They focus on graduates with good credit scores and steady incomes. Some of their target customers include medical and law school graduates.

ELFI Refi Review

Name: ELFI

Description: is an excellent student loan company offering private loans and refinancing at competitive rates. With stellar customer service and personal loan experts to assist through the refinancing process, they put their client's needs first. However, cosigners are permanently binding and you must have a bachelor's degree or higher. 

Overall

4.5

• Interest Rates
• Repayment Options
• Customer Service
• Refi Amounts

ELFI Refinancing Review

ELFI is an excellent student loan company offering private loans and refinancing at competitive rates. With stellar customer service and personal loan experts to assist through the refinancing process, they put their client’s needs first. However, cosigners are permanently binding and you must have a bachelor’s degree or higher. 

Pros

• Competitive and low APRs
• Stellar customer service
• Service offered across all 50 states
• Little to no fees
• No cap on how much you can refinance

Cons

• Must refi at least $15,000
• Cannot release the cosigner
• No refinancing for associate degrees
• No autopay discount

• Get Your Rate Now!

What Is ELFI?

Education Loan Finance (ELFI) is a student loan financial company founded in 2015 by SouthEast Bank. ELFI strives to provide a clean, simple-to-use application process that focuses on putting its student customers first and has financed over $1 billion in student loans. Furthermore, they have unique benefits, such as personal loan advisors, helping differentiate themselves from the surrounding competition. 

ELFI offers private student loans and student loan refinancing.

Besides, ELFI has a clean history and hasn’t run into any problems with the law. They’re rated “A+” by the Better Business Bureau and are an FDIC member. Overall, the firm is credible and offers fantastic student loan products. 

What Is Student Loan Refinancing (Refi)?

Say you had $10,000 in student loans with an interest rate of 10% per year. After one year of not paying off your debt, you’d owe $1,000 in interest. That’s a lot of moola.

Student loan refinancing (refi) is when a separate company pays off your loan but gives you a new loan at a (usually) lower interest rate. This is where lenders like ELFI, Earnest, or LendKey come in.

As an example, let’s say ELFI swoops in to refinance your student loan, offering first to pay off your $10,000 of existing loans and second to open a new $10,000 loan at a lower interest rate of 5%. If you took this refinancing option, you’d be able to save money on interest every year due to the lower interest rate. 

That’s a whole lot of savings. Now, imagine if this had gone on for several more years! You’d potentially be saving thousands of dollars.

Student loan refinancing can be one of the best ways to save money by decreasing the interest rates on your student loans.

ELFI Rates, Terms, and Fees Summary

ELFI is one of the best student loan refinancing options on the market right now, presenting competitive variable and fixed rates. Their refi products are only available to applicants with minimum credit scores of 680 who are looking to refinance $15,000 or more. These standards allow them to offer some of the lowest fixed APRs in the market and fantastic variable rates. 

ELFI also has excellent customer service, reflecting its focus on its clients. 

What Makes ELFI Unique?

ELFI stands out from its competitors by providing access to expert personal loan advisors during the refinancing process. Customers on Trustpilot have consistently noted that these advisors are extremely helpful during the process, making everything “stress-free,” “easy,” and “quick.”

These are accolades I don’t typically hear to describe student loan companies.

Pros & Cons Of ELFI Refi

Generally speaking, ELFI’s refinancing products are excellent. With a strong customer service team, personal loan advisors, and competitive APRs, it’s hard to beat them off. However, there are some minor issues with their refinancing options that you should know.

Pros

• Competitive and low APRs
• Strong customer service
• Personal loan advisors
• Service offered across all 50 states
• Little to no fees
• No cap on how much you can refinance
• All types of student loans are eligible

Cons

• Must refi at least $15,000
• Cannot release the cosigner (if you have one)
• Not flexible repayment plans (vs. Earnest)
• No refinancing for associate degrees
• No autopay discount

How Do I Qualify To Refinance With ELFI?

ELFI has several requirements you need to check to be eligible to refinance your student loans. It’s worth noting that you can refinance your loans in all 50 states, Washington D.C., and Puerto Rico. 

• You’re a U.S. citizen or a permanent resident
• You have a credit score higher than 680
• You’re refinancing at least $15,000 in student loans
• You’re pursuing or graduating with a bachelor’s degree or higher
• Your debt-to-income ratio is less than 50%
• You make at least $35,000 a year
• You’re attending classes at least half-time
• You have at least 36 months of credit history

If you check all these boxes off, you should be ready to rock and roll for refinancing!

If not, you’re not out of luck. ELFI allows cosigners, who are people that agree to pay back the loan if you default on it. Cosigners are typically your parents, close relatives, or friends who are willing to vouch their credit history for you. 

However, ELFI doesn’t allow you to release your cosigner, even if you demonstrate good repayment behavior. This rule might dissuade potential cosigners from helping you out and is worth noting.

Student Refi vs. Parent Refi

ELFI differentiates between student and parent refinancing. The rates and loan terms between the two groups are slightly different, where students have more term length options than parents. However, the variable and fixed rates are the same. If you’re a student reading this article expecting to make small monthly payments, it’s probably worth looking into refinancing your loans as soon as possible for the longer term. 

What Are ELFI Repayment Options?

ELFI repayments are standardized by year. There is no difference between monthly payments for students or parents.

Monthly payment ranges will vary depending on the length of your loan term, the size of your loan, and the interest rate. Though, the lower your monthly payment, the more you’ll end up paying in interest. So, if you can, make bigger monthly payments.

If you’re looking for more individualized repayment plan lengths, check out Earnest refinancing.

Who Should Get ELFI Refi?

ELFI refinancing isn’t for everyone, since they have ‘higher’ standards for who they work with.

If you meet all of the minimum requirements, then ELFI is generally a pretty solid option. After all, these standards are what allow them to offer highly competitive interest rates!

Though, make sure you take a look at its competitors to see what has the best rates and term length for you.

ELFI does have one of the lowest fixed-rate loans available.

However, if you don’t meet the criteria, then you likely won’t be eligible for refinancing anyways. ELFI wants to ensure that the risk of default is low so that they don’t lose a lot of money.

Though, if your credit score is still above 650 or 660, you could try looking at other shops like Earnest or CommonBond, respectively. 

How Much Does ELFI Refi Cost?

ELFI has little to no fees. They don’t charge an application fee, origination fee, nor prepayment penalties. Furthermore, their prequalification check can give you an accurate estimate of your refi rates in minutes.

The only fees that arise are if you make late payments. These occur after payments aren’t for 11 days and are either 5% of the amount past due or $50, whichever is smaller.

Is ELFI Safe?

Yes! 

As mentioned previously, ELFI has a clean track record and hasn’t run into problems with the law like other student loan companies have (looking at you Navient). 

Furthermore, several rating agencies rank ELFI highly. For instance, Trustpilot and Better Business Bureau give ELFI 4.9/5.0 and “A+” ratings, respectively. These stellar scores reflect the loan company’s trustworthiness.

Will ELFI Refi Hurt My Credit Score?

Well, yes and no.

Initially, during the prequalification process, ELFI will only do a “soft pull” for your credit score. “Soft pulls” do not affect your credit score.

However, if you decide to refinance your loans with ELFI, they will temporarily hurt your credit score. To finalize the refi, the firm needs to do a “hard pull” on your credit score to thoroughly determine your creditworthiness. “Hard pulls” look through your entire credit history to ensure that the prequalifying “soft pull” didn’t miss anything. 

Though, it’s worth noting that the effects of “hard pulls” are small. Your credit score only factors new credit applications and inquiries for 10%. Moreover, these hard inquiries only stay on your credit report for 24 months. Thus, your credit score will be back to normal pretty soon. 

Nothing to worry about!

You can check your credit score for free using Credit Karma or Credit Sesame!

How Is ELFI’s Customer Service?

Like we’ve briefly talked about, ELFI has excellent customer service. They are the only firm to offer personalized loan assistance throughout the refi process. 

ELFI provides several ways to contact their customer service. 

• Email them at [email protected]
• Fill out a contact form found on their website
• Call or text them at 1-844-601-ELFI (3534)

Their customer service calling hours (Eastern time) are as follows:

• Mon – Thu, 8am – 8pm
• Fri, 8am – 5pm
• Sat & Sun, 10am – 4pm

They even have Sunday hours for help, which is rare amongst these industries!

How Does ELFI Fare Against Competitors?

As a whole, ELFI does pretty well against its competitors. Although it requires a credit score on the higher end, it offers low APRs.

Top Student Loan Refinance Companies

Company	Variable APR	Fixed APR
	1.86-6.01%	2.43-5.99%	Get My Rate
	1.99-5.64%	2.98-5.79%	Get My Rate
	1.99-6.09%	2.99-6.09%	Get My Rate
	1.99-6.10%	3.00-6.20%	Get My Rate
	2.99-6.06%	2.99-5.99%	Get My Rate
	1.99-5.25%	2.99-7.75%	Get My Rate

How To Get Started On ELFI

ELFI prides itself on how easy it is to get started with refinancing.

All you really need to do is:

1. Get a quote via prequalification (~2 min)
2. Determine if the fixed or variable rate is the best option you have
3. Submit an application (~10 min)
4. Upload relevant documents (Government-issued ID, W2, previous month’s pay stub)
5. Sign your name
6. Wait up to one business day
7. Hear back!

If you are ever confused during this simple process, ELFI provides free access to personal loan support experts. Also, their customer service is open every day of the week. 

Are There Referral Bonuses?

For every friend who refinances their student loans with ELFI, the company will reward you $400, and your friend will get $100. In fact, referring your friend is easy too. You just need to refi your loans and then sign up for a personalized referral link that you can share. 

This is a pretty sweet deal!

Should You Use ELFI?

We believe ELFI is an excellent refinancing option. Given the company’s clean history, competitive APRs, and client-first attitude, ELFI proves itself as a top competitor. Furthermore, being the only firm to offer personalized assistance during the refi process is something worth noting. 

However, even if ELFI provides a reasonable rate, make sure to take a look at some other companies. Earnest, for example, offers innovational and individual APRs and loan term lengths that might suit you better. LendKey will try to match you to your perfect loan.

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post ELFI Refinancing Review appeared first on Finance Plan Today.

One of their original founding principles was to redesign the loan application process to be as streamlined as possible. As a top option for student loans, how do they stack up against the competition? This review will outline CommonBond’s pros and cons to help you make the right decision on whether you should refi your loans with CommonBond. 

How Does CommonBond Refi Work?

Student loan refinancing (refi) is when CommonBond pays off your existing student loans and then gives you a new loan at a (typically) lower APR or interest rate. Refinancing is an excellent way to save money by lowering your student loan interest rates. 

Should I Refi My Federal Student Loans?

Although your refi option could have a lower APR than your federal student loans, federal loans have many benefits. 

For instance, federal loans offer public service loan forgiveness, interest-free deferment and forbearance, discharge options, and income-based repayment plans. No private lenders provide all these benefits.

If you’re deciding to refi your federal student loans, make sure to carefully think through your decision. Refi might not be the best choice for you if you plan on taking advantage of the federal benefits.

CommonBond Rates, Terms, and Fees Summary

CommonBond refi has some awesome interest rates. Moreover, they charge no origination or application fees. 

I think the coolest part about CommonBond is that they offer the only “hybrid loan” available on the market. This product combines fixed and variable rate interest loans. The hybrid loan will lock a rate for the first five years, after which it becomes a standard variable rate loan. 

Though, they do require you to refi at least $5,000. 

Pros & Cons Of CommonBond

Generally speaking, CommonBond is a good option for the average applicant. If you fear you might face economic hardship in the coming years, CommonBond is a top choice, offering extensive forbearance options. In fact, from what I’ve seen, they have the most robust forbearance tools available. 

One of the remarkable things about CommonBond is its partnership with Pencils For Promise. For every loan they refi, they promise to sponsor a child’s education. This is an incredible social cause. 

Unfortunately, CommonBond doesn’t offer loans across all 50 states. They also don’t have the most competitive rates available. Though they provide co-signer release after 36 mo, we didn’t list this as a pro or a con since it depends on your perspective. 

Pros:

• Low-interest rates
• Unique “hybrid” loan product
• Amazing social cause to sponsor education
• One of the best forbearance programs
• Refi Parent PLUS loans

Cons:

• Loans not offered in Mississippi and Nevada
• No refi for associates degrees

How Do I Qualify For CommonBond Refi?

CommonBond refi statistics are, for the most part, undisclosed. However, in comparison to some other lenders such as SoFi, Laurel Road, or Earnest, I think it’s reasonable to guesstimate that they’d have less stringent entry barriers than these top of the line lenders. 

For example, SoFi has some of the best rates around. The average income and credit score there seems to be about $100,000 and 750. Since CommonBond doesn’t have rates or benefits as good as SoFi’s, we would probably say that the average applicant here has a lower income and credit score. 

Guesstimation is your friend here. Though, note that getting a rate quote is entirely free of charge. Thus, it’s worth a shot.

Financial Requirements

• Minimum credit score of 660
• Unknown income requirements
• Undisclosed debt-to-income ratio minimum
• Co-signers eligible
• Must refinance between $5,000 to $500,000 

Individual Requirements

• U.S. citizen or a permanent resident with a green card
• Working professional with four-year undergrad (or higher) degree
• Must have graduated from a Title IV public or private institution authorized to receive federal financial aid
• Not living in Mississippi or Nevada

What Are CommonBond Repayment Options?

CommonBond has typical loan terms of 5, 7, 10, 15, and 20 years. These are pretty standard options available across the loan industry. If you’re looking for more flexibility in your loan terms, Earnest offers personalized options.

While CommonBond provides the standard fixed and variable rate loans, they also have a unique hybrid option. This ten-year hybrid takes the best of both worlds and combines them into one. A hybrid loan holds a fixed rate for the first five years and converts to a variable loan for the remaining five. 

Generally speaking, it’s worth remembering two rules of thumb across all lenders:

1. The longer your loan term, the less your monthly payment. However, you’ll pay more overall.
2. The shorter your loan term, the lower the interest rate. This means that you’ll pay less overall.

Thus, the shorter your loan term, the more beneficial it will be for you. However, you’ll be expected to meet higher monthly payments. Choose your options wisely!

They also offer a 0.25% interest rate reduction promotion if you enable automatic payments. 

Deferment & Forbearance

Like I’ve hinted at, CommonBond has some of the best forbearance options around. 

Borrowers can request up to a total of 24 months of forbearance in three-month intervals. This is about double the average forbearance options around. A great perk to keep in mind if you fear some economic hardship will arise.

In terms of deferment, CommonBond also has excellent options. They provide academic, medical residency, and military deferment with proper proof. Moreover, you’ll be forgiven of all loans in the case of death or disability. It’s comforting to know that they are willing to be explicit about their views here.

Is CommonBond Safe?

It’s not my right to be the absolute voice on this matter, but I will give facts to help you make a logical decision.

While CommonBond hasn’t run into any trouble with the government, it isn’t accredited by the Better Business Bureau (BBB). Worryingly, the BBB rates CommonBond a “B.” Consumers note that there have been frequent credit report mishaps and rate misunderstandings.

Thankfully, CommonBond hasn’t reported any major data breaches. However, there’s always a risk when entering your sensitive info online. 

Will CommonBond Hurt My Credit Score?

This question isn’t as simple as yes and no. 

CommonBond won’t touch your score if you only get a rate quote. Though, if you finalize the loan, your credit score may be affected. 

In these first steps, CommonBond only does “soft pull” on your credit score. “Soft pulls” don’t affect your credit score. However, in the final steps, CommonBond will do a “hard pull” for your full credit history. “Hard pulls” could harm your credit score.

Though, credit inquiries play a small part in your score (10% in FICO score). Also, inquiries leave after only 24 months. Nothing much to worry about!

How Is CommonBond’s Customer Service?

CommonBond knows that being entirely online can make things difficult for borrowers. Consequently, they offer several ways to contact their customer service teams. You can either give them a call, email, or live chat with them. 

Nicely enough, some have even mentioned that CommonBond’s customer service is far superior than SoFi’s. That’s always a nice note to hear. 

What I Wish Was Different About CommonBond

Unfortunately, CommonBond is by no means perfect. 

The first thing that comes to mind is that they should work on their Better Business Bureau ratings. A “B” rating isn’t going to cut it these days and can be a little worrisome for potential borrowers. 

Moreover, it would be nice if they offered loans across all 50 states. On top of that, they should be a little bit more transparent about the refi requirements. Their competitors give more information about the entry barriers, while CommonBond provides very little info. 

How Does CommonBond Fare Against Competitors?

Top Student Loan Refinance Companies

Company	Variable APR	Fixed APR
	1.86-6.01%	2.43-5.99%	Get My Rate
	1.99-5.64%	2.98-5.79%	Get My Rate
	1.99-6.09%	2.99-6.09%	Get My Rate
	1.99-6.10%	3.00-6.20%	Get My Rate
	2.99-6.06%	2.99-5.99%	Get My Rate
	1.99-5.25%	2.99-7.75%	Get My Rate

How To Get Started On CommonBond

CommonBond’s application is designed to be simple. To first get a rate quote, you’ll have first to fill out a short form. This form will ask for basic personal and financial information. Afterward, you’ll see if you’re pre-approved for the loan. 

If you’re approved, and you like your rates, then you can proceed with finalizing the loan. In these final steps, you’ll submit documents to prove your identity, income, and student loans. 

If you have any questions, reach out to their customer service. 

Should You Use CommonBond? 

I think CommonBond is worth trying out. They have great forbearance and deferment options available and have a good cause in sponsoring education. Considering you can get a rate quote for free, it’s worth exploring to see if you’ll get approved. 

The best way to deal with all these lenders is to apply for a bunch of them. You can then compare your rates across and choose the optimal one. Remember: you can get a rate quote completely free of charge from refi lenders such as ELFI, Earnest, or SoFi. 

It’s always a good idea to look through all your options. You wouldn’t want to miss out on lower rates simply because you didn’t look through other lenders. In fact, almost every online lender offers free quotes after just 15 minutes or so. Definitely worth the effort since you’ll be with the lender you choose for years.

FAQs

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post CommonBond Refinancing Review appeared first on Finance Plan Today.

What Is Laurel Road?

Founded in 2013, Laurel Road is an online-only lender with a strong presence in the loans market. Offering products ranging from student loan refinancing to personal loans, they’ve since refinanced over seven billion dollars. Laurel Road has developed a simple application to make the loan process as smooth as possible.

How Does Laurel Road Refi Work?

Student loan refinancing (refi) is when a firm like Laurel Road pays off your existing student loans but assigns you a new loan at a (usually) lower interest rate. Refi is one of the best ways to save money by reducing the interest rates on your old student loans.

Laurel Road’s refi process is designed to be as easy as possible. You can get a rate quote in minutes and completely free of charge. Customer service is available along the way to assist you if you need it at any step. 

Should I Refi My Federal Student Loans?

On the surface, your new refi option could have a lower interest rate than your federal student loans. However, remember that federal student loans have a lot of benefits. 

For example, federal loans offer public service loan forgiveness, interest-free deferment and forbearance, discharge options, and income-based repayment plans. No private lenders provide such benefits.

You must think through the refinancing decision carefully. If you plan on taking advantage of the federal benefits, then refi might not be the best choice for you. 

Laurel Road Rates, Terms, and Fees Summary

Laurel Road offers some of the best rates available on the market and doesn’t cap the amount you can borrow. Furthermore, they also charge no origination nor application fees. 

Though, they do require you to refi at least $5,000 and favor those working in the healthcare industry.

Note: the rates displayed below are for nonhealthcare student loan refi. Check out Laurel Road’s website to find rates for residents, Parent PLUS loans, or healthcare professionals.

Pros & Cons Of Laurel Road

Generally speaking, Laurel Road is one of the best refi options around. With competitive rates, excellent benefits, and a great customer service team, there’s a lot to like. In fact, Laurel Road has some of the best perks for medical and dental students that I’ve seen. Furthermore, they’re available across all 50 states.

However, they do require high credit scores and incomes. In addition, they seem to favor healthcare workers, which could be a pro or con, depending on your background. 

Pros:

• Low and competitive interest rates
• Awesome perks for medical and dental students
• Available across all 50 states
• Great customer service
• No application or origination fees
• Co-signers allowed
• Free and easy rate quotes

Cons:

• High income required
• Low DTI required
• Minimum credit score of 700
• Need to refi at least $5,000
• Co-signer release after 36 months

How Do I Qualify For Laurel Road Refi?

Laurel Road favors people with great credit scores and incomes. Unsurprisingly, Laurel Road also likes to see low debt-to-income (DTI) ratios. Though, being a top lending option, they have somewhat high entry barriers. Moreover, it seems like Laurel Road prefers to refi loans for those in medical or dental school.

Financial Requirements

• Minimum credit score of 660
• DTI ratio less than 43%
• Co-signers eligible

Individual Requirements

• U.S. citizen or a permanent resident with green card
• Working professional with four-year undergrad or graduate degrees OR an associate’s degree working in specified medical fields
• Must have graduated from a Title IV public or private institution authorized to receive federal financial aid

Laurel Road specifically differentiates eligibility for those graduating with associate degrees. If you’re looking to refi associate degree loans, you must have worked for at least 12 months in one of the following fields of study:

• Cardiovascular Technologist (CVT)
• Dental Hygiene
• Diagnostic Medical Sonography
• Paramedics
• Nuclear Technician
• Nursing
• Occupational Therapy Assistant
• Pharmacy Technician
• Physical Therapy Assistant
• Radiation Therapy
• MRI Technologist
• Respiratory Therapy
• Surgical Technologist

Make sure you fully understand the eligibility reqs. They vary for the type of degree you’re looking to refi. 

What Are Laurel Road Repayment Options?

Laurel Road provides standard loan terms of 5, 7, 10, 15, and 20 years. Interestingly, Laurel Road seems to have options to have alternative loan terms as long as you contact customer service. This fact makes Laurel Road the only other firm outside of Earnest to offer non-standard terms. Though, if you’re looking for personalized loan terms, make sure to check out Earnest!

Furthermore, Laurel Road offers the automatic electronic fund transfers (ETF) incentive. If you choose to enable auto payments through ETF, your interest rates decrease by 0.25%. 

Generally speaking, you’re expected to make monthly payments. If you want to make additional payments, no fees are applied. Instead, your extra payments will apply to your principal balance. This is a great way to shred through your loans.

Deferment & Forbearance

Laurel Road has great deferment and forbearance options. 

Since they seem to favor medical and dental students, it’s no surprise that they offer so many perks and benefits. Laurel Road allows doctors and dentists in residency to defer making full payments on their loans up to 6 months after they complete their residency and fellowship. In fact, they only have to pay a minimum of $100 per month until they finish. Unfortunately, interest will accrue during this period and must be paid off at the end of the reduced payment period. 

Furthermore, Laurel Road allows borrowers to apply for forbearance in times of economic hardship. These forbearance periods are pretty standard. They allow for you to meet forbearance payments for periods of one to three months, totaling less than 12 months over the lifetime of the loan. 

In the event of death or permanent disability, Laurel Road will forgive all remaining student loan debt. This is a nice note since some other competitors don’t explicitly mention this. 

Unfortunately, I didn’t see any notes about academic deferment. 

Is Laurel Road Safe?

It’s not my right to be the judge or jury on this matter, but I can provide facts to help you make a justified decision. 

Since its launch, Laurel Road hasn’t run into any problems with the Federal Trade Commission. Furthermore, they haven’t experienced any data breaches. Despite their clean record, there’s always a risk when submitting your sensitive personal and financial information online. Given today’s day and age, there’s no real way to avoid this problem. Trust the security holds up.

Laurel Road’s customer reviews are pretty good overall. The Better Business Bureau rates them “A-” and TrustPilot consumers rate the firm 4.3/5.0 stars. Reviewers have said that Laurel Road is “quick and easy,” “excellent,” and the “best experience [out there].” 

Will Laurel Road Hurt My Credit Score?

Yes and no. Laurel Road won’t hurt your score if you only get a rate quote. However, if you proceed with finalizing the loan, your credit score may be affected. 

In these first steps, Laurel Road only does “soft pull” on your credit score. “Soft pulls” don’t affect your credit score. However, in finalizing the loan, Laurel Road will do a “hard pull” for your full, in-depth credit history. “Hard pulls” can hurt your credit score.

Though, inquiries play a small part in your credit score (10% in FICO score). Moreover, they disappear after 24 months. Nothing much to worry about if you don’t rapidly open too many credit cards or loans.

How Is Laurel Road’s Customer Service?

Seeing their TrustPilot reviews, it seems like Laurel Road has excellent customer service. Consumers mention that they are “friendly” and are an “excellent loan company.” 

Laurel Road is well aware that running completely online can make things difficult for borrowers. Thus, they offer customer service via phone or email. 

What I Wish Was Different About Laurel Road

As a whole, Laurel Road offers some of the best rates and perks available.

However, I wish they’d have more robust academic deferment and forbearance options. While they offer many benefits for their medical and dental students, they lack opportunities for other advanced degrees. 

Moreover, they seem to like those in the healthcare industry. It would be nice if Laurel Road would be more open to refinancing associate degree loans for other sectors. 

How Does Laurel Road Fare Against Competitors?

Top Student Loan Refinance Companies

Company	Variable APR	Fixed APR
	1.86-6.01%	2.43-5.99%	Get My Rate
	1.99-5.64%	2.98-5.79%	Get My Rate
	1.99-6.09%	2.99-6.09%	Get My Rate
	1.99-6.10%	3.00-6.20%	Get My Rate
	2.99-6.06%	2.99-5.99%	Get My Rate
	1.99-5.25%	2.99-7.75%	Get My Rate

How To Get Started On Laurel Road

Laurel Road’s application process is designed to be simple and straightforward. To first get a rate quote, you’ll have to fill out a short form. The initial process is split into several brief portions, asking for your personal, academic, and employment info. 

If you end up liking your rate and loan term, then you can proceed with finalizing the loan. In these next steps, you’ll submit documents to prove your identity, income, and existing student loans. After proper submission, waiting time until approval ranges from three to six days.

If you have any questions, reach out to Laurel Road’s great customer service.

Should You Use Laurel Road? 

I think Laurel Road is an excellent choice for anyone working within the healthcare space. With awesome rates and perks for medical and dental students, not many other options can compete.

Even if you don’t think you’ll meet their criteria, it’s worth getting a rate quote anyways. Getting a quote is entirely free of charge and takes minutes. 

And even if you feel like your rate quote is good, make sure you look into other options like Earnest, ELFI, or SoFi. Each offers free rate quotes that might end up being a better fit for you. You wouldn’t want to spend thousands more because you didn’t check out Laurel Road’s competitors. 

You’ll be working with your lender for years to come. It’s worth checking out all your options before committing to anyone of them. 

FAQs

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post Laurel Road Refinancing Review appeared first on Finance Plan Today.

While many people carry the financial burden of an enormous amount of student debt, it’s also important to recognize how fortunate we are to live in a country where the government will loan us money to pursue and achieve our dreams.

In many other countries, only those from wealthy and privileged backgrounds have the opportunity to study beyond high school. But here in the U.S., a poor kid raised by a single parent can become a doctor or go to college in the Ivy League.

That’s incredible! And it may sound strange, but I am thankful for the student debt I have because it was the only way I could make my professional dreams come true.

Don’t get me wrong. Despite being thankful for the government’s help in pursuing my dream of being a doctor, I also don’t want to pay them back any more than I have to. It’s a double-edged sword. Lenders make borrowing so easy that many people borrow more than they should, and get into a lot of financial trouble.

I plan to get rid of my medical school debt as quickly as possible. This post will outline my plan for reaching my financial goals. You can use it as a template to pay off your debt too. Whether you have personal loans, business loans, or other debt, I hope this will help you.

My Wife And I Owe $225K In Student Loans, And It Could Have Been A Lot Worse

At the time of writing this post, I owe $198,745.68 in student loans and my wife owes about $25,000 in student loans. That brings our grand total to just about $225,000.

Our minimum payment looks more like a mortgage payment.

Fortunately, we don’t have any credit card debt, a large car loan, or any medical debt to worry about.

With regard to my federal student loan total, it puts me close to the median amount owed by medical school graduates around the country. This includes tuition, living expenses, residency interview costs, and visiting rotation costs (I did two separate month-long rotations away from Mayo Clinic when I thought I was going to be a urologist, but that’s a story for another day).

Special shout-out to the benefactors who generously donated to the scholarships that helped me offset the $55,500 yearly tuition at Mayo Clinic School of Medicine. If it weren’t for them, my student loans could have easily been $300K+, as the yearly cost of attendance with tuition and living expenses is $86,768. That’s an incredibly high amount of money.

In fact, the average debt of all of my med school friends is similar to mine. Higher education is shockingly expensive, but hopefully the trend will reverse so that young people have more money to build a life for themselves!

Unfortunately, Mayo Clinic Didn’t Offer My Class Need-Based Financial Aid

My medical school class was the last class at Mayo Clinic School of Medicine to not offer need-based financial aid (all of the other top med schools offer need-based financial aid).

Every student in my class received the same scholarship, regardless of their ability to pay. That means that I got the same scholarship as my peers from affluent backgrounds whose parents could pay their tuition and living expenses, and therefore graduated with ZERO debt.

I do not say this to complain, but to give context as to how I have so much debt from a school that advertises the lowest average student debt in the nation.

The reality is that just a handful of the students in my class carried the majority of the debt burden. The students in the classes after mine, from similar backgrounds as me, are fortunate to have much less debt than I have.

This is probably more true now than ever since Mayo Clinic School of Medicine recently received a $200 million donation from Mr. Jay Alix. The medical school was renamed to Mayo Clinic Alix School of Medicine (bonus points if you’re able to find me in one of the photos in one of the site’s pages).

I Began To Repay My Student Loans In My Residency Years

I graduated from Mayo Clinic in May 2018 and began my residency in June 2018. In July 2019, I begin my training in radiology at Northwestern University’s hospital in downtown Chicago after I finish my 1 year medical internship (first year of general medical training after med school). The internship is a prerequisite for my radiology residency.

I will spend a minimum of 4 years in Chicago training to be a radiologist. During residency, all residents at the hospital get paid the same amount regardless of specialty and the salaries are based on your year of training.

Salaries are funded through Medicare and are published online. To see resident salaries for the residents at Northwestern click here. I’ll save you the trouble – since I will be a second-year resident I will make $62,124 (before taxes).

My paycheck every two weeks will come out to roughly $1,740. If I contribute to the 403B (like a 401K except for not-for-profit organizations), my take-home will be even lower.

That salary will need to cover our living expenses (rent, food, utilities), insurance (renters, disability, life), daycare, retirement (401K match), other expenses (clothes, gifts, any travel, etc.) and last but not least, student loans.

As you can see in the image below, I would need to pay $2,156 each month under the standard repayment plan (120 monthly payments).

With the cost of childcare in Chicago ranging from $1,600-$2,200 per month and rent in that same range, you can imagine that it is impossible to cover all of the expenses on resident’s salary when over 40% of your income goes to cover student loan payments.

I Am Eligible For An Income Driven Repayment Plan (and PSLF!)

Enter the Income-Driven Repayment (IDR) plans. These are plans available for those with federal student loans that use one’s income to calculate payments.

The four IDR plans are:

1. Pay As You Earn (PAYE)
2. Revised Pay As You Earn (REPAYE)
3. Income-Based Repayment (IBR)
4. Income-Contingent Repayment (ICR)

Since I will be an employee at a non-profit hospital, it makes financial sense to work towards PSLF. PSLF is a program that the federal government offers to incentivize federal loan borrowers to work in public service jobs. In return for 10 years of service, they will forgive your remaining student loan balance.

Qualifying for student loan forgiveness is pretty straightforward, but you have to make sure to follow all of the steps perfectly. It seems like the Department of Education is finding any excuse possible to not forgive loans!

In order to qualify for Public Service Loan Forgiveness (PSLF), you must make 120 monthly payments (12 payments for 10 years) under one of the four IDR plans.

Thus far, I have chosen to repay my student loans during my residency with REPAYE. With REPAYE, the monthly loan payment is set at 10% of your discretionary income.

Discretionary income depends on your income and household size. The more you make, the more you pay (higher discretionary income) and the larger your family, the less you pay (lower discretionary income).

There are many online calculators including this one from studentloans.gov that will use your actual loan balance to calculate payments under all the different payment plans. As a federal loan borrower, you have more flexibility with repayment plans that private loan borrowers. Just log in with the same info you use to fill out FAFSA and it will calculate your payments on your actual loan balance. I use this calculator at least once or twice a year to ensure that I am on the plan that makes the most sense for me.

My Monthly Payment Under The REPAYE Plan Doesn’t Even Cover The Monthly Interest Charge

Under REPAYE, my monthly payment is not enough to even cover the monthly interest on my loans. That means, that despite making monthly payments, my loan balance will continue to go up.

One of the perks of REPAYE is that, if your payment does not cover all of the interest, they will pay 50% of the unpaid interest each month on unsubsidized student loans. So if your loans accrue $900 dollars a month in interest (like mine do) and your monthly payment is $400 dollars, the government will pay 50% of the difference as follows: $900-$400=$500; $500 x 50% = $250.

That means that each month your student loans will only accrue $250 of unpaid interest instead of $500. That’s a good thing for you but a bad thing for your lender.

Don’t forget to use the repayment calculator after every change in household size or promotion at work. Just because REPAYE is the best plan for me this year, doesn’t mean that it will be the best plan for me next year. You may be surprised by the difference a change could make to your payment.

If you have a high earning spouse, it is probably worth looking into filing taxes as “Married Filing Separately” and using PAYE, since REPAYE will take your spouse’s income into account regardless of whether you file jointly or separately.

Even with the reduced monthly payments for my student loans, it would be nearly impossible to cover all living expenses outlined above in a higher cost of living city. Though Chicago is not wildly expensive like San Francisco or NYC, it’s not exactly like my hometown in Minnesota either.

Without My Wife’s Help, It’d Be A Lot Harder To Make Ends Meet

Fortunately, I have another resource to help: my wife. She will also work to help make ends meet. She also has about $25,000 in student debt we will be paying off.

Our goal for the next four years of residency will be to avoid taking out ANY more debt. This means renting an apartment instead of buying, not financing anything we can’t afford (cars, vacations, phones, etc.), and most importantly living within our means.

The single most important factor that will allow us to be successful in minimizing our debt during my training will be sticking to our budget. We’ve been budgeting regularly for a while now, and it allowed me to borrow less money for medical school.

At the end of each month, we sit down together and make our budget for the following month using our Excel budget template (those new to budgeting may prefer to do it on paper the first couple times so you can take additional notes that are easy to track).

One awesome hack I use to save money is using Mint Mobile to save thousands of dollars on our cell phone bills. Make sure you check out how I did it.

Having a partner that is NOT the same page financially is quite frankly, the quickest way to derail any financial plan.

For those of you that aren’t married, don’t put off discussing money until you are engaged. You don’t want any surprises about your partner’s debt or spending habits and vice versa. Once you get married there is no more ‘my debt’ and ‘your debt’. It’s both of your debt.

If you are married and you have a spouse that doesn’t agree with your perspective, don’t give up after the first try. It could take months and many attempts to get your partner to agree to have a meeting to discuss your monthly budget. They may not understand that a budget can actually greatly enhance your life.

My Post-Residency Years Will Be Focused On Becoming Debt-Free And Building Wealth

Getting through training while trying to keep our overall debt burden as low as possible is just the first step.

By the time I finish my training, I will be closer to 40 than I will be to 30 years old, will owe over $225,000, and will be light-years behind my non-medical peers in terms of homeownership and retirement savings.

What will allow me to catch-up and surpass my peers will be my earning potential combined with a disciplined budget and an equally motivated spouse.

Regardless of whether I pursue PSLF or not, I should be able to pay off my student loans within 5 years.

If I choose to not pursue PSLF (if I don’t accept a full-time job at a non-profit medical practice), I will refinance my student loans to a lower rate.

I will only do this if I am 100% sure I do not want to pursue PSLF, as you are no longer eligible if you refinance through a private lender. Quickly paying off our student loans will only be possible by sticking to a rock-solid budget, avoiding lifestyle creep (the silent money thief), and focusing on mindful spending.

There’s A Lot Of Ways For Student Loan Borrowers To Handle Repayment

My repayment strategy for my 200k student loan debt consists of keeping my living expenses as low as possible so that I can leverage my future high income as a physician to repay my debt aggressively.

From a technical standpoint, I will use the debt avalanche method (paying down my debt based on the highest interest rate first) to handle my debt repayment. However, it’s worth mentioning that the debt snowball may be a better technique for some of you.

The debt snowball consists of prioritizing your debt repayment based on the debts with the lowest balance. That means that you ignore the interest rates and just knock out the lowest balance first. this method has risen in popularity because it’s endorsed by Dave Ramsey and his baby steps.

This may seem counterintuitive, but it has been found to help borrowers with high student loan debt stay focused and it provides a mental boost to keep you motivated. You can say it’s a type of psychological repayment assistance!

Whether you use the avalanche or snowball method, the goal is to pay the loans as quickly as possible over the repayment term.

The money saved in interest could be the difference in having enough money for the down payment on a house or not!

Student Loan Refinancing Can Have Multiple Benefits

It’s also worth mentioning that if you have a huge amount of student loan debt, you likely have many different loans to manage. This can be a combination of a private student loan and a number of federal loans. For that reason, student loan refinancing can also provide a huge organizational benefit.

When you refinance, you essentially replace all of your existing student loans with a new single student loan. That means you only need to worry about one interest rate, one payment date, and one loan servicer. Student loan repayment is so confusing, and all of these potential moving parts don’t help.

The financial benefit of refinancing is the largest for someone with a strong credit score. If you have bad credit you may not save any money at all. But those with excellent credit can stand to save thousands of dollars in interest if they qualify for low-interest rates.

Student loans typically carry much lower interest rates and borrowing fees than a personal loan, which is why you’ll only want to refinance from a student loan refinancing company like ELFI or Earnest. This will ensure that you get lower interest rates and work with a student loan servicer that understands your repayment terms.

Thankfully, We Know That Buying Things Doesn’t Bring Happiness

Growing up poor doesn’t give you many advantages in life, but it certainly gives you one advantage: you don’t miss what you’ve never had. I’ve never had a luxury vehicle or a large home. My wife hasn’t either. This will allow us to live a comfortable and simple life, free from large car payments, 5-star resorts, and eye-gouging mortgage payments.

We know that none of these things will provide us with sustained happiness and will derail our plans. Sticking to our plan is what will allow us to beef up our retirement savings and make up for all of the lost time during medical school, residency, and fellowship.

Remember, when it comes to investing and compound interest the most important factor is time.

Once we are completely debt-free and have made significant ground in our retirement savings, we will continue to be aggressive savers and investors. This means putting away at least 20% of our gross income into tax-deferred accounts, taxable accounts, and other investments. The other 80% will go towards, living expenses, traveling, hobbies, charity, and of course, taxes.

These post-residency years will likely be our peak earning years and we expect to be in a high tax bracket.

As a rehabbed impulse shopper, having a tight budget is what keeps me in line. With a rock-solid plan, I wake up each day with my eye on the prize. I also sleep better at night knowing that if something were to happen to me unexpectedly my family will be taken care of.

Not only would my family get my assets, but I have term life insurance to ensure my family won’t suffer financially if I were to die before we reach financial independence. Losing your dad when you are seven years old will teach you these things.

Financial Independence Is a Marathon Not a Sprint

This is a glimpse into how we are attacking our combined debt as quickly as possible. And my plan for how to pay off student loans.

Whether you have more or less debt, these principles can be applied broadly. It’s important to remember that you only live once and you should enjoy your life. Life doesn’t begin in the future. Life won’t start once your debt is paid off or when you get that one thing you’ve always wanted. It’s all about the journey you take along the way.

Despite living with a tight budget with an eye on our life in the future, I enjoy my life every single day. Other than wishing I was able to travel more, especially to visit family domestically and abroad in Colombia or friends living abroad, I don’t feel like I am missing out on anything.

While I don’t have everything I want, I have everything I need. And in life, that’s the most important thing – especially since I know being wealthy is better than being rich. Your financial situation doesn’t have to define your life. You just have to do your best.

Update: Those of you with student loans (AKA probably every person reading this article) are likely well aware of the Automatic Temporary 0% Interest and Administrative Forbearance due to COVID. My monthly $400+ loan payments are currently on hold, but more importantly the loans are set to 0%. That in and of itself will save nearly $10K this year (and more if it gets extended beyond 9/30/21). I’m still not sure if I will pursue PSLF, but these $0 payments will count towards PSLF qualifying payments!

Francisco Maldonado

Francisco Maldonado, MD is a personal finance expert who was raised in poverty by a single mother and had to learn everything about personal finance on his own. In addition to running  Finance Plan Today with his twin brother, he’s been featured on Forbes, Business Insider, CNBC, US News, The Simple Dollar, and other top publications. Francisco is a physician who borrowed over $200,000 to pay for his medical training and understands debt payoff strategies and frugal living. He received his M.D. from the Mayo Clinic School of Medicine, the most selective medical school in the country, and a Bachelor’s degree in physiology from the University of Minnesota. He is currently a radiology resident at Northwestern University.

FinancePlanToday.com

The post How I’ll Pay Off Over $200K In Student Loans appeared first on Finance Plan Today.

What Is Credible?

Credible is an online-based loan marketplace similar to Upstart, and was founded in 2012 simplifying the loan hunt process. Based in San Francisco, they’ve since established themselves as one of the top competitors in the industry. Credible prides itself on creating a streamlined and straightforward application to make it easy to find your perfect loan.

It’s important to remember that Credible is not a lender, credit union, or bank. Instead, they serve as a middleman to connect you to a loan that best suits your needs.

What’s A Loan Marketplace?

Imagine applying for a job. You look at the info and see if it would be a good fit for you. You then fill out one application after another, submitting 10, 25, maybe even 100 applications. It can get tedious and mind-numbing.

What if you had a tool to fill out one application submitted to over 100 companies at once?

Finding a loan is almost exactly like finding a job. Except Credible exists to make the entire process as simple as one application.

All you need to do is fill out one form, and then Credible connects you to potential lenders. This method saves a ton of time and makes the loan-hunting process as stressfree as possible. Furthermore, Credible lenders offer some of the lowest and most competitive rates available.

What Products Does Credible Offer? 

Credible helps connect consumers to a variety of loans, including: 

• Private student loans
• Student loan refinancing (refi)
• Personal loans
• Mortgages
• Mortgage refinancing
• Credit Cards 

One of the remarkable things about Credible is that they charge no fees for their services. Literally, you can try their loan marketplace for zero dollars. 

Credible divvies up the entire loan hunting process into three, easy steps:

1. Fill out a short prequalification form to see individualized rates and find loan options that best fit your situation

Credible asks a few simple questions to estimate what your credit profile looks like. For example, they’ll want to know what school you’re attending, what your income looks like, and how much you want to borrow. Afterward, Credible’s technology matches you with the best options available.

Filling out this form has absolutely no obligations. You won’t have to pay a dime, nor will it touch your credit score. 

2. Compare loan options and select ones that best fit your requirements

Once you’ve completed the prequalification form, you’ll be able to see personalized loan options from up to eight lenders. These numbers are quotes based on the information you provided Credible earlier. 

3. File a full application with the lender

Although you might see the perfect loan based on rate and term length alone, consider your options carefully. Explore whether the lender offers forbearance and deferment options to help you through tough times. Moreover, since Credible doesn’t provide loans from every lender possible, we recommend you check out your options on ELFI and Earnest. 

Credible also has “Best Rate Guarantee,” where they’ll give you $200 if you close a loan with a better rate without Credible. That’s how confident Credible is about their loan matching process. No other competitor does this, cementing Credible’s reputation. 

What Are Credible’s Basic Requirements For Loans And Refi?

Generally speaking, it’s hard to sum up all of Credible’s requirements to qualify for a loan or refi because it consolidates so many lenders in one space. Each lender is unique, so it would be impossible to put everything into a few bullet points. 

However, generally speaking, Credible requires applicants to:

• Be 18 or older
• Be a U.S. citizen or legal resident with a Social Security number (SSN)
• Have a minimum credit score between 670 to 700 for refi
• Meet minimum income requirements
• Have a low debt-to-income ratio
• Loan a certain amount at a minimum

Each loan has some specific or stringent requirements, but these are the ballpark requirements. For example, private student loans and refi require you to be an eligible student, whereas mortgages will need more information about your income and credit history. 

Private Student Loans

Finding the perfect private student loan you need for tuition, room and board, transportation, food, or the latest tech has never been easier. Credible loans have some of the lowest and most competitive rates in the market. They also offer a ton of guaranteed benefits by finding loans with them, such as:

• No origination fees
• Zero prepayment fees

Besides, you can apply alongside a co-signer, which Credible claims to boost your qualification chances threefold. Many lenders offer co-signer release, which is excellent news for anyone considering co-signing for their loan. An additional innovative feature is the ability to compare your rates with different co-signers. 

Credible offers loans from well-known and trusted lenders such as Ascent, Citizens Bank, College Ave, Discover, and Sallie Mae. 

Student Loan Refinancing (Refi)

Credible makes the refi process as simple and streamlined as possible. The entire process is entirely free as well, charging no origination, service, and prepayment fees. 

You can refi federal student loans, private student loans, or Parent PLUS loans. Refinancing your loans can save you thousands of dollars.

For example, imagine you currently had a $100,000 private student loan with a 5% APR and a loan term of 10 years. Every month you’d be paying around $1,000 to pay your loan off in time. 

However, if you refi your loan successfully to a 3% APR with the same loan term, you’d end up saving about $11,000. For just an hour or two of applying and researching refi options, you could save thousands of dollars. 

Credible refi can help relieve co-signer obligations on your existing loans as well. 

While refi might sound exciting, it’s crucial to remember that these are big decisions and that you should thoroughly research your options. Always check out other lending marketplaces to see if they have better choices!

Should I Refi My Federal Student Loans?

On the surface, your new, shiny refi option could have a lower interest rate than your federal student loan. Despite this, it’s key to keep in mind that federal student loans have many benefits. 

For example, these government loans offer public service loan forgiveness, interest-free deferment and forbearance, discharge options, and income-based repayment plans. No private lender provides such assistance. 

A decision like this should be carefully thought out in terms of whether you plan on taking advantage of any of the federal benefits, and the savings you could get from refinancing your loans.

Read more about whether you should refinance your student loans!

Personal Loans

Have you been searching for ways to consolidate your debt, refinance your credit card debt, or improve your home? Credible can help match you to the perfect personal loan.

Personal loans range from $1,000 to $100,000 and could save thousands of dollars, depending on the situation. Typically, once you complete the loan application and qualify, you get your money within the next business day or week. 

Credible offers personal loans from trusted banks, lenders, and credit unions such as Goldman Sachs, SoFi, LendingPoint, and Avant. 

Mortgages

Credible makes the mortgage hunt process as “pain-free” as possible. As a mortgage broker, they help you find the best options possible. 

Their application process is similar as usual, but Credible mortgages can be completed end-to-end through their website. All you need to do is submit some additional documents, including your tax returns, and let them process the mortgage.

They even offer loan officers with decades of experience to assist you. These officers are not commissioned, so they have no reason to try to upsell you a mortgage. 

Other benefits include data privacy, automatic updates, and bank integration. The Credible mortgage process is simple and straightforward, modernizing the typical lengthy application process.

Mortgage Refinancing

If you currently are in a bad mortgage situation with high rates and lengthy loan term, you may want to consider mortgage refi. Per the theme of this article, Credible strives to make that process as streamlined as possible, minimizing the forms involved.

Amazingly, you can complete the entire process end-to-end on Credible’s website. You begin by completing the prequalification form to uploading documents as the final step. 

Unfortunately, Credible lenders typically charge a 2-6% commission for refinancing your loan. Other fees such as origination charges, appraisal fees, mortgage or homeowners insurance, and application fees may arise, depending on the lender. It’s important to look through the other charges carefully since they vary wildly by the lender. 

However, using Credible to find your loan is entirely free. It’s just the process of finalizing the refi that could incur charges. 

Is Credible Safe?

It’s not our right to be the judge and jury on this. Though, we can provide you the facts to help you make a justified decision. 

Credible hasn’t run into problems with the law nor has reported any major data breaches since its founding. However, there’s always an inherent risk when giving your sensitive personal and financial information online, even to trustworthy companies. 

Moreover, Credible is highly rated, furthering its trustworthy reputation. The Better Business Bureau rates the firm an “A+,” and TrustPilot consumer reviews rank Credible 4.7/5.0 stars. 

Will Credible Hurt My Credit Score?

Credible itself won’t hurt your credit score, but the lender they connect you with can touch your credit score. 

Remember that Credible is merely the middleman in the transaction. While Credible will only do a soft pull on your credit score, the actual lender will do a hard pull to fully gauge your credit history.

However, credit inquiries play a small part in your total credit score (10% in FICO score), and hard pulls only last 24 months. 

How Does Credible Make Money?

It’s probably hard to believe that Credible is offering all these well-designed services for free. Heck, even their user interface is crisp, clean, and easy-to-use. But where are they getting their money?

Credible makes money for every successful loan. Think of Credible as a merchant selling art. If the merchant sells the art, then they can take some commission for their marketing services.

It’s actually in Credible’s best interest to try and match you to the best possible loans. Remember that every signed dotted line makes them the most money, not necessarily just showcasing random loans.

Thus, you can see Credible’s keen efforts to make the loan hunting process as streamlined as possible. Beautiful graphics and a pleasing dashboard make everything feel as friendly and open as possible. 

How Is Credible’s Customer Service?

Being an online-only service provider, it’s vital to have good, accessible customer service options. Credible offers a few different options:

• Email them at [email protected]
• Call them at 866-540-6005
• Online chat on their website

What I Wish Was Different About Credible

To be honest, after thinking about this for a while, there’s not a whole lot Credible can change to become better. They’re currently one of the best loan marketplace tools out there. 

Some of their negatives are problems that every other loan marketplace faces, including requirements on U.S. citizenship and that quotes can differ between the actual lender offer. The latter is because Credible only acts as a middleman, and sometimes, information between them and the lender can get a little messy, leading to misunderstandings and misinformation.

Perhaps they could extend their lending partners to provide more options, but then again, no lending marketplace is perfect in this aspect either. Thus, we’d recommend using other lending marketplaces, such as LendKey, to get a wide variety of options. 

How To Get Started With Credible

Credible is incredibly easy to get started with. All you need to do is first fill out the quick and simple prequalification form, explore through your options, and submit a full application to close the loan.

Credible’s entire website is beautifully designed, and the user experience is as sleek as it can be. Remember that the whole service is free and doesn’t hurt your credit score, so it’s worth checking out if you’re considering getting a loan for anything. 

Should You Use Credible?

If finding the perfect loan is on your mind right now, we believe Credible is one of the best ways to be matched to a loan best suiting your needs and credit history. Given that the tool is entirely free-to-use and that many previous consumers have rated them highly, they are a great place to start.

Though, it’s worth mentioning that Credible doesn’t offer loans from every lender possible. Thus, it’s still an excellent idea to look into LendKey, Earnest, and ELFI to see some other loan options. You wouldn’t want to miss out on potentially lower rates because that lender wasn’t in Credible’s network. 

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post Credible Review appeared first on Finance Plan Today.

What Is Upstart?

Upstart is an online lender that uses unique metrics to determine your creditworthiness. Launched in 2012 by ex-Googlers, they use artificial intelligence (AI) to underwrite loans for more Americans. Upstart has since originated $6.7 billion in loans and automated 70% of all loan applications. 

Their technology has proven enormously successful, leading to 75% fewer defaults at the same approval rate as other firms. Moreover, they’ve been able to approve 27% more borrowers than other lenders using the standard models. 

Upstart is truly an innovative and entrepreneurial firm seeking to break the standard loan industry traditions. They offer personal loans for all sorts of purposes, ranging from home improvement to medical to wedding loans. 

How Does Upstart Work?

For the most part, Upstart’s loan application process is pretty standard. They’ll ask you for your credit score, income, debt, and assets. However, their novel twist is their machine learning algorithm.

Upstart separates itself from its competition through its AI-based model that gauges more than the typical lender. For example, Upstart also asks for your education, job history, major, and residence to introduce new variables that could swing approval odds and interest rates in your favor. 

For instance, say you have no credit history, but you study a major with a high median salary. Upstart might still approve you, predicting that you should have the repayment capabilities in the future. Regular lenders would probably just straight up reject you. 

Now say you had a good credit history, excellent grades, and past employment history. You’ll be more likely to be given a more competitive loan with lower rates than what other lenders can offer. 

Upstart has a reputation for approving those with little to no credit history. Typical credit scoring models would almost immediately ax these applicants. Differently, Upstart’s algorithm allows these people to be appropriately analyzed and judged for factors outside just their credit score. 

As a firm, they believe that you are more than just your credit score.

Through their innovative tech, Upstart has been able to bring more loans to a wider variety of Americans. Truly a forward-facing firm seeking to break the traditional lending methods.

Upstart Rates, Terms, and Fees Summary

While Upstart has introduced new, innovative perspectives into the lending market, they charge hefty fees. Origination fees can range from 0 to 8%, and they have one of the highest maximum APRs we’ve seen. For example, someone with a poor credit history could end up with a loan with an APR around 35%—that’s a ridiculously high rate. 

Moreover, Upstart doesn’t allow co-signers; they only let you loan for three and five-year term lengths and for amounts between $1,000 and $50,000. Be aware of the various limitations imposed when trying to get an Upstart personal loan.

According to Upstart, the average three-year loan APR was about 20%. 

Pros & Cons Of Upstart

Upstart’s novel credit algorithm has allowed them to issue loans to a wider span of applicants. However, they have competitive rates on the low end and horribly high APRs on the other side. Though, a huge pro is their ability to parse through applicants with little to no credit history.

They also have one of the best customer ratings we’ve seen as well. Unfortunately, Upstart doesn’t offer loans in every state.

Pros:

• APRs as low as 4.66%
• Maximum loans of $50,000
• Applicants with little to no credit history can apply
• No prepayment fees
• Stellar customer reviews

Cons:

• APRs as high as 35.99%
• Loans not offered in West Virginia or Iowa
• Must loan a minimum of $1,000*
• Origination fees from 0 – 8%
• Late payment fees, greater of 5% due or $15
• Minimum credit score of 600 needed
• No co-signers

*Minimum loans vary slightly by state. The minimums in MA, OH, NM, and GA are $7,000, $6,000, $5,100, and $3,100. 

How Do I Qualify For Upstart Loans?

Remember that the beautiful thing about Upstart is that they’re willing to look at applicants with little to no credit history. However, if you do have sufficient credit history, generally, a score of 600 is required at a minimum.

Financial Requirements

• Must have a regular source of income or prove you have a job offer in the coming six months making at least $12,000
• If you have a credit history, a score of 600 is generally required at minimum
• Look to get a loan of at least $1,000*
• No recent bankruptcies or delinquent loans 
• No more than six recent hard inquiries 

Individual Requirements

• US citizen or a permanent resident
• Don’t live in Iowa or West Virginia

*Minimum loans vary slightly by state. The minimums in MA, OH, NM, and GA are $7,000, $6,000, $5,100, and $3,100.

What Are Upstart Repayment Options?

Unfortunately, Upstart offers limited loan terms for only 3 and 5 years. You can make your payments monthly electronically or via mail-in check. Furthermore, if you want to pay off your loan early or make larger payments, there are no fees.

Generally speaking, the shorter the loan term, the lower the APR you’ll end up with, and the less money you’ll end up paying in the long run. 

Who Should Use Upstart?

We think that Upstart is best for those with average credit scores or little to no credit history. Since Upstart will look at you even if you have a nonexistent credit history, they might approve your loan if no other lender will.

However, if you have a more robust credit history, you should gauge all your options. Upstart has extensive origination fees and somewhat high-interest rates that can be unappealing if you have better options.  Firms like Earnest and LendKey might have lower fees.

Will Upstart Hurt My Credit Score?

The answer is yes, and no.

During the loan matching process, Upstart only does a “soft inquiry” on your credit history. “Soft pulls” do not affect your credit score.

However, if you choose to finalize a loan and sign the dotted line, you could temporarily hurt your credit score. The lender will do a “hard inquiry,” which gives a thorough and complete report on your entire credit history. 

Though, “hard inquiries” have a small effect on your credit score. Your credit score only factors inquiries for 10%. Moreover, these pulls only stay on your credit report for a maximum of 24 months. Therefore, your credit score will go back to normal pretty quickly.

How Is Upstart’s Customer Service?

Upstart has some of the best consumer reviews we’ve seen.

Over 6,000 Trustpilot reviews rate Upstart 4.9/5.0 stars. Clients noted that Upstart’s process was “quick, easy, and wonderful,” and that everything went “smoothly.” Moreover, Upstart has been an accredited business with the Better Business Bureau since 2015, even scoring the elusive “A+” rating. 

They are indeed a business that emphasizes the customer experience.

You can contact Upstart via email or phone. Their calling hours are as follows:

• Mon – Fri, 9 AM – 8 PM ET
• Sat & Sun, 9 AM – 8 PM ET

What I Wish Was Different About Upstart

Generally speaking, Upstart is a fantastic platform and company. There’s not too much I would change except for a few minor things:

• A slightly more transparent website displaying more information
• Better rates for those with excellent credit scores
• Lower origination fees

Though Upstart is still an excellent place for those with average or nonexistent credit scores.

How To Get Started On Upstart

Like previous consumers have cited, Upstart is really easy to use.

The entire process is online, and you’ll need to give them your personal information, including your name, social security number, and income. Given Upstart’s unique model, you’ll also need to provide them with your academics, major, GPA, and prior employment history to weigh if you’re eligible for better rates or approval. 

If you prequalify, you can see your quote and then proceed with finalizing your loan. The final steps may require you to submit documents to prove some information, such as your transcript. Finally, you just need to sign the dotted line. 

You can apply for your loan end-to-end on Upstart’s website. A smooth, clean process.

Are There Referral Bonuses?

Unfortunately, this doesn’t seem to be the case. If you’re looking to take advantage of referral bonuses, you might want to take a look into the likes of Earnest.

Should You Use Upstart

I think Upstart is an excellent choice, especially if you have an average or little to no credit score. Most traditional lenders might not even approve you or provide terrible rates, whereas Upstart will weigh non-traditional variables to help your approval odds and rates.

Furthermore, given that you can get a quote free of charge, there’s no real downside to not at least trying out Upstart. Their customer service is truly incredible, and they’re more than willing to help you through the process.

However, even if you get an offer with Upstart, make sure you look through all your options. You never know if a competing lender like Earnest or LendKey has better personal loan options. 

FAQs

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post Upstart Review appeared first on Finance Plan Today.

Lenders use the five C’s of credit to get a sense of your repayment capability. Remember: lenders want to make sure you can repay your loan. Whenever you default on your loans, lenders take heavy losses, and your credit history takes a hard hit. A lose-lose situation for everyone.

Primarily, lenders are looking to make sure that your business is stable, trustworthy, and can pay off the monthly payments. They’d rather not give money to those with businesses that aren’t making any revenue or just recently went bankrupt—that would spell disaster for the lenders. 

The five C’s of credit that lenders use to evaluate your creditworthiness are Capacity, Capital, Character, Collateral, and Conditions.

If you are ready to go, check out Fundera. Their service makes it super easy to apply for a business loan.

Capacity

What: Can you meet your monthly debt repayments?

Capacity is one of the key C’s of credit. Lenders will look through your cash flow, income, employment history, stability, and debt-to-income (DTI) ratio to see if you can pay off your debt. 

Why: If lenders feel like you can’t meet your repayment obligations, your lending journey will likely stop here. It won’t matter how good your other 4 C’s are if you can’t display the ability to repay your loan. 

Make sure your DTI ratio is within a reasonable range. The DTI ratio is your monthly liabilities divided by your gross monthly income, representing your ability to make monthly debt repayments. 

For reference, many lenders won’t approve mortgages for applicants with DTIs higher than 42%. Lenders such as Wells Fargo view different ratios to mean various risks:

• 35% or less: debt is manageable; you’re in a good place
• 36 – 49%: DTI ratio could improve
• 50% or more: debt is unmanageable and is taking over 50% of your income; bad!

The main idea here is that the lower your DTI, the more likely you will be approved. 

Capital

What: How much skin do you have in the game?

Lenders want to see that you’re putting something towards your loan. Capital generally refers to the “down payment” (similar to when you buy a house) or other personal assets and investments you have that can pay off the loan. 

Why: The more you have personally and financially invested in your business, the more risk you take on. This distributes the risk evenly, helping to reassure lenders that you are very serious about your project. 

For example, if you’re only willing to put down $1,000 and ask for $100,000, then lenders might question why you’re not confident in your own business. Differently, if you put down $20,000, then lenders will be more inclined to trust you.

Likewise, having personal assets and investments can help lenders feel a little safer about giving you money. Having investments, such as ETFs or individual stocks, that can be used to pay off the loan when you’re having trouble making payments comforts lenders. 

Character

What: What’s your reputation?

Character is basically a way to describe your credit history, credit score, education, experience, and integrity. Lenders want to see that you’re trustworthy based on your past and have a strong reputation in the field. They may even tap into your references or your employee’s experience levels as well. 

Why: Banks want to lend to trustworthy people that seem to possess the ability to repay their loans. For example, if you defaulted on your mortgage, then the lender might be hard-pressed to approve of you. What’s to say you won’t default on this business loan? 

Moreover, knowledge and experience play an enormous role as well. Say you have launched three enormously successful businesses and showcased an exact growth timeline before asking for a loan. That’s a fantastic track record that would make lenders feel a little more secure. 

Furthermore, relationships play a crucial role in these interactions. Being able to showcase your expertise, experience, integrity, and professionalism in your interactions with the lender is extremely important. 

Collateral

What: If you were suddenly unable to pay off your loans, do you have a way to secure the loan with something non-cash? 

For example, when applying for mortgages, your collateral is your house. If you defaulted on your mortgage, the lender would take possession of your home. 

Why: Lenders don’t want to simply give you money without having a way to secure it. A collateral is a fantastic way to reduce the lender’s risk because it gives lenders a way to feel a little safer with their decisions. 

Lenders use the loan-to-value ratio (LTV) to weigh their lending risk. LTV represents the amount you want to borrow relative to the value of your collateral. The lower the LTV, the less risk involved for the lender. 

For instance, if you want a $90,000 loan, and your collateral is worth $100,000, then your LTV is 90%. Comparably, a $50,000 loan would have an LTV of 50%. The lower LTV is favorable for the lender since they can take your collateral and sell it to cover their losses after default.

Conditions

What: How will external economic conditions affect your business? What do you plan on using the money for?

Why: Lenders will want to understand what their funds are being used towards. Being explicit about your intentions and goals is good because it will also build your (3) Character. 

Moreover, maybe your business has a strong competitive advantage breaking into a new market. These are exciting prospects for lenders who will be more inclined to help you out. 

Though, you won’t have any control over the surrounding economic or environmental conditions. During times of economic recession, lenders are hard-pressed to distribute loans due to credit crunches. Furthermore, your business might be in an area susceptible to earthquakes, which could scare lenders a little. 

Consider everything going on around you and see if now is the best time for you to apply for a loan. 

How To Improve The C’s

Capacity: Minimize Your Debt-To-Income Ratio

Your DTI ratio plays a vital role in deciding your Capacity. Consequently, planning ahead to reduce your DTI will help.

Recall that the DTI ratio is just your monthly debt obligations divided by your monthly gross income. Thus, there are two ways to reduce your DTI:

1. Pay off previous debt to reduce your monthly repayments
2. Increase your gross monthly income

The first of these two is generally easier for most people. We all wish we could magically boost our monthly income. However, you can plan ahead and pay off as much of your previous debt as possible. Doing so will help decrease DTI. 

Character: Boost Your Credit Score

There are several ways to improve your credit score, which will help your Character.

Though, if you’re trying to increase your credit score, you must first thoroughly understand how your credit score works. Make sure you have looked into Credit Karma and Credit Sesame to ensure you can monitor your score’s growth.

Once you’ve done these preliminary steps, then you can start exploring ways to help your credit score.

Check Your Credit Report For Errors

Sometimes the credit bureaus make errors on your credit report. In fact, the Federal Trade Commission estimates about 20% of consumers have mistakes in their credit scores. This is a stark stat considering how many people are likely affected.

Unfortunately, it takes months to fix errors. 

Thus, if you plan on applying for a loan, make sure to examine your credit at least six to nine months beforehand. This timeframe will give you plenty of time to file a dispute. 

Pay Off Your Credit Cards

Credit card utilization factors into 35% of your FICO score. This ratio represents your credit use divided by your total credit limit. 

The lower your credit utilization, the higher your credit score.

The nice thing about this ratio is that it resets frequently. Therefore, you can minimize your utilization before using your credit score.

One to three months before applying, pay off all your credit cards weekly. This move will place your utilization ratio near 0% when your card companies report your utilization to the credit bureaus.

A 0% utilization ratio makes the FICO and VantageScore algorithms happy.

Ask For Credit Limit Increases

Remember that your credit utilization comprises 35% of your credit score. 

By getting a credit limit increase, you’ll effectively decrease your credit utilization ratio. Sorry for sounding like a broken record, but the lower your ratio, the higher your credit score.

All you need to do is talk to your credit card issuer and see if they’d be willing to bump up your limit. This usually only happens if you’ve demonstrated strong repayment history and are generally qualified. 

It also doesn’t hurt to ask. The worse they can say is no, and that limit boost could help bump your credit score. 

Open A Credit Card With Good Habits

Opening another credit card on your history can be helpful. If you maintain excellent habits, you’re set to rake in credit score boosts.

Firstly, your credit utilization ratio will decrease. This new card will increase your total credit limit, which will lower your ratio. 

Next, if you maintain a good repayment history, then the “payment history” portion of your credit score will also improve.

Finally, adding a credit card could improve your credit mix, which plays a small role in your score.

However, simultaneously opening too many credit cards could harm your credit score. When you apply for a credit card, the lender will do a “hard inquiry” on your credit report, which will temporarily ding your score for up to 24 months.

Getting a new card will affect your credit score after a few weeks, but positive effects increase as time goes on. Note that everything we’ve just noted also applies to secured credit cards.

Check out Fundera if you want to apply for a business loan. Their service makes it super easy.

Frequently Asked Questions (FAQ)

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post The Five C’s Of Credit appeared first on Finance Plan Today.

LendKey Review

Name: LendKey

Description: is an excellent student loan marketplace connecting you to over 13,000 local and small credit unions and banks. As a middleman, they will provide you with the best loan options available, and consumers rate them well. However, they don’t offer refinancing in all states and no deferment options. 

Overall

4.3

• Interest Rates
• Repayment Options
• Customer Service
• Refi Amounts

Summary

LendKey is an excellent student loan marketplace connecting you to over 13,000 local and small credit unions and banks. As a middleman, they will provide you with the best loan options available, and consumers rate them well. However, they don’t offer refinancing in all states and no deferment options. 

Pros

• Competitive and low rates
• Allows co-signer release
• No application fees

Cons

• Not available in every state
• Must have graduated with a minimum of an associates degree
• Doesn’t have federal loan benefits

• Get A Quote

What Is LendKey?

LendKey is a student loan marketplace launched in 2007 and is headquartered in New York City. Their innovative technology allows them to match over 13,000 lenders to their clients. LendKey’s business model has worked so successfully that they’ve helped fund $3.1 billion in loans since their inception.

It’s important to note that LendKey acts as a middleman between you and the lender. Though, LendKey works with local nonprofit credit unions and community banks, allowing LendKey to offer some of the lowest rates out there. This stands in stark contrast to bigger banks that generally charge higher rates, but are easier to find.

LendKey’s goal is to connect you to these smaller banks to bring more favorable rates.

As a Better Business Bureau accredited organization, they are rated “A.” In addition, TrustPilot reviews place them 4.5/5.0. Compared to some other lenders, their ratings are still pretty good. 

LendKey Rates, Terms, and Fees Summary

What Is Student Loan Refinancing?

Let’s say you had $10,000 in student loans with a fixed annual percentage rate (APR) of 10% per year. After one year, you’d owe $1,000 in interest. That’s a lot.

Student loan refinancing (refi) is when a company like LendKey or Earnest pays off your loan but gives you a new loan at a (usually) lower interest rate.

Now, LendKey offers to refinance your student loan. They first pay off the $10,000 loan and then open a new $10,000 loan at an APR of 5%. If you took this refinancing option, you’d only owe $500 in interest after a year.

That’s 50% in savings by making a small switch. Now imagine if how much more you’d be paying if you had much larger student loans. You’d literally be saving thousands of dollars by refinancing.

Student loan refinancing can be one of the ways to save money on your student loans. 

LendKey Refinancing Pros And Cons

If you’re looking to refi your student loans, LendKey is a solid choice. They have competitive APRs and offer some nice perks. Furthermore, they allow you to have a non-binding co-signer and don’t charge application fees.

However, LendKey doesn’t offer refi in several states, including Maine, Nevada, North Dakota, Rhode Island, and West Virginia. Furthermore, if you have federal student loans, you’d lose a lot of those benefits, including forgiveness. 

Moreover, while they offer typical loan terms, their term lengths are nowhere near as flexible’s as Earnest’s. We didn’t list this as a pro nor con since Earnest is the only lender offering 180 different loan terms vs. the standard loan terms. 

Pros

• Competitively low APRs
• No application fees
• Allow co-signers
• Autopay interest rate discount
• Forbearance options available

Cons

• Not available in every state
• Doesn’t have federal loan benefits
• No way to postpone payments
• Must have graduated with a minimum of an associates degree

Make sure to thoroughly compare all your options before you decide to refi with anyone of them. 

How Do I Qualify To Refinance With LendKey?

LendKey needs to look through your credit history, debt-to-income ratios, and employment to gauge your risk level. Since lenders take a risk when they give you money, they want to make sure you can pay them back. Failure to do so is called “default” and can cause lots of damage to both parties involved. 

Listed below are some of the requirements to refi with LendKey. In fact, LendKey doesn’t have many requirements, allowing them to have a streamlined application. 

Financial Requirements

• Minimum credit score of 660
• Income above $24,000/year
• Debt-to-income ratio below 50%
• Must refi at least $5,000

Individual Requirements

• Must have at least an associate’s degree
• U.S. citizen or permanent resident
• Cannot refi in Maine, Nevada, North Dakota, Rhode Island, and West Virginia

Also, what degree you’re studying will affect the maximum amounts you can refi. 

• Undergrad degrees: max $125,000 refi
• Graduate degrees: max $250,000 refi
• Medical, dental, veterinary degrees: max $300,000 refi

What Are LendKey Repayment Options?

LendKey offers loan terms for five, seven, 10, 15, and 20 years. These are pretty standard loan terms. Also, LendKey doesn’t charge any origination fees, so that’s a nice bonus. 

Their interest rates are low and competitive. As of 07/07/2020, their rates are as follows:

• Variable rate: 2.86% to 5.50%
• Fixed rate: 3.44% to 8.00%

LendKey also provides an option for autopay, which can reduce your interest rate by 0.25%. Consequently, with a FICO score above 810, you could be eligible for the following minimum rates for a five-year loan:

• Variable rate: 2.61%
• Fixed rate: 3.19%

It’s worth noting that these minimum rates aren’t applicable for any loan term greater than five years. Though, most companies follow similar stringent rules on these advertised rates. 

Take a look below at LendKey’s competitors to get an idea of just how reasonable these rates are—trust me, they’re good.

Who Should Get LendKey Refinancing?

LendKey refinancing is for those with good credit scores (660 minimum) and looking to refi at least $5,000. They have reasonable interest rates compared to their competitors, but they require slightly less stringent requirements to qualify. 

For example, while Earnest and ELFI currently offer lower variable rate APRs, they require stricter policies. Earnest has a more complex application, and ELFI has a minimum credit score of 680. LendKey might be best for you if you don’t think you can qualify for a lower variable rate APR from Earnest and ELFI. 

Also, LendKey only needs a minimum student income of $24,000, which is slightly less than some competitors. I.e., ELFI requires a minimum of $35,000! 

In brief, LendKey is a good option for those with average incomes or credit scores.

What’s In The Fine Print?

Co-signer Release

When you apply to refi your loans with LendKey, you can have a co-signer. However, a co-signer places their credit score on the line for your sake. 

Some LendKey lenders offer co-signer release. On average, you can apply for co-signer release after 12 months. However, you must meet the following criteria to be eligible for co-signer release:

1. Don’t miss any payments
2. Account cannot be delinquent
3. You must demonstrate you have sufficient income and credit history to support the monthly loan repayments 
4. You must not have any bankruptcies or foreclosures in the last 60 months
5. Cannot have any loan default history

Remember: co-signers are there to help the lender feel more comfortable with giving you money. Loan defaults cost lenders a lot of monetary losses. 

For instance, if you recently defaulted on a loan, LendKey will not let you release your co-signer. What’s to say you won’t default again?

Deferment and Forbearance Options

LendKey provides some forbearance options for those needing to delay their monthly debt payments. More specifically:

• 5, 7, and, 10-year loans: pause payments for up to four month periods, totaling 12 months max
• 15 and 20-year loans: pause payments for up to six month periods, totaling 18 months max

Unfortunately, LendKey doesn’t support any deferment options. Even if you’re going back to grad school or into the military, LendKey doesn’t have any options to pause payments. If you’re looking for lenders with deferment options, then you should look into Earnest. 

Remember: LendKey Is A Middleman, Not The Lender

It’s crucial to keep this fact in mind.

Some lenders could have lay payment fees; some won’t. Others might charge you extra for returned checks; others won’t bother. 

Furthermore, a lot of numbers depend on the lender you sign up with. For example, some lenders will offer a grace period of six months, where they charge no interest payments for up to six months after you graduate. Others might be even more generous and only charge $25 every month you’re in school.

LendKey merely acts as the middleman to help you find your lender. Make sure you read carefully through each offer to ensure there’s no confusion. The last thing you want is to get the lowest possible APR loan but to have ridiculous bylaws in the fine print. 

Can I Trust LendKey?

LendKey is a pretty trustworthy company.

They’ve had no problems with the federal government about their services. Furthermore, they’re accredited by the Better Business Bureau with an “A” rating. Consumers on TrustPilot on average rate LendKey 4.5/5.0. 

Moreover, in the last 12 months, seven complaints were filed. However, LendKey closed them all after a month with thorough, thoughtful responses. 

Given that LendKey has also not had any significant data breach issues, we believe that LendKey is an excellent firm. 

What I Wish Was Different About LendKey

Just a few things. I think the biggest problem I saw with LendKey was their website. 

Surprisingly, while their website was straightforward and easy to follow, finding some vital loan information was difficult. For instance, no immediate information was available about deferment or forbearance options. 

Compare this to firms like ELFI and Earnest, which display all their information clearly. This transparency allows consumers to easily find valuable and relevant details about their loans. 

However, the lack of clarity might be because LendKey assigns you to a lender that might have their own unique terms. Understandably, it can be challenging to summarize all 13,000 lenders into a few paragraphs. 

• Offer refi in all states across the country
• Provide some deferment options 
• More flexible loan terms
• Have a clearer and more informational website

Are There Referral Bonuses?

LendKey offers a $200 referral bonus for every person you invite to successfully take a loan or refi. There’s also no limitation on the number of people you can refer every year. Furthermore, the person you refer will also get $200!

A truly win-win situation for everyone involved.

What Other Loans Does LendKey Offer?

Private Student Loans

Generally speaking, LendKey’s private student loans are similar to their refi products. LendKey still acts as a middleman between you and the actual lender. Furthermore, they still work with local credit unions and banks, allowing you to get competitive fixed and variable APRs.

LendKey’s interest rates are some of the best available on the market, even offering an additional 0.25% discount for autopay. As of 07/07/2020, their private student loan rates with the autopay discount are as follows:

• Variable rate APR: 2.99% to 7.77%
• Fixed rate APR: 4.99% to 7.75%

If you’re interested in finding a private student loan, LendKey is a fantastic option.

Home Improvement Loans

Looking to repair, renovate, or remodel your home? You’ll probably need thousands of dollars to do so. 

LendKey offers home improvement loans with low rates, benefits, and no-fee financing. Furthermore, all renovations are eligible for loans, so don’t fret about whether your kitchen project will fit the criteria! 

Though, rates vary from person to person, which is why LendKey doesn’t instantly display typical rates on their website. If you’re curious, I recommend you look into your offers and compare them against other home improvement lenders. 

Top Student Loan Refinance Companies

Company	Variable APR	Fixed APR
	1.86-6.01%	2.43-5.99%	Get My Rate
	1.99-5.64%	2.98-5.79%	Get My Rate
	1.99-6.09%	2.99-6.09%	Get My Rate
	1.99-6.10%	3.00-6.20%	Get My Rate
	2.99-6.06%	2.99-5.99%	Get My Rate
	1.99-5.25%	2.99-7.75%	Get My Rate

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post LendKey Review appeared first on Finance Plan Today.

They also make it possible to easily apply for a PPP loan as part of the coronavirus economic relief program. This Fundera review will explain the process and why we recommend the company if you need a business loan.

Fundera Review

Name: Fundera

Description: simplifies the small business loan application process by creating one application to simultaneously apply for hundreds of loans. Fundera saves time and stress by consolidating hundreds of loan options in one place. They even provide additional personal advisory service to assist you through the process. 

Overall

5

• Fees
• Customer Service
• Ease-of-use

Fundera Review

Fundera simplifies the small business loan application process by creating one application to simultaneously apply for hundreds of loans. Fundera saves time and stress by consolidating hundreds of loan options in one place. They even provide additional personal advisory service to assist you through the process. 

Pros

• Makes finding loans easy
• Specialized loan advisors
• Free-to-use
• User interface is straightforward

Cons

• Acts as a middleman; can only provide estimates on your rates
• Doesn’t offer loans from every lender out there

• Apply Now

What Is Fundera?

Fundera started as a one-stop-shop for you to apply for multiple loan products through a straightforward application. Since launching in February 2014, Fundera has helped over 35,000 small businesses secure a billion in loans.

The company not only makes the loan process simpler but also provides comparison tools to help you pick the right loan for your small business. They even assign lending specialists to make the journey as smooth as possible.

Fundera has since expanded outside of its founding business model to provide further consolidation tools on credit cards, banking products, and more. In comparison to some competitors, they also offer personal loans like Upstart. They are rated 4.8/5.0 stars on TrustPilot, solidifying their reputation. 

How Does Fundera Work?

If you’ve ever applied for loans, you know how much of an annoying process it can be. 

It’s like applying for jobs. You look at a position, apply, and then move onto the next. Rinse and repeat, 10, 20, and 50 times. Whew.

Imagine if you had a tool where you could fill out one application for many jobs. Fundera does just that, except for loans.

Fundera makes finding loans easy and streamlined. Their process breaks down into a few, simple steps:

1. See what your options are (1-3 min)
2. Apply (10-30 min)
3. Talk to your lending specialist
4. Wait for your results
5. Compare offers
6. Pick the best product for you!
7. Stay up-to-date about 

With just a few questions, Fundera helps find loans that you are likely to prequalify for. Once you’ve looked through your first options, then you can go through and submit the full prequalification form. Note that these two steps are entirely different and that the complete application takes between 10-30 minutes.

Afterward, they have technology that matches you with the best loan options available for you. Your full prequalification form is bounced through their system, submitting your application to multiple lenders.

Your specialist will work closely with you throughout the process to learn more about your business. By understanding your fundamental needs, they’ll help optimize your loan options as well.

Fundera even goes as far as to claim that they make the process so simple that users don’t need to exit out of the site once they start. The form takes about 10-30 minutes to complete, and the dashboard is clean and simple to follow.

What Lenders Does Fundera Work With?

As a middleman, Fundera works with a variety of lenders such as:

• Kabbage
• Bluevine
• Funding circle
• Fundbox
• Paypal
• Five Star Bank
• Celtic Bank
• PNC Bank

What Type Of Loans Does Fundera Offer?

SBA Loans

The Small Business Administration (SBA) offers government-backed loans that are referred to as SBA Loans. Essentially, the SBA contributes to a part of a small business loan, reducing overall risk for a lender. Thus, the SBA helps incentivize lenders to create loans.

These loans can be used for almost anything, ranging from working capital to fixed assets. 

Term Loans

Business term loans are the typical loan you think of when you think “loan.” 

You take the loan, borrow some amount of money, and pay it off as usual. Though, term loan approval is typically much faster than SBA loans. 

Startup Loans

These types of loans are more geared towards startups or companies with little business history. 

Startup loans, compared to SBA loans and term loans, are not as explicitly grounded in terms of rates. Your personal credit history and your startup’s business potential play a considerable role in determining the loan term, APR, and amount. Consequently, the ranges for each are far too large to quantify in a singular table.

Each startup will have its own, unique terms.

Lines of Credit

Business lines of credit behave extremely similarly to a typical credit card.

You’re essentially given a “credit limit” which acts as the maximum amount of money you can borrow. Interest only accrues on any money you use on your line of credit. Thus, lines of credit can give you more flexibility on your spending prowess and can allow you to cover unexpected costs.

Equipment Financing

Fundera provides access to loans that help cover all of your necessary equipment. These loans can easily and quickly finance computers, vehicles, and more.

Unfortunately, one of the major cons of equipment financing is depreciation. By the time the loan term ends, the equipment could have little to no value.

Invoice Financing

This type of loan helps provide immediate funds to cover your accounts receivable. 

For example, say you have delivered a product, but the customer hasn’t paid their invoice yet. You might need that money now, but the customer has 30 days to pay for their purchase. Invoice financing gives you the money you need within 24 hours.

The table below summarizes all the loans mentioned previously. 

What Makes Fundera Unique?

Fundera’s secret sauce lies in making the application process as easy as they can.

The application consolidation tool simplifies the entire loan process to just a few simple steps. By emphasizing a streamlined flow, Fundera understands just how cumbersome these forms can be.

Moreover, Fundera is one of the only firms offering individual, personalized human support. These trusted advisors can help clear up any questions or concerns that arise. Since everyone’s situation is different, these specialists ensure that the loans you pick are the best ones for you. 

Pros & Cons Of Fundera

Generally speaking, Fundera is a free-to-use tool that can help speed up the loan hunting process. To be honest, Fundera doesn’t have any significant cons that would truly deter you away from using. 

The only issue is that Fundera can’t give you precise interest rates, loan terms, or amounts. They can only provide estimates, and their estimates might differ significantly from what the lender actually provides.

Besides, if you don’t like the loan options you see with Fundera, nothing is forcing you to take them. Remember: you can apply for free to see what loans work best for you, but you don’t have to sign any dotted lines.

Pros:

• Makes finding loans easy
• Specialized loan advisors
• Free
• Excellent customer reviews
• User interface is pretty and easy to use

Cons:

• A middleman; only points you in the right direction
• Only provides rough estimates until you get your actual offer

How Much Does Fundera Cost?

Fundera is entirely free to use. Like literally, you can go to their website right now, fill out their application, and find your loan options today. 

How do they make money, you ask? Look below!

Is Fundera Safe?

Yep! 

Fundera has a clean record. They have had no run-ins with the government since their inception. 

Moreover, they have fantastic reviews from 790 satisfied consumers on TrustPilot (4.8/5.0). Clients cite that Fundera:

• Helped them throughout the COVID-19 pandemic
• Went above and beyond
• Was simple to use

The Better Business Bureau even rates Fundera as an accredited “A+” company. 

Although you will have to input some personal identifying information during the full prequalification application, including your social security, Fundera hasn’t had any security breaches in the past. 

Simply put, Fundera is a pretty safe and trustworthy company.  

Will Fundera Hurt My Credit Score?

In the full prequalification app, Fundera needs your credit score to determine your creditworthiness for the loans you’ll be applying. However, they only use a “soft pull” to find your credit history. “Soft pulls” do not affect your credit score.

However, remember that Fundera only serves as the middleman between you and the lender. If you decide to proceed with signing the dotted line for a loan, the lender will have to use a “hard pull” on your credit. “Hard pulls” look through your entire credit history to ensure that the prequalifying “soft pull” didn’t miss anything.

Hard pulls do result in a temporary hit to your credit score. Thankfully, the effects are pretty small. Your credit score only factors new credit applications and inquiries for 10%. Moreover, these hard inquiries only stay on your credit report for a max of 24 months. Thus, your credit score will quickly return to normal.

In short, Fundera can’t hurt your credit score, but the lender will temporarily damage it if you go through the formal application process for a loan.

How Does Fundera Make Money?

Seeing that they don’t charge you a penny for their services, it’s natural to question how Fundera makes their money. Shady practices? Selling your data?

Surprisingly, no!

Fundera makes money for every successful loan they process. Think of Fundera as a merchant selling an artist’s product. If the merchant successfully sells the artwork, then the merchant can take a percent of the commission. 

Lending middlemen like Fundera similarly make their money by selling loans. However, Fundera isn’t going to just give you any random loan. If the loan didn’t match your fit, then you wouldn’t sign up for the loan, and Fundera doesn’t make any money.

It’s actually in Fundera’s best interest to be as helpful as possible throughout the entire process. Remember: every successful loan offering makes them money, not just merely showcasing the loans.

Consequently, they reflect their keen interest in keeping the consumer first by offering a fantastic user experience. By providing free advisors and technology-based matching, Fundera really tries to make each loan as personalized to you as possible to generate sales. 

How Is Fundera’s Customer Service?

With such a focus on the client, Fundera’s customer service is unsurprisingly spectacular. 

Like we’ve mentioned beforehand, consumers have rated Fundera 4.8/5.0 on TrustPilot, and the Better Business Bureau gives the firm an “A+” rating. These stellar ratings have built an excellent reputation for Fundera.

Fundera offers a few ways to contact them for additional help:

• You can email them at [email protected]
• Or you can give them a call at +1 (800) 386-3372

How Does Fundera Fare Against Competitors?

Generally speaking, Fundera is an excellent choice for loan consolidation and application tools. Their entire application process is free and easy to complete. 

One of Fundera’s main competitor is Lendio, and it’s a similar business loan marketplace.

Our recommendation is to start with Fundera and see what you are offered. If you are unhappy you can try your luck with Lendio. Both applications are completely free, but Lendio does offer some loans from lenders that Fundera doesn’t, and vice versa. Moreover, Fundera offers personal loans, whereas Lendio doesn’t.

How To Get Started On Fundera

Fundera is easy to use.

Go to their application site and fill out the seven questions to get an initial overview of your broad options. Then, fill out the full prequalification form to see what exact loans you could get. Finally, you can explore your personally matched options to determine the best loans for you.

The whole process shouldn’t take you any longer than 30 minutes. 

Should You Use Fundera? 

If you are looking for small business loans, then we would recommend using Fundera. From what we’ve seen, the company makes the user experience as sleek as possible. 

Though, you should also combine your efforts alongside Lendio to sort through all possible options since Fundera has lenders that Lendio doesn’t. 

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

The post Fundera Review appeared first on Finance Plan Today.

The FAFSA or Free Application for Federal Student Aid is a form you have to fill out to get financial aid from state and federal governments for college. If you’ll need loans to pay for college, I will share everything you need to know about the FAFSA.

Through the FAFSA, students across the country are granted millions in financial aid awards and scholarships to help them achieve their college goals.

Some colleges also use it to assess an individual’s eligibility for non-federal financial aid.

The FAFSA is known to be a lengthy application with many boxes that must be filled in. However, considering the potential for significant aid to help limit your student loans, it’s well worth the process. Don’t forget: it’s free. 

You must complete the FAFSA yearly to apply for aid. You can complete it for free via the web, mobile app, PDF, and paper versions. Arguably, the online application is the easiest, providing helpful pop-ups and tools to assist completion.

Am I Eligible For The FAFSA?

Many individuals are eligible for the FAFSA. At the minimum, you need to:

• Be a United States citizen, U.S. permanent resident, or have an I-94 
• Have a high-school diploma or GED
• Enroll in an eligible degree or certificate program
• Register with Selective Service
• Have a Social Security number
• Demonstrate financial need

The latter is hard to quantify precisely. There’s no set threshold on what defines financial need. 

Since the FAFSA is free, it’s worth applying to see if you can get financial aid. Remember: you miss 100% of the shots you don’t take.

Can Graduate Students Apply?

Yes! Graduate and professional students meet all of the minimum eligibility requirements and are thus able to apply. However, federal aid for graduate students usually consists of unsubsidized federal loans.

The biggest difference between filing as undergrad vs. graduate is that most graduate students file as independent. 

Independent vs. Dependent Applicants

Filing as an independent can help award more financial aid since your parent’s assets aren’t considered in calculations. However, the rules governing independence status are incredibly tight, designed to prevent people from finessing the system. 

To be considered independent, you must satisfy one or more of the following:

• You’re 24 years old by the end of the year
• You’re married
• You have children or legal dependents
• You’re studying for high-level education; graduate or doctoral programs
• You’re in the military or are a veteran
• You’re an orphan
• A legal court has ruled or found the student to be an emancipated minor

There are other considerations as well which you can find on the student aid gov website.

For the most part, the FAFSA application remains the same for both independent and dependent applicants. Though, independents don’t have to note parental income. 

Should I Fill Out The FAFSA?

Yes. There is no downside.

The FAFSA is literally a free application for college students to get aid to pay for college. Let me repeat this. You put in an hour of your time, and you could get a $1,000 financial aid award. That’s a pretty good return on investment. 

After filing the FAFSA, even if you aren’t eligible for aid, you might still be able to get federal loans. The nice thing about federal loans is that you don’t have to repay them until after you graduate. Furthermore, you could get subsidized federal loans, which could help save you a lot of money down the road. 

How Does The FAFSA Work?

The FAFSA application takes your family’s income, assets, and other details. It then spits out one number called the Expected Family Contribution (EFC). The EFC is the number that the federal government and school use to gauge how much your family should pay for college.

The EFC formula is very complex and takes into account many factors including the state in which you live.

Knowing how the system works could save you thousands of dollars. Why?

The algorithm they use to calculate your EFC splits up parental and student asset contributions significantly. 20% of student’s assets are factored into the EFC, whereas only 12% of parents’ are factored. 

For example, if a family has $10,000 in a bank account under their student’s name and nothing else, then the FAFSA suggests the family can pay $2,000 for college. However, $10,000 under the parent’s name, would drop the EFC to $1,200.

This may create an incentive to move student assets to parent accounts.

However, you have to be very honest, careful, and factually accurate when making any moves like this. Doing anything to purposefully manipulate or shelter income from the government is fraud and illegal. And yes, there can be a hefty penalty.

What Is A FAFSA Asset?

Assets, according to the FAFSA, include:

• Money in cash, savings, and checking accounts, CDs
• Businesses
• Investment farms
• Other investments, such as real estate (other than the home in which you live), UGMA and UTMA accounts for which you are the owner, stocks, bonds, certificates of deposit, etc.

Assets do NOT include:

• The home in which you live
• UGMA and UTMA accounts for which you are the custodian, but not the owner
• The value of life insurance
• Retirement plans (401k plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)

Wait, So Can I Earn/Save Any Money Without Hurting My EFC?

Yes! 

Income/asset protection allowance allows both the student and the parents to earn income and save money towards college and other expenses. In short, the FAFSA won’t count every penny you earn against you. 

If you know how the system works, then you can play it to your advantage. But as always, make sure you stay within the bounds of the law!

Income Protection Allowance

Depending on the number of people and college students in your family’s household and your filing status as independent vs. dependent, your family can earn different amounts of minimum income before it starts to affect your financial aid. For example, filing as a dependent student with no siblings and two parents would protect up to $23,760 of my family’s total income. 

All dependent students automatically have $6,840 in protection against student income. Thus, if a student made less than that, there would be no effect on the EFC. 

The table below shows the protection for dependent students. However, since there are so many more factors involved, the government has a document covering all protection allowances. 

The key takeaway from this section is that while income protection allowance exists, it’s not worth trying to meld your income to fit the minimum protection requirements. 

However, unlike income protection, you can use asset protection allowance to your advantage. It’s also far easier to minimize your EFC through your assets.

Asset Protection Allowance

This version of protection applies to the assets as opposed to income. Asset protection allowance behaves in the same fashion as income protection does. However, asset protection varies by the number of parents and the age of the older parent.

For instance, if a dependent student has two parents, and the older parent is 45, their parents can have up to $5,500 worth of assets without penalty. 

As we mentioned earlier, student and parent asset contributions to the EFC differ significantly (20% and 12% respectively). Thus, taking the asset protection allowance and differing contribution weights into consideration, it’s best when parents are the owners of assets.

What Are The FAFSA Deadlines?

FAFSA deadlines vary by school and state. Generally speaking, the FAFSA opens up on October 1 and closes around June 30. 

Make sure to check your school’s deadlines to see the earliest date you can apply. 

What Is Renewal FAFSA?

Every year, you must submit the FAFSA to be considered for financial aid. Renewal FAFSA is a way to save time and effort upon reapplication.

The Renewal FAFSA takes a lot of information from the previous year’s FAFSA, carrying it over. Thus, you only need to update the financial information. 

What Do I Need To Fill Out The FAFSA?

Regardless of whether you are filing as dependent or independent, there are documents needed to fill out the FAFSA. Dependent students will also need to have almost all the below information regarding their parents.

• Time: be ready to sit down for about 30 min to an hour
• Social Security Number (SSN)
• Tax return documents
• W2 forms
• Bank statements
• Investment records (i.e., from Robinhood or WeBull)
• Records of untaxed income (i.e., child support or interest income)
• Schools you’re applying to or the one you attend

What Are FAFSA Tips I Should Remember?

Apply Early!

Some schools have limited financial aid, and some federal grants award on a first-come-first-serve. It’s not worth the risk of delaying your application to the last minute.

Also, by submitting early, you can learn about your financial aid award sooner. Consequently, this allows you to dispute your award if necessary.

An indirect benefit is that by finishing the FAFSA, you can stop stressing about it and continue focusing on school. Personally, knowing I have to complete the application is something that drives me to do it as soon as possible. Less stuff to stress about!

Be Accurate And Careful!

This sounds like obvious advice, but be mindful that there are over 100 boxes to fill out. A single mistake could lead to delays in your financial aid award and cause other, unintended problems.

Always check your numbers and make sure things make sense. 

For example, when entering total familial gross income, I noticed that my parent’s salaries didn’t add up anywhere close. I quickly realized that I had made a mistake inputting the wages, which would have caused some systematic mishaps. 

Be Thoughtful About Where Your Assets Live!

Remember that assets have different weights depending if they’re under the student or parent. Furthermore, there are ways to place assets into “non-asset” categories, further minimizing impacts. Here’s a checklist you should go through:

• Max out retirement contributions; does not influence EFC
• Equity investments on primary homes don’t count as assets

To delve deeper into the latter, say your parents have a 250k mortgage for their home. If your parents hold 50k in cash, then your EFC is expected to rise by about 5k. However, if your parents use that 50k towards the mortgage, then there would be no effect on your EFC.

But that doesn’t necessarily mean all parents should just pay off their houses early in order to show lower assets. First, assets don’t hurt that much. Secondly, you are losing liquidity that you might need in case of an emergency. Lastly, not all schools exclude home equity in their calculations for financial aid.

Note What Assets The FAFSA Counts And Doesn’t Count

It’s impossible to list out all the ways to maximize your financial aid award, but it’s possible to know what assets aren’t counted in the FAFSA formula. Like hinted above, retirement plans and home value don’t count. 

• Family-owned small business
• Retirement plans
• Life insurance policies
• The home you live in

Though, remember that the CSS Profile does count some FAFSA non-assets as assets (such as the net worth of your family’s home and small businesses). 

I think its safest to maximize retirement plan contributions and pay off your home if you are really concerned about it.  

Do You Have To Pay Back The FAFSA? Are There FAFSA Loans?

The FAFSA helps your eligibility for different types of financial aid. 

• Grants (i.e., Pell Grant, Federal Supplemental Educational Opportunity Grants)
• Scholarships
• Work-study jobs
• Loans (must be repaid)

Thus, the only financial aid that must be repaid is federal loans. These loans come in two types: subsidized vs. unsubsidized. 

Subsidized vs. Unsubsidized Loans

The difference between these two loans is pretty simple.

Subsidized loans are awarded based on financial need. The interest accrued on them through college is paid by the government, effectively negating the growth.

However, the interest on unsubsidized loans accrues and isn’t paid by the government.

The simple difference between the two can either mean saving or paying thousands of dollars.

How Can I Contact FAFSA Customer Service?

The FAFSA offers many contact methods, including phone calls, email, and live chat.

Their calling hours (ET) include:

• Weekdays 8am – 11pm 
• Weekends 11am – 5pm

You can give them a ring at 1-800-433-3243.

Frequently Asked Questions

Should I apply for aid if I think my family makes too much money?

Yes. Absolutely. The FAFSA is completely free and won’t hurt your credit score nor your academic eligibility. There’s nothing to lose by applying.

You miss 100% of the shots you don’t take.

I was incarcerated. Am I eligible for financial aid?

Incarceration limitations are complex and are expanded deeply on the FAFSA website. 

In short, if you’re arrested for drug-related or sexual offenses, then your eligibility will be permanently limited. For other cases, once you are released, most eligibility limitations end.

However, even if you were incarcerated, fill out the FAFSA anyway. Some grants might still be applicable. After all, it’s free and can’t hurt you in any way. 

Do my work-study earnings affect my eligibility for future financial aid?

No. Work-study earnings are removed from calculations involved in determining your eligibility. There is a separate box in the FAFSA application asking for your work-study earnings. Make sure to answer this prompt accurately.

Oh no! I made a mistake on my FAFSA. Can I still fix it after submitting?

Yes. If there are significant changes, such as an increase in the number of family members, you need to update your FAFSA accordingly. 

The only field you cannot change is your Social Security number. Make sure you have entered it appropriately!

John Ta

John Ta is an undergrad at the University of Pennsylvania and the founder of Penn’s first undergrad personal finance club, Penn Common Cents. As a first-generation college student, he had to learn everything about personal finance on his own and seeks to mend the financial literacy knowledge gap seen almost everywhere. John is currently studying for an MS in Chemistry and a BA in Physics (business & tech concentration), Biochemistry, and Biophysics and is interested in the intersections of finance and healthcare.

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