I Really Saved $20,000 Refinancing My Student Loans

I recently refinanced a large amount of student loan debt, and saved $20,000 in interest over the life of the loan, was able to select the interest rate that best worked for me, and determine the payback period to fit my needs as well. When I say large, I'm talking about an amount in the six figure range, which I thought would be impossible to refinance. Refinancing with a private lender is not the best option for every situation (which I'll touch on later in this article) but for many, it's a fantastic solution.

First, let me give you some background. I am a 48 year old professional in the healthcare industry, and just graduated with my first bachelors degree a year ago in December. I graduated with a small amount of student loan debt, but also had two daughters graduating at the same time, and had some Parent Plus loan debt from their schooling as well. We did not make payments during the deferment period, so when that came to an end, we had a six figure balance that was more than my first home. Both daughters contribute to their portions of the loans, but of course my name is on the entire amount.

At first I set up a loan consolidation with Nelnet, since in total I was responsible for 21 different loans. This made repayment a mess. After consolidation, Nelet would not set up a 10 year repayment plan, but rather would only allow a 20 year repayment plan. This would end up costing another six figures worth of interest over that time, and I had no desire to do this. The answer, they explained, would simply be to make the additional payment each month in order to pay it off in 10 years. This sounds like a great plan, however my experience was that the additional payments were not properly applied to the principal, but rather towards additional interest. I quickly lost interest in having to manage each and every extra payment with a monthly communication to the provider for the next 10 years.

I quickly researched options for a private loan servicer that could refinance the large amount of loans I was holding. I'm going to share with you the organization I found to be the best, and easiest to deal with, as well as the reasons for that conclusion. I should point out that I have a credit score in the 700s, have been employed with the same company for 6 years, and have been working since I was 20. My debt to income ratio is neither low nor especially high -- I pretty much have a mortgage on my primary residence and a rental home, and then these student loans. All this to say, my situation is a common one, and nothing extraordinary.

Some banks are interested purely in what the numbers say. Some work exclusively from credit reports and algorithms, others have minimums and maximums for what they will loan. Some are specific to certain types of loans (remember mine was a mix of personal federal loans and Parent Plus loans) and others only serviced loans in certain parts of the country. I applied to 4 that seemed the best fit, and was rejected by one company, while receiving offers from the other 3. My interest rate with Nelnet was 6.67%, and 2 organizations offered me a slightly better rate, but one offered me a >5% rate, which was the most attractive. This company was Earnest.

Full disclosure, I'm going to provide a referral link for anyone interested in seeing what kind of rate they may get with Earnest. You will receive a $200 cash back if you refinance, and I will also receive the same. This was one of the reasons I applied with them to begin with. You can apply immediately here: https://www.earnest.com/invite/paul1614 - but I will also share additional thoughts about this organization and experience. Here are those thoughts:

• Earnest initially only does a soft credit pull to pre-qualify and offer rates, which means your credit score is not impacted from a credit inquiry until you decide to proceed with an actual application.
• Earnest's website is a easy-to-navigate, with a minimal amount of fields to fill out in order to get your first offers.
• During the application process, there is a field that lets you have what I call a 'real chat' with Earnest. They basically ask you to share anything about your situation that isn't reflected in the financial info they've asked for. For me, this allowed me to point out that I was already making a payment in the amount of the loan I was asking for, but just wanted to ensure that it would properly be applied to my principal.
• Earnest is fast. My offers arrived the same day. I took a few days to actually apply because I was in the middle of refinancing my home, but after completing the application, I was qualified for my loan in less than 48 hours. After agreeing to the loan--all online, mind you--my Nelnet accounts were paid off in 10 days.
• Earnest is flexible. After getting a handful of offers - different payback periods, different rates, variable vs fixed, etc - I was able to adjust each of those items online during the signing process. There is literally a slider on one page that allows you to adjust these features until your ideal situation is established. Once the loans are paid off, you can also adjust your new payment date by 6 days in either direction as well, and you can choose to auto-pay or manually pay your new loan payments.
• Customer service is on point. I wanted to ask a few questions, mostly because everything was going almost too smoothly, and reached out twice by phone. I also emailed two other times, and in each case the responses from Earnest were quick, helpful and resolved my issue.
• There are no additional fees, AND you can get cash back. Again, using this referral link - https://www.earnest.com/invite/paul1614 - you can get $200 cash back for refinancing your loans. I've seen plenty of offers like this, so this isn't anything unique, however, I am confirming that I just went through this process and had a good experience, and this is simply icing on the cake.

Clearly, I can't say enough good things about my experience. That being said, if you need the flexibility of an income-driven repayment plan that is offered by federally funded banks, OR you might qualify for loan forgiveness due to your chosen industry, then refinancing your student loans with a private lender may not be the best solution. Do your homework on these situations. However, if you want the most flexibility in getting the best rate with an organization that really caters to the customer, then I can wholeheartedly suggest the one that I used.