They want to help students and their families reduce debt wherever possible (especially through great planning), and access a reasonable private loan solution when it’s not possible.
INvestEd’s private student loan solution goes far beyond explaining the pros and cons of loans. They offer a private student loan with variety of benefits that make graduation more appealing, timely payments more feasible, and cosigning more palatable.
The company is so thoughtful in their approach to student debt, that I recommend that every student in Indiana who is thinking about debt should go over to the site. Their loans might not be the right fit for you, but INvestEd will be the first to tell you.
In the hopes of inspiring other banks to start similar loan programs, I’ll share a few key details about the INvestEd lending process.
You can compare INvestEd to other lenders on Credible. We recommend Credible because it allows you to quickly compare in-school loans in about 2 minutes. We strongly believe in shopping around. Check out Credible here.
The Best Loan Is No Loan
INvestEd espouses the philosophy that the best student loan is no loan at all. They offer portals that help Indiana residents plan the cost of college, find scholarships, and think creatively about funding it.
While not every Hoosier will ultimately avoid private student loans, INvestEd is doing their part to help students and their families think through their actions.
They don’t just offer suggestions about how to afford your top school choice, INvestEd offers great suggestions about college selection and ways to keep costs down. I wish that more lenders had amazing content about avoiding debt. (Technically, INvestEd isn’t a lender, but it’s connected to one).
Offering The Right Incentives For Private Loan Borrowers
If you do end up taking on private student loans, taking them through INvestEd’s partners makes a ton of sense. They’ve set up their loan program, so that it maximizes your likelihood of success in life (and loan repayment).
All loans issued by INvestEd are backed by First Merchant Bank, processed by Campus Door, and serviced by American Education Services.
Personally, I would love INvestEd even more if they partnered with more banks to guarantee that you get the best rates, but this is a decent way to get people the right loan.
When you take out a loan, you’ll get a 2% reduction in the principal balance after you graduate from college. One of the biggest issues with the private student loan market is that too many borrowers taking out private loans, don’t ultimately come out with a degree.
According to a study by the Federal Reserve, over one third (34%) of borrowers who didn’t receive an associate’s or bachelor’s degree are behind on education related debt, compared to 11% of borrowers who completed their degree program. Offering the 2% reduction in principal balance helps borrowers understand just how valuable completing their degree really is.
On top of the 2% reduction, INvestEd borrowers can receive a .25% interest rate break by signing up for autopay. More banks are starting to offer this feature, but it’s a great deal.
Not only will autopay guarantee that you build your credit through on time payments, it will also take your mind off of the daily money management decisions. That will free you up to think about ways to earn more or invest.
The .25% interest rate break doesn’t lower your monthly payment. Instead, it reduces interest rate accrual. That means borrowers will automatically pay off their loans a few months early. Both new loan borrowers and refinancers qualify for this benefit.
INvestEd loans also come with a clear path to cosigner release. Many parents and grandparents are putting their own retirement on the line by co-signing their kid’s loans. While this means students get cheaper rates, it puts parents on the hook for delinquent payments.
Some banks never offer cosigner releases, and other banks only offer it if you ask. With INvestEd, all borrowers can request a cosigner release after 48 months of principal and interest repayment (provided you meet credit and income standards).
This helps families as well as students. Both new borrowers and people refinancing their loans will get this benefit.
If you opt for a loan refinance through INvestEd, you’ll also get a loan that has opportunities for deferment.
Most private student loans never allow you to defer, but with INvestEd, you may qualify to defer your loans while you’re in school, while you’re on active duty military, or for certain financial hardships.
Are The Rates Competitive?
With all their benefits, you may think that the INvestEd loans cost way more than average. In fact, they do not. All the advertised rates are competitive with private lenders. For new student loan borrowers, you can take out loans for 5-15 years with fixed rates as low as 5.09% or variable rates as low as 2.56%. To qualify for these loans you need a 670 credit score, an income above $3,333 or a debt-to-income ratio below 30% (including the student loan repayment). There are a few other qualifications, so check those out too. The minimum loan size is $1001.
For student loan refinances, borrowers can refinance $5000 to $250,000, at fixed rates 3.92%-9.39% (including the .25% benefit). Variable rates range from 2-6.24%. Borrowers need at least a 670 credit score, continuous employment for a year, an income of $36,000 and a debt to income ratio below 40-50%. Check here for other qualifications. Although, the refinances are competitive, borrowers should shop around to see if they can get better rates elsewhere.
Should You Use INvestEd?
Most people considering private student loans in Indiana should consider INvestEd for their borrowing needs. I love the focus on avoiding debt, and the benefits that keep students on track. The lending partnership with First Merchant Bank seems like one that offers benefits for students and the bank alike.
I’m less enthusiastic about the refinancing opportunity. Aside from the deferment option, the refinances are similar to all other private loans. Borrowers should shop around to get the best rates when refinancing student loans.
At the end of the day, INvestEd loans are just one type of private student loan, but the company offers a ton of college cost planning solutions for free. Take a look at their resources, and if necessary, go ahead and consider their loans.
We'd love to hear your thoughts about INvestEd in the comments below!
INvestEd Student Loans
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Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.