such as invitations to exclusive events.
But determining which lender is best for you depends on your circumstances. Once you find a few lenders you think may be a good fit, look to see if they offer a soft credit check preapproval so you can compare estimate interest rates.
Once you’re ready to refinance, submit applications to all the lenders on your short list. Although each application could result in a hard inquiry, which may hurt your credit score, multiple student loan inquiries won’t increase the impact if they occur within a 14-day period. Some, depending on the credit-scoring models, offer a longer “rate shopping” period, but to be safe, it’s a good idea to shop around in as short a period as possible.
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