More student loan borrowers are having trouble making their student loan payments, as they place their student loans into deferment and forbearance.
A recent study by the Consumer Financial Protection Bureau found that more than 40% of student loan borrowers graduate with at least $20,000 of student loan debt. Shockingly, there are 2.6 million borrowers in forbearance for $96.2 billion dollars, and 4.0 million borrowers in default for $67.5 billion.
Wouldn’t it be great if you could refinance your student loans the same way you refinance a mortgage? Well, you can.
Student loan refinancing may be an option if you are looking for maximum savings on your student loan interest and monthly payment. Student loan refinancing is the process of trading in old federal and/or private loans for a new private loan for either a lower interest rate or lower monthly payments.
Just like refinancing your mortgage or other debts, you can refinance your student loans. If you’ve heard of student loan refinancing, you have probably heard of ELFI, or Education Loan Finance.
Before you dive in with any refinancing company, we urge you to shop around and compare. Credible allows you to shop multiple student loan lenders in 2 minutes or less, without a credit check. As a bonus, College Investor readers can get $200 when they refinance with Credible.
What Is ELFI?
ELFI is one of the student loan refinancing options offered through Southeast Bank. Although ELFI is one of the newer options for student loan refinancing, SouthEast Bank’s holding company, Educational Services of America Inc has been around for much longer.
While there are other options for student loan refinancing through multiple lenders such as PenFed Student Loans, SoFi, and Wells Fargo, ELFI provides numerous benefits that set ELFI apart from its competitors, such as loan consolidation, bonus payments, and Parent PLUS loans.
If you have graduated from school and have a stable job, ELFI can probably help you reduce your payments and interest rate. ELFI offers competitive interest rates for student loan financing, with rates as low as 2.49% per year for a variable interest rate, and 3.19% for a fixed interest rate.
With ELFI, you can repay your student loans efficiently on your own terms, as long as you meet the requirements outlined below.
Is ELFI Right For You?
ELFI’s services are available to borrowers in 48 U.S. states, excluding Arizona and Wisconsin.
To qualify for ELFI refinancing, you must meet the following requirements:
What You Need To Apply For ELFI Refinancing
Applying for ELFI Refinancing is a simple and quick process if you have the needed documents on hand. The information must be current, meaning no more than 30 days old.
How Do I Apply for Refinancing With ELFI?
Fill out the application here by providing your basic background information, and then allow them to run your credit. You will get a preliminary offer, and if you accept, you will have to upload certain documents and verify your income and financial situation.
Once your information is confirmed, ELFI will provide you with a loan offer, and you can accept the offer through electronic signature.
The Benefits of Refinancing Student Loans through ELFI
ELFI borrowers will never have to pay an origination or application fee. In addition, there is never a fee to pay off student loans early. Also, no late fees are assessed if payments are made within 10 days of the due date. Aside from minimal fees, ELFI has several advantages, as discussed below:
Lowest Interest Rates
ELFI offers competitive refinancing rates for those who have over $15,000 in student loan debt and who qualify. These rates start at 2.49% for variable interest and 3.19% for fixed interest.
You can choose from fixed or variable interest rates. A fixed interest rate will lock in the rate despite changes in the market, whereas a variable interest rate will depend on the rise and fall of the market.
Consequently, borrowers who opt for variable interest rates may end up paying a bit more over a longer period of time. Borrowers who want stable interest rates should opt for a fixed rate repayment plan.
If you go with a variable interest rate, don’t worry. ELFI’s variable rates won’t increase more than once every three months, and will never exceed 9.95%.
Flexible Repayment Terms
Refinancing results in better loan terms. ELFI’s terms are very flexible, with terms including 5, 7, 10, 15, and 20-year options. The loan terms for federal consolidation loans can be anywhere up to 30 years.
A shorter term means a larger monthly payment but a lower interest rate, resulting in less paid over the life of the loan. A longer term may allow for a lower monthly payment, but you will pay much more overall as the interest rate will be much higher.
Access To Resources From MOHELA
ELFI will replace your existing loan servicer (usually AES or Navient) with MOHELA, a federal student loan servicer that has a reputation for great customer service and getting students out of debt. With ELFI, borrowers also have access to a team of student loan experts for guidance.
Parent PLUS Refinancing Options
ELFI is one of the few refinancing companies that offers refinancing services for parents that have taken out student loans for their child’s college education. ELFI’s Parent PLUS loans offer a lower interest rate and better terms.
Parents are able to refinance their parent loans into the student’s name so long as there is consent from both sides and the student is willing to accept responsibility for the debt.
In addition, parents can also combine other private loans into this consolidation and refinancing plan to simplify the payment process.
Co-Signer Release Option
If you originally obtained your student loans with a co-signer, ELFI allows you to release your co-signer (usually a parent) if you have good credit history and demonstrate the ability to pay off the loans by yourself.
Releasing a co-signer from your student loan allow co-signers to improve their credit scores and free up their line of credit for major purchases.
Loan Consolidation Services
Besides refinancing, ELFI also offers student loan consolidation, which means that you can combine your existing loans into one loan with one payment.
With a federal student loan consolidation, the government just takes a weighted average of your current loans, which doesn’t save you money. Unlike federal student loan consolidation, consolidating through a private lender still allows for the possibility of a lower interest rate. Be sure to research student loan consolidation before you take the plunge.
Aside from refinancing and consolidation, ELFI also has bonus programs. Specifically, the ELFI referral program rewards individuals who refer others to ELFI to refinance their loans through a referral link, with up to $400 as a referral bonus, and $100 bonus for the new borrower credited to their loan.
Another perk is the ELFI Fast Track Bonus Program, which rewards new borrowers with $100 cash when they complete their loan application within 30 days of the initial application.
The Drawbacks Of Refinancing Student Loans Through ELFI
There are minor downsides to ELFI, such as a graduation requirement, and more serious downsides, such as loss of federal student loan benefits. Let’s take a look below:
You May Need To Have A Co-signer On Your Student Loan
Let’s face it- most students don’t have sufficient credit history to get approved for ELFI. If your credit is below average, you may not be approved for refinancing without a co-signer with good credit history.
Since you are required to have a bachelor’s degree or higher, it follows that you must graduate from college to use ELFI to refinance your student loans.
Loss Of Federal Student Loan Benefits
A huge disadvantage is that you will lose benefits associated with your federal student loans when you refinance. In other words, you will not be able to defer your loans, apply for forbearance, or apply for income- based repayment plans.
Also, if you receive refinancing through ELFI, repayments start within 30 to 45 days rather than 6 months with federal student loans. However, you are not required to include federal student loans when you refinance.
The Bottom Line
Student loan refinancing is a great option for borrowers with a stable job and high student loan debts. You can benefit from reduced monthly payments and lower interest rates that also save thousands of dollars on the original value of the loan.
Ultimately, your goal is to pay off your student loans quickly without hurting your wallet. ELFI can help you reach your goals, but you can also compare refinance options first using a student loan refinancing comparison tool.
There are a number of private refinancing firms available, but be sure to weigh the pros and cons and research the interest rates and flexibility. Once you are properly informed, you will be able to make the right choice and get rid of your student loan debt quickly.
Have you ever thought of refinancing your student loan? If so, what are your thoughts? Tell us your thoughts in the comments section below!
ELFI Student Loan Refinancing
ELFI is one of the student loan refinancing options offered through Southeast Bank.