SoFi Parent PLUS Loan Refinance Review

Senior Couple Talking To Financial Advisor At Home

Updated August 21, 2017

Are you a parent who wanted to help your child finance his or her education, and ended up taking out more loans than anticipated? Many parents find themselves in a precarious situation as they try to plan for retirement and while balancing student loan debt.

If you’re looking to save on the amount of interest you’re paying, SoFi’s Parent PLUS loan refinance program may be right for you.

Details of the Parent PLUS Loan

You can refinance a minimum of $5,000 under SoFi. Fixed rates range from 3.35% to 6.75% APR and variable rates range from 2.815% – 6.490% APR (these rates assume you enroll in autopayment).

Terms of 5, 7, 10, and 15 years are available. Variable rates on terms of 5, 7, and 10 years are capped at 8.95%, while the 15 year term is capped at 9.95%.

An example payment looks like this: if you refinance $10,000 on a 5 year term with a fixed APR of 5.49%, your monthly payment will be $190.97 and you’ll pay a total of $11,457.93 over the life of the loan. If you refinance $10,000 on a 5 year term with a variable APR of 4.2%, your monthly payment will be $185.07 and you’ll pay a total of $11,104.43.

How Does the Parent PLUS Loan From SoFi Compare to a Federal PLUS Loan?

The interest rate for Federal Direct PLUS Loans disbursed on or after July 1st, 2015 and before July 1st, 2016 is 6.84%. During much of the 2000s, interest rates were higher. Currently, interest rates are fixed – variable rates are unavailable.

Most people are looking to refinance to save money, and SoFi offers very competitive rates compared with the Direct PLUS Loan, especially on variable rates.

While there are no fees to refinance, you should calculate your estimated savings before going through the process. Be aware if you do refinance, you’ll lose out on certain benefits that come with having Federal student loans, such as deferment, forbearance, and various repayment options.

PLUS loans made to parents are eligible for the Graduated or Extended Repayment Plans, and Direct PLUS loans are also eligible for forgiveness. In some cases, PLUS loans can be discharged due to the death of the borrower (or student).

Private loans often don’t extend these same benefits. In fact, SoFi explicitly states on its legal page that this loan “is not discharged in the event of death or permanent disability of the borrower or student on whose behalf the loan is taken out.”

Eligibility Requirements

You must be a U.S. citizen or permanent resident and employed to be approved. SoFi is unable to lend in Nevada, and variable rates aren’t offered in Illinois, Ohio, or Tennessee. The loans must have been used to obtain at least a Bachelor’s degree with an eligible school as well.

There are no specific credit score requirements as SoFi tries to take a broader view of borrowers. It focuses on income and credit history instead.

Application Process and Documents Needed

The application process to refinance a PLUS Loan with SoFi is easy and can be done completely online. The application takes around 15 minutes to complete, and you’ll know whether or not you qualify by going through the pre-approval process first. During this portion of the application, a soft credit inquiry is used. If you decide to move forward with the loan offered to you, a hard credit inquiry will be used.

You’ll be asked to upload a few documents, so it’s a good idea to have the following ready to go:

  • Proof of residence – ID with matching address, otherwise a utility bill dated within the last 60 days is okay
  • Proof of income – most recent pay stubs
  • Proof of citizenship – a passport or birth certificate can be provided
  • Verification of loans – most recent loan statements for the loans you’re refinancing

Once you submit this documentation, SoFi’s review team gets to work on evaluating your loan. If no other documentation is needed, reviews can take anywhere from 2 to 3 weeks to complete.

The Fine Print

There isn’t an origination fee or application fee, and there are no prepayment penalties. Rates are determined on a number of factors, including the term you choose, your income, and your credit history.

There are late fees associated with the loan. The Parent PLUS Refinance program is currently offered through SoFi’s lending partner, Mohela, and it assesses any fees owed. When you receive the paperwork for the loan, the fees can be found under the disclosures.

Repayment Assistance Options

If you’re struggling to repay the loan after refinancing with SoFi, we recommend you contact a representative and make them aware of the situation. The worst thing you can do with any loan is not make a payment.

SoFi offers unemployment protection on a case-by-case basis, during which payments can be paused for a period of 3 to 12 months.

Pros and Cons of SoFi Parent PLUS Loan

Pro: SoFi offers much better rates than the 6.84% fixed rate that comes with Direct PLUS loans. If you have a higher interest rate – around 8% – you’ll stand to benefit even more.

Con: As we mentioned, refinancing means losing out on benefits associated with Federal student loans. If you’re not as concerned about needing repayment assistance, the savings might be enough to make refinancing worthwhile.

Pro: SoFi also offers variable interest rates, whereas the most recent Direct PLUS loans don’t. Variable rates can be tricky, though – SoFi says rates may change on a monthly basis. If you value stability and peace of mind, variable rates may not be for you. If you’re trying to pay off your balance quicker, and a lower interest rate would help, then it might be worth considering this option. 

Con: You may have to extend the repayment term to get a lower monthly payment, as SoFi offers terms up to 15 years. Unfortunately, this increases the amount of interest you’ll pay over the life of the loan. It’s important to use a calculator to estimate how much your savings will be to make sure refinancing is worth it. For example, if you have less than 5 years remaining on your loan, refinancing may not save you a lot of money.

Pro: SoFi offers unemployment protection, and you can also take advantage of SoFi’s career assistance program. If you or your child is experiencing trouble finding employment, it will connect you with its network of alumni and give you tools and tips to succeed in your job search.

SofiLogo

 *referral link

Other Parent PLUS Refinance Alternative

If you don’t qualify with SoFi, you can try these lenders that also offer refinancing options:

CommonBond: Fixed APRs range from 3.35% to 6.74%, and variable APRs range start at 2.80%, and terms offered are 5, 10, 15, and 20 years. CommonBond also has hybrid APRs. Only a 10 year term is offered with this choice; it starts off as fixed for 5 years, and changes over to variable for 5 years. There are no origination fees or application fees, no prepayment penalty, and CommonBond actually allows you to transfer your loan to your child (which isn’t allowed with Federal loans). You can borrow a maximum of $110,000.

CommondBondbank

 

 

Citizens Bank: Citizens Bank refinances Parent PLUS and Direct PLUS loans through its Education Refinance program. The minimum amount you can refinance is $10,000 and up to $90,000 for Bachelor’s degrees and below, $130,000 for graduate and doctoral degrees, and $170,000 for professional degrees. For a Bachelor’s degree and above, you must have made 3 consecutive monthly payments to refinance. For anything less than a Bachelor’s degree, you must have made 12 consecutive monthly payments. The loan you’re refinancing must be in repayment status and can’t be enrolled in an Income-Based Repayment plan. Fixed APRs start at 6.24%. Terms of 5, 10, 15, or 20 years are offered. You need a minimum income of $24,000 to qualify.

citizens-bank

 

Be sure to shop around as there are other lenders out there that will refinance PLUS loans – you want to make sure you’re getting the best rates and terms available to you so you can save the most. Shopping around within 30 days will only count as one credit inquiry, so your credit won’t get penalized heavily. Take advantage of this and lessen the burden of student loan payments so you can focus on saving for your future.

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Should You Refinance Your Student Loans with a Credit Card?

Using a balance transfer credit card can be a great way to lower the interest rates on your debt to help you save money and pay your debt off faster. Most people only think about doing a balance transfer with high-interest credit card debt, but recently I’ve been considering a 0% interest balance transfer credit card to help me pay off my student loan.

After making my final credit card payment to be credit card debt free, I started thinking about how I could use a balance transfer offer extended by my creditor to help pay off other types of debt I still have. Since the highest interest debt I have remaining is my student loan, this is what I’m considering refinancing with a 0% interest balance transfer. My student loan only has a remaining balance of about $6,000, which means I could transfer the entire balance to the credit card and pay it off before the promotional rate expires, if I pay it off aggressively.

Of course, there are lots of reasons why you could choose to refinance or consolidate your student loans. I was curious whether or not a balance transfer could be a viable option as well.

Here are some of the pros and cons you should consider before deciding to refinance your student loans with a balance transfer credit card.

Benefits of Refinancing Student Loans with a Balance Transfer Credit Card

There are several benefits you could take advantage of by refinancing your student loans with a balance transfer credit card.

A Lower Interest Rate

One of the main reasons people choose to refinance student loans is to lock in a lower interest rate. For example, my student loans are at 6.8%. If I do a balance transfer to a 0% interest credit card, I could save hundreds of dollars on interest through the end of the 0% interest rate period on the balance transfer.

But keep in mind that not all balance transfers are created equal. You might get all kinds of different balance transfer offers from companies trying to entice you to sign up for a new credit card, or even transfer a balance to a card you already have. Some of these transfer offers will be better than others. You might encounter offers that have a 1% to 3% interest rate for a certain period of time, usually 12, 18, or 24 months. But the best balance transfer offers have a 0% interest rate, obviously saving you more on interest than the others.

Pay Off Student Loans Faster

Transferring student loan debt to a credit card can save money, but only as long as you get the balance transfer paid off before the promotional interest rate expires. This time limit is a big motivation for people to pay extra on their student loans to make sure the balance transfer is paid off before it expires. If you struggle with being motivated to make extra payments, the reality that your interest rate may spike up to 15% or more after a few months may be just the motivation you need to get serious about paying off debt. It’s worked well for me in the past when I’ve transferred high-interest credit card debt to a 0% balance transfer credit card, helping me to pay off $5,284.18 much faster than I would have otherwise.

Drawbacks of Refinancing Student Loans with a Balance Transfer Credit Card

Although using a balance transfer to help pay off your student loans sounds like a great way to save money and pay your debt off faster, there are some potential downsides you should be aware of.

Balance Transfer Fees

A lower interest rate makes balance transfer credit cards an attractive option for those looking to refinance debt, but you need to consider more than just the interest rate before deciding to refinance your student loans with a balance transfer credit card. Make sure you consider the balance transfer fee that many credit cards charge. This can eat away at the amount of money you save on interest. Luckily, some credit cards do have a cap on this fee at $50 or $75, which can be helpful if you plan to transfer a large balance that would otherwise result in a fee higher than that cap. But at that point, it could be difficult to get your student loan transfer paid off before the promotional interest rate on the balance transfer expires.

There are balance transfers without fees, but your options may be limited. If you find a no-fee, 0% interest transfer option you qualify for, it’s almost a no-brainer to use it to pay off other debt.

Potential Loss of Savings on Interest

As mentioned, it’s imperative that you pay off your entire balance transfer before the promotional interest rate expires in 12, 18, or 24 months. If you don’t, the high interest rate after the transfer expires will quickly negate any interest savings you earned by doing the transfer in the first place. In fact, you may end up paying more in interest than if you’d skipped the balance transfer in the first place.

You May Not Qualify

In order to use a balance transfer credit card to refinance your student loans, you first have to qualify for one. In order to qualify for many balance transfer credit cards you must have a credit score of at least 680.

Applying Could Ding Your Credit Score

If you don’t already have a credit card with a balance transfer offer available, you may need to apply for a new card. Anytime you apply for a new line of credit, it will ding your credit score slightly. This may or may not be an important factor depending on what your score is and if you plan to apply for any other credit cards or loans in the near future.

Loss of Federal Student Borrower Protections

A final and very important consideration to think about before you decide to refinance your student loans with a balance transfer credit card is the loss of student loan protections you may have. If you are refinancing federal student loans, you will lose the protections that are offered to you as a borrower, such as:

  • Income-driven repayment plans
  • The opportunity for student loan forgiveness
  • Deferment or forbearance
  • Discharge upon permanent disability or death

Some credit card companies may be willing to work with you in an emergency situation, but chances are high that even in those situations the flexibility offered to federal student loan borrowers is far greater. In some cases, you may be better off not refinancing your student loans in order to maintain your borrower protections.

With most low or 0% interest balance transfer credit cards, you can’t miss a payment or pay late. If you do, your promotional interest rate may be void and you will be subject to the regular interest rate, which could be 15% or more depending on the card and your credit score.

Despite these drawbacks, doing a balance transfer to help pay off your student loans can be a good idea if your goal is to get out of debt quickly while saving money on interest.

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Kentucky (KHESLC) Student Loan Refinance Review: Fixed APR as Low as 3.99%

Louisville, Kentucky Skyline at Night

Kentucky’s student loan refinance program is operated by the Kentucky Higher Education Student Loan Corporation (KHESLC). Although the KHESLC primarily services Kentucky residents, this student loan refinance is open to residents of some other states, as well.

At present, there are over 40 million Americans repaying student loan debt. So it’s safe to say, finding the most efficient way to tackle student loan debt is at the top of many minds. Refinancing your student loans can get you a lower, fixed interest rate and consolidate multiple student loans into one easy payment.

Lenders like LendKey and SoFi have led the pack in student loan refinance products by offering some of the lowest rates around. More state-run student loan refinance programs are popping up as well to answer the call of borrowers who want to refinance their education debt for interest savings.

In this post we’ll cover:

  • The KHESLC loan terms
  • Eligibility requirements
  • Student loans you can refinance
  • Pros and cons

KHESLC loan terms

The KHESLC refinance offers fixed interest rates starting at 3.99% APR. KHESLC also offers a rate reduction of 0.50% if you make payments through auto-pay. Factoring in this discount, the lowest rate KHESLC will offer is 3.49% APR.

The loan terms are 10, 15, 20, or 25 years. The minimum amount you can refinance is $7,500.

The KHESLC refinance has no fees, including no prepayment penalty or origination fees.

Eligibility requirements

This refinance is open to residents of Alabama, Georgia, Indiana, Kentucky, Mississippi, Missouri, Ohio, Tennessee, Virginia, and West Virginia.

To qualify, you must be employed for the past 12 consecutive months, and you need a credit score above 670.

A co-signer is not required unless you can’t meet income and credit requirements. However, applying with a co-signer even if you do qualify on your own can get you a lower interest rate.

Loans that you can refinance include private student loans, graduate or parent PLUS loans, Stafford Loans, and Perkins Loans. Students can refinance their loans together with parent PLUS loans. This means parents can add their parent PLUS loans to their children’s refinance to hand over the payment responsibility.

KHESLC borrower protections and benefits

The KHESLC is a private student loan refinance. Private student loans often come with limited benefits and protections to support borrowers in times of need. However, KHESLC is noteworthy in this area. For the interest rate, you can get a 0.50% rate reduction just for using auto-pay. That’s a nice perk.

Besides a competitive interest rate, KHESLC offers:

  • Death and disability benefits
  • Forbearance
  • Graduated payment plans
  • Co-signer release

If you pass away or become permanently disabled before your loan is paid off, you and the co-signer can be released from the debt. If you’re a parent borrower and your child who benefited from the loan passes away before it’s paid off, you can also be released from the outstanding debt.

Besides the protections in tragic situations, the KHESLC refinance has a forbearance option. If you experience a period of hardship, you can request a temporary break from payments. You can get a maximum of 36 months in forbearance throughout the life of the loan term.

There’s also a graduated repayment plan that gives you a reduced payment at first and then increases the payment by 10% every two years. Before taking advantage of this perk, understand the implications of paying less up front. Paying less can lengthen your loan term and, ultimately, increase the cost of your loan.

Lastly, KHESLC allows for co-signer release. You can apply for co-signer release after you make 36 on-time, regularly scheduled payments on the loan. However, you will have to go through a credit review at the time of the release to confirm you meet eligibility criteria.

Should you refinance federal student loans?

We usually go through the typical federal student loan disclaimer when discussing refinances because understanding what you forfeit with a refinance is important.

In this case, KHESLC offers some borrower benefits and protections that can make the decision to leave your federal student loans behind less drastic.

Some major federal loan borrower benefits include forbearance, deferment, income-based payments, and loan forgiveness. Forbearance and deferment can put a pause on your student loan payments temporarily if you’re unable to pay due to economic hardship. KHESLC also offers this option.

Income-based payment plans cap your monthly payment based on your family size and income. If you’re in an entry-level job or underemployed, an income-based program can help make your monthly payments manageable.

Keep in mind, the same downside applies here as with the KHESLC graduated payment plan. Lower initial payments can stretch out your loan term. Although, for federal loan income-based plans, after making payments for 20 to 25 years any remaining student loan balance can be forgiven.

Lastly, Public Service Loan Forgiveness is a program that will forgive your federal student loans sooner than later. To qualify, you must make 120 monthly student loan payments while working in an approved public service position. It should take you around 10 years to get forgiveness. You may want to hold off on refinancing federal student loans if you’re considering public service.

You can compare what federal student loans have to offer against private student loans here.

Pros and cons

Pro: Low and fixed interest rates. The starting interest rate offered by the Kentucky refinance is as low as the student loan refinances offered by some of the most competitive lenders. We’ll talk about a few of these lenders below.

Con: Limited eligibility. This student loan refinance is only open to residents of 10 states. If you live outside of these states, unfortunately, you’re out of luck.

Pro: The borrower benefits and protections. Altogether for protections, there’s deferment, co-signer release, graduated payment, and the death and disability benefit. If you choose to refinance your federal loans with KHESLC, you can take comfort knowing there are still some backup protections in times of trouble.

Con: Forfeiting federal student loan perks. The KHESLC benefits are nice, but there are federal loan benefits like forgiveness that you would no longer have access to if you refinance.

Pro: The parent PLUS loan refinancing opportunity. Parents with parent PLUS loans can hand over the responsibility of payment to their children. Children can refinance parent PLUS loans together with their other loans using the Kentucky refinance.

Who will benefit from the KHESLC refinance?

Ultimately, borrowers who will benefit most from this refinance will be those who live in the 10 states where the refinance is offered. That’s a given. With location restrictions aside, the borrower benefits are impressive. The starting interest rate is impressive as well.

In fact, it’s right on target with other top student loan refinances available. The top 4 student loan refinances at this point are CommonBond, Earnest, LendKey, and SoFi because they offer the lowest interest rates. Starting fixed interest rates from these lenders range from 3.25% to 3.50% APR.

Of course, the lowest rates offered by all lenders are given to those who are the most creditworthy. Applying with a co-signer will give you a better chance at qualifying for a low rate with KHESLC.

You can also take the time to strengthen your credit score before applying to obtain a competitive rate with KHESLC or any other lender. Be sure to shop around with multiple lenders when looking for a refinance to get the best deal.

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Review: North Dakota’s Deal One Student Loan Refinance Program

student loans college

If you don’t know much about North Dakota, it has some interesting quirks. It’s the largest producer of honey and sunflowers in the U.S. It’s home to the largest scrap metal sculpture in the world. In the past year, it has had both the largest population growth and the biggest economic contraction of any U.S. state.

North Dakota is also home to the only remaining state-owned bank in the country. The Bank of North Dakota (BND) collects all state tax revenues to redistribute into various programs. One of those programs is the Deal One Loan, which gives residents the chance to refinance their student debt at competitive interest rates.

Who Qualifies?

You must be a resident of North Dakota to qualify for this loan option. This means your primary residence has had a physical address in the state for at least the past six months. On top of being a state resident, you must also be a citizen of the United States.

If you are able to refinance by yourself, your credit score must be 700 or higher. If you cannot qualify solo, you can also look at getting a co-signer who has a minimum credit score of 600.

Co-signers can be released after 48 straight months of on-time payments as long as you meet the current credit score requirements at that time. It’s important to know Bank of North Dakota looks at your complete credit history when determining your eligibility.

The final criteria for qualifying is the loan itself. If your loan is in repayment or a grace period, you qualify, but if it is delinquent or in default, you cannot refinance through this program. Most loans are eligible, including federal, state, and private loans for both undergraduate work and graduate school. However, you cannot currently be attending school if you want to use this refinancing option.

[Look into refinance options on our table here.]

Terms

The length of the term on your loan will depend on how much you are refinancing.

If you owe…Your term will be….
Under $10,00010 years
$10,001-$20,00015 years
$20,001-$30,00020 years
$30,001 or more25 years

While terms vary depending on how much you owe, interest rates are the same across all terms. Currently, fixed interest rates sit at 4.36%, while variable interest rates are at 2.35%. If you choose to go with a variable rate, the maximum variable interest rate is 10%. If you sign up for automatic payment, you can decrease your interest rate by 0.25%.

There are no application or origination fees with a Deal One Loan. However, if you are more than 15 days late on a payment you will have to pay a late fee. The late fee will be 6% of the missed payment amount, as long as 6% doesn’t exceed $15.

It is also important to note that when you refinance federal loans, even at the state level, you will be giving up access to certain advantaged repayment options like REPAYE, IBR, and other benefits. Always make sure any refinancing program is worth forfeiting these programs for.

While these federal benefits will be lost, BND does offer some deferment and forbearance options of their own. If you find yourself unemployed, disabled, in a state of financial difficulty, or deployed as an active duty member of the armed services, you may qualify for partial or full deferment or forbearance.

These special exceptions do have guidelines, but are generally handled on a case-by-case basis.

Pros and Cons of Refinancing with BND’s Deal One Loan

Pros

  •       No application or origination fees.
  •       Extremely competitive rates, especially on longer loan terms.
  •       BND does allow for some form of forbearance on deferment in extreme circumstances.
  •       Co-signer release is available.

Cons

  •       Only available to residents of North Dakota.
  •       Late fees will be assessed.
  •       Credit score criteria may be high for some new graduates.
  •       You will lose access to advantaged programs if refinancing federal loans.

Application Process and Documents Needed

You can apply for a Deal One Loan online. Before you start the application process, make sure you have the following documentation and information:

  •       The lender’s name, current balance, loan type, account number, and interest rate of any loans you are attempting to refinance.
  •       Your Social Security number and driver’s license number.
  •       The names, addresses, and phone numbers of three separate references who live at three separate addresses.

If you do not qualify for the loan based on your own credit score, you will be provided with information to give to a co-signer at the end of the application process. The co-signer will use this information to create their own account and apply to co-sign your loan.

After you have finished the application, you will need to send in the Authorization for Release of Student Loan Information via email, fax, or snail mail. This form allows BND to confirm that the loan information that you submitted was accurate. You may also need to sign a Federal Student Loan Benefits Waiver.

After BND has confirmed and approved your loan, you will need to sign some paperwork to accept the refinancing offer. You will be given one more chance after this to change your mind, and will be required to sign the Loan Final Disclosure. Then, BND will pay off your existing loans.

How It Stacks Up

As far as state-run refinancing programs go, the Deal One Loan has some of the lowest interest rates around. The only states that compare are Kentucky, Iowa, and Rhode Island.

Kentucky’s Advantage Education Loans only offer fixed interest rates. Those rates are low, though, starting at 3.99%. However, those who are closer to the qualification line of a 670 credit score are more likely to see rates closer to 7.99%. You cannot be eligible for both North Dakota and Kentucky’s programs. Advantage Education Loans are only available to residents of Kentucky, Georgia, Mississippi, Missouri, Ohio, Virginia, and West Virginia.

Iowa’s Reset Refinance Loans do compete with North Dakota on interest rates, but they do so with a few caveats. The first is that the longer your term, the higher your interest rate will be. This means rates are only truly competitive with North Dakota on their five-year product. On that product, the interest rate is 4.25% for Iowa residents and 4.50% for non-residents, but only if your credit score is 830 or above. Reset Refinance Loans also come with a financing fee, which puts North Dakota clearly ahead.

If you are refinancing with a co-signer, Rhode Island’s RISLA Refinance Loans come in at a respectable 4.49% fixed interest rate, but, again, this is only for five-year loans. If you apply without a co-signer, that rate jumps up to 5.74%. While this program is open nationwide, North Dakota residents will still have an advantage by staying loyal to their own state’s program.

Overall, if you’re a resident of North Dakota and want to refinance after considering the loss of advantaged programs from your federal loans, staying with your own state program or shopping the private sector is likely the best way to go.

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Obama Administration Reaches out to Americans with Disabilities and Student Loans

mortar board cash

The Obama administration recently announced a new plan to ensure that permanently disabled Americans with outstanding federal student loans are able to easily apply for student loan discharge.

The process of applying for loan discharge due to permanent disability has been available in its current form since 2012, but only a small percentage of eligible individuals have actually applied. The new initiative set forth by the Department of Education will actively identify and reach out to individuals who are eligible for Total and Permanent Disability (TPD) loan discharge, to let them know about this option and help guide them through the necessary steps. Letters containing this information will be sent out over the next several months to eligible individuals, and follow-up letters will be sent after 120 days if no response is received.

However, if you do not receive a letter from the Department of Education but believe you may be eligible for TPD loan discharge, you can apply on your own by using the online form found here. If you’d prefer, you can also request that a paper version of the application be sent to you by calling (888) 303-7818 (seven days a week between 8am and 8pm Eastern Time), or emailing DisabilityInformation@Nelnet.net.

You must include supporting documentation along with your application. This documentation must consist of one of the following:

  • If you are currently receiving either Social Security Disability Insurance or Supplemental Security Income benefits, you can submit documentation of the award for these benefits.
  • If you are a veteran and your disability is a result of your service in the U.S. military, you can submit documentation from the Department of Veterans Affairs stating that your disability prevents you from being gainfully employed.
  • If you have neither of the above types of documentation, you can obtain documentation from a certified physician stating that you have a permanent disability that prevents you from being gainfully employed.

The application and supporting documentation should be mailed to:

U.S. Department of Education
P.O. Box 87130
Lincoln, NE 68501-7130

The Department of Education estimates that most applications will be processed within 30 days. While your application is under consideration, your obligation to repay your student loans will be suspended.

The Obama administration is aiming to reach as many eligible Americans as possible, so if you know someone who might qualify for TPD loan discharge, please forward this information to them. More information about the TPD loan discharge application process is available here.

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My Student Loans Are Keeping Me from Buying a House

college-grad (1)

Sam Schumacher is keeping a close eye on the real estate market where he lives, in Oakland, CA. He’d love to buy a live/work space where he could put a studio for his hand-blown glassware company, Rocket Glass Works, and also cook himself dinner at night.

Currently he pays rent on a house he shares with three roommates, and he also rents studio space at a cooperative for his business. “I pay a daily rental rate for every day where I do production work in the studio, which is about $300 a day,” says Schumacher, 26. “So I do as much work as I can out of my house. I have a little studio carved out in our living room where I store inventory and do packing and assembly. No molten glass there.”

Unfortunately, although he’s keen to combine his two spaces, it’s probably going to be a while before he can contemplate a down payment.

Squeezed by student loan debt

That’s because Schumacher graduated from college five years ago with a degree in political communications and just over $70,000 in student loans, most of them private. His payments are now $650 a month—and will be for the next 20 years if he sticks with the payment schedule.

“Even though I got into several other good public schools, and I even got offered a full ride with a stipend at another school, I was totally in love with Emerson College, where I ended up,” Schumacher says. “As a foolhardy 17-year-old, I said, ‘You know what, I’m not going to let money influence this decision. This is my education; I’m not going to worry about it if I have to go into debt.’ Now it looks a little different on the other side of things.”

Although he’s applied for refinancing, his most recent request was denied. In the meantime, he’s paying between 9% and 11.75% in interest on the loans and struggling to set savings aside for anything else.

“At this point, I can’t even fathom holding onto any money when I could be putting it on my loans,” he says. “Because of the interest rate, it just doesn’t make any sense.”

Trying to pay it off faster

He briefly moved in with his parents to try to pay his loans off more quickly, and although he shaved $20,000 off his total bill, he couldn’t stay there forever. Now he works four jobs other than running his own business. “I run around a lot, basically trying to fill my days with as much work as I can take on,” Schumacher says. “That means 13 to 14 hour days are pretty regular for me right now, and very few days off.”

He’d love to buy a property he could use as a home and studio in the next few years, but concedes that it might only be possible if his parents help him with the down payment. And even then, he’s not sure he can justify the purchase. “It’s this weird balancing act,” he says. “Is it worth it to be putting money into a mortgage when I still have all this debt?”

But in the end, he sees buying property as an important investment for his personal and financial future. “I think it makes a lot of sense in the long term,” he says. “I’m just trying to scramble and figure out a way to make it happen.”

The post My Student Loans Are Keeping Me from Buying a House appeared first on MagnifyMoney.

5 Options for Enlisting in the Military to Pay for College

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Lacey Langford was taking classes at a local community college when she realized she’d rather work full-time to save money for school. “My father was an Army officer, and I decided I wanted to join like him,” says Langford, now 38, who lives in Summerfield, NC. “He convinced me to at least talk to the Air Force recruiter. That was it. I realized it would be better for me and I committed to the Air Force.”

Three years into her active duty, Langford started taking classes at night, using the Air Force’s Tuition Assistance program and the GI Bill. She later separated from the Air Force and completed her degree at the University of North Carolina at Wilmington. She estimates that the GI Bill paid for 100 percent of her tuition, 85 percent of her books, and about 40 percent of her room and board expenses. “I am happy with the way it worked out, walking out of school with zero student loan debt,” says Langford, who today is a financial planner. “I also gained valuable work experience and discipline. The discipline alone has reaped major rewards.”

With the average 2015 graduate coming out of school with more than $35,000 in student loans, being able to get a degree without all the debt is appealing, to say the least. Langford’s path to tuition coverage is one way to do it, but the military offers a variety of ways to pay for schooling or even to pay back student loans. Here are a few options:

1. ROTC Scholarships

Some schools offer the opportunity to apply for a Reserve Officers’ Training Corps (ROTC) program that could pay for nearly all of your tuition, fees and books charges for four years of school, in exchange for a commitment to enter the service as a commissioned officer when you graduate. You generally promise to serve for at least four years post-graduation. There are also two- and three-year scholarships available, depending on how many years you have left in school. Each branch of the military has their own information and program.

2. Montgomery GI Bill

During basic training, recruits get the chance to sign up for this GI Bill plan, paying for it with $100 a month during their first year in the service. Once enrolled, however, eligible members can receive a monthly stipend while attending classes, based on their active duty status and how long they’ve served. For instance, effective October 1, 2015 through September 30, 2016, those who have completed an enlistment of three years or more and enrolled in full-time school qualify for a monthly stipend of $1,789. Rates generally go up every year.

3. 9/11 GI Bill

Any veteran with at least 90 days of active duty after September 11, 2001, with an honorable discharge, is eligible to take advantage of this benefit. The biggest benefit goes to those with at least three years of active duty service. For those with three years of active duty service and attending a public school, the 9/11 GI Bill will pay up to 100% of tuition and fee payments for an in-state student. For private or foreign school attendees, payment is up to $21,970.46 per academic year.

4. Tuition Assistance

Each branch of the military also offers its own tuition assistance program, in which active duty members can get money toward tuition and fees for qualified programs. The Air Force, Army and Marines offer up to $4,500 per fiscal year with caps on credit hour costs, and the Navy offers up to $250 per semester credit hour or $166 per quarter credit hour. The Coast Guard offers up to $3,375 per fiscal year. This may also be an option for you if you belong to one of the service’s Reserve units.

5. Student Loan Repayment

If you’ve already incurred student loans, you may be able to enlist in the military and have them paid off over time. Each branch offers its own program for this. The Army and Navy, for example, will repay up to $65,000 of a soldier’s qualifying student loans, and the Air Force will repay up to $10,000. Generally, after each year of completed active duty, your service will pay 33-1/3 percent or $1,500, whichever is greater, of your total unpaid balance.

There are other programs that may assist with school costs or loan repayment, depending on your position, active duty status and career field. You can get more information on all programs at military.com/education, or find specific information from the military branch you’re interested in.

A word of caution

Although these are all valid pathways to an education without massive student loan debt—or any debt at all in some cases—experts advise that students shouldn’t join the military for the tuition assistance alone. “There are people for whom the military is great, but for some people, the military is just not for them,” says Ryan Guina, founder of TheMilitaryWallet.com, who used the military’s Tuition Assistance program to get his degree while on active duty with the Air Force. “If you’re going to join for a specific benefit, make sure all the other aspects are in line with your values and what you’re looking for out of life. I encourage people to look at the military as a whole and not just a means to an end.”

The post 5 Options for Enlisting in the Military to Pay for College appeared first on MagnifyMoney.

Laurel Road (formerly DRB) Student Loan Refinance Review

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Updated August 14, 2017

[LaurelRoadSL]Laurel Road[/LaurelRoadSL] (formerly know as DRB – rebranded on June 15) is a division of Darien Rowayton Bank that offers a highly competitive student loan refinance product. In addition to a competitive interest rate, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] offers some decent loan perks that sets it apart from others.

According to [LaurelRoadSL]Laurel Road[/LaurelRoadSL], someone who refinances $100,000 has the potential to save up to $15,000 over the life of a 10 year loan. And in special circumstances like disability or financial hardship, the bank might completely forgive loans or allow for partial payments. Read on for the ins and outs of a [LaurelRoadSL]Laurel Road[/LaurelRoadSL] loan to see if it’s the right refinance for you.

Loan Details

[LaurelRoadSL]Laurel Road[/LaurelRoadSL] will refinance up to 100% of Federal, private and Parent PLUS loans. The [LaurelRoadSLLoanAmt]minimum amount you can refinance is $5,000[/LaurelRoadSLLoanAmt] and [LaurelRoadSLTerm]loan terms are available for 5, 7, 10, 15 and 20 years[/LaurelRoadSLTerm].

[LaurelRoadSLAPR]Fixed interest rates are available from 3.95% to 6.99% APR. Starting variable interest rates are available from 2.99% to 6.42% APR[/LaurelRoadSLAPR]. If you choose a variable interest loan, the rate will fluctuate throughout the loan term depending on market conditions. Only consider variable interest if you can pay off your student loan refinance quickly. Otherwise, you might be taking too much interest rate risk since your interest has the potential to increase over time.

The interest rates above include a 0.25% discount for using auto-pay. You just need to set up automatic payment from any checking account in order to get the auto-pay discount.

[Look into refinance options on our table here.]

Loan Qualifications

You must be a working U.S citizen or permanent resident with a degree from an accredited U.S. school program to be eligible. In terms of creditworthiness, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] does not disclose its underwriting requirements. The requirements can change over time. However, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] is targeting people with good credit.

To have the best chance of approval, your existing student loans should be in good standing. You should be able to demonstrate affordability and have limited negative marks on your credit report.

A cosigner is not required to be eligible for refinancing although you’ll probably need one if you only meet the minimum credit score or income requirements above. [LaurelRoadSL]Laurel Road[/LaurelRoadSL] does not have an official co-signer release program. However, a representative of [LaurelRoadSL]Laurel Road[/LaurelRoadSL] confirmed to MagnifyMoney that [LaurelRoadSL]Laurel Road[/LaurelRoadSL] will consider a [LaurelRoadSLCoSigners]co-signer release upon request of the borrower on a case by case basis[/LaurelRoadSLCoSigners].

[LaurelRoadSL]Laurel Road[/LaurelRoadSL] will ask for documents to backup the details of your application like photo ID, pay stubs, proof of graduation and student loan pay off statements.

Fees & Gotchas

[LaurelRoadSL]Laurel Road[/LaurelRoadSL] is very transparent with fees. There are [LaurelRoadSLOrgFee]no fees for origination[/LaurelRoadSLOrgFee] or [LaurelRoadSLPrepayFee]loan prepayment[/LaurelRoadSLPrepayFee]. There’s a [LaurelRoadSLLateFee]late fee of 5% or $28 (whichever one is less) for payments that are over 15 days late[/LaurelRoadSLLateFee]. [LaurelRoadSL]Laurel Road[/LaurelRoadSL] also charges $20 for returned checks or electronic payments whether it’s due to insufficient funds or a closed account.

Pros and Cons

Low interest is the major pro of refinancing with [LaurelRoadSL]Laurel Road[/LaurelRoadSL]. Loan benefits like forbearance, deferment and loan forgiveness are other advantages. [LaurelRoadSL]Laurel Road[/LaurelRoadSL] may forgive loans if you die or if you can prove a significant reduction in income due to disability. Hopefully these situations don’t occur, but it’s good to know you and your family is covered if it does.

On a less morbid note, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] offers full or partial forbearance of payments if you can prove that you’re going through financial hardship. You may also qualify to pay just $100 per month while you complete a full-time post-graduate training program like an internship, fellowship or residency. If you graduate less than 6 months before refinancing, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] may allow you to defer payments for up to 6 months.

There aren’t many disadvantages of going with [LaurelRoadSL]Laurel Road[/LaurelRoadSL] other than it not having an official co-signer release program with explicit qualification terms. This may be a turnoff for cosigners since your loan will likely appear on his or her credit report until it’s repaid.

Student Loan Refinance Alternatives

How does Laurel Road stack up to other available student loan refinances?

[SoFiSL]SoFi[/SoFiSL] has a higher rate cap for fixed interest and a higher starting rate cap for variable interest than Laurel Road. [SoFiSL]SoFi[/SoFiSL] currently offers [SoFiSLAPR]variable rates from 2.815% APR and fixed rates from 3.35% APR[/SoFiSLAPR](if you sign up for autopay). However, the [SoFiSL]SoFi[/SoFiSL] refinance does come with a benefit comparable to [LaurelRoadSL]Laurel Road[/LaurelRoadSL] called unemployment insurance. If you’re laid off, [SoFiSL]SoFi[/SoFiSL] will pause your payments and help you find a new job.

SoFi

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[CommonBondSL]CommonBond[/CommonBondSL] has similar rates to [LaurelRoadSL]Laurel Road[/LaurelRoadSL]. [CommonBondSLAPR]Fixed interest rates are available from 3.35% APR and variable interest rates are available starting at 2.80% APR (if you use autopay)[/CommonBondSLAPR]. Although to qualify for the [CommonBondSL]CommonBond[/CommonBondSL] refinance you must have obtained a degree from one of the graduate programs on its eligibility list. On the other hand, [LaurelRoadSL]Laurel Road[/LaurelRoadSL] will refinance any loan (graduate or undergraduate) from an accredited program in the U.S.

Who Will Benefit Most From This Refinance?

The [LaurelRoadSL]Laurel Road[/LaurelRoadSL] refinance may work out really well for people who need to complete a post-graduate training program before finding a job in their profession. Since [LaurelRoadSL]Laurel Road[/LaurelRoadSL] allows for reduced payments in this circumstance, you’re given some leeway until you can earn your full professional salary. Still, you should compare the benefits of any Federal loans you have to the benefits of a refinance before making a decision.

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The post Laurel Road (formerly DRB) Student Loan Refinance Review appeared first on MagnifyMoney.

“How I Saved Almost $18,000 in Student Loans by Refinancing”

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When Aaron LaRue, the founder of MortgageMonks.com, graduated from the University of California, Santa Barbara in 2011, he owed more than $50,000 in student loan debt. “I didn’t qualify for any financial aid or federally subsidized loans, and I took whatever private loan I could get because I just wanted to go to school,” he said.

By the time LaRue was done financing his schooling, he had ended up with three student loans, one for each year he was in school (he even graduated in three years on purpose in the hopes of cutting down on tuition costs). “Everything got lumped together when I consolidated the first time, but the loans were about $23,000 for the first year about then $13,500 for both my second and third years,” said LaRue. “So almost $50,000 on the nose.”

Since the variable interest rates on his loans were incredibly high, LaRue knew that he’d have to work throughout college in the hopes to pay down some of that debt he owed. “I worked as a teacher’s assistant for two different classes,” he said. “I was the photo editor of our daily school newspaper, and I worked in a computer lab on campus teaching video editing. At one point I had all three jobs at the same time, and that was on top of my crazy class schedule. On top of my consistent jobs, I also always had one-off side gigs going. I shot photos for magazines, photographed a wedding and would pick up freelance video editing jobs on the side.”

Needless to say, LaRue stayed busy — but the bills kept piling up.

Finally, after a few years of checkered payment history and a brief period of deferment, he decided to refinance. “Refinancing was really difficult for me,” LaRue admits. “I graduated high school in 2008, right when the economy was in free fall. By the time I graduated [college] in 2011, I was competing in a job market against people with tons of experience who had recently been laid off. It was difficult for me to get a good paying job, so I decided to go out on my own as a consultant and try to take on multiple clients. I’ve been doing that ever since.”

While LaRue found some success in his career after graduating, he admits that what many people often don’t understand is that when you’re self-employed, it’s very difficult to qualify for loans unless you have two years of tax returns as a self-employed person. “So the first time I tried to refinance my loan, I was denied,” he said. “I started doing more research and I came across a company — Earnest — that used a merit-based qualification system. They checked my earnings and my credit score, but they also dug through my bank accounts to see if I was managing my money properly. They could tell I was responsible, and I was able to qualify. This was huge for me, because it got me into a fixed interest rate loan, and my rate was 2% lower than what I was paying at the time.”

At the time of refinancing, LaRue had about $54,775 in debt, and he’s managed to save $17,990 over the life of the loan, which works out to over $1,200 per year during the repaying period. “I’m still making payments, but I’ve cut about four years off my repayment time and I’m saving money every month,” said LaRue.

At the end of the day, LaRue has some advice for students struggling under the same weight of crushing student loan debt. “Don’t let the debt get you down,” he says. “If you understand how debt works and you can manage it, it’s really not that bad. Debt has allowed me to go to school and it’s helped me start my own business, and in both cases I’ve come out ahead. Having a monthly payment sucks, but I have definitely gotten a return on my investment.”

If you’re ready to consider saving money by refinancing your own student loans, check out this piece for 19 options to refinance and get your lowest rate.

The post “How I Saved Almost $18,000 in Student Loans by Refinancing” appeared first on MagnifyMoney.

Debt Relief Options for Corinthian Students and Graduates

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The vast majority of students who take out federal loans to fund their education are required to eventually repay these loans in full. But what if the institution you are attending closes, or is found to have violated the law?

If you are a student or graduate of a Corinthian school, you could be eligible for debt relief from the federal government. It was determined in 2015 that Corinthian Colleges, Inc., the company that operated Everest College, Heald College, and WyoTech schools, defrauded students by providing false information about the job rates of graduates.

Due to this finding, and to the subsequent closing of Corinthian college campuses, students who took out federal loans to attend a Corinthian school have the opportunity to apply for debt relief.

What is debt relief?

Debt relief is forgiveness of debt, in part or in full. If you attended Corinthian Colleges, you could be eligible to have up to 100% of your federal student debt from your Corinthian program discharged or forgiven.

How do I know if I am eligible for debt relief?

There are two types of debt relief that you may be eligible for as a Corinthian student or graduate, depending on your situation:

  1. If you attended one of Corinthian’s campuses that closed on April 27, 2015 (a list of these campuses can be found here), or if you withdrew from one of these campuses on or after June 24, 2014, you may be eligible for closed school debt relief for your Federal Direct Loans, Federal Family Education Loan Program loans, or Federal Perkins Loans. Note that if you later transferred your credits to a different school, this might impact your eligibility for debt relief.
  1. If you attended a Corinthian campus that did not close on April 27th, 2015, but you believe you were defrauded by the school, you may be eligible for debt relief for your Federal Direct Loans under a borrower defense to repayment.

How do I apply for debt relief?

First, determine whether you are more likely to be eligible for closed school debt relief or for debt relief under a borrower defense to repayment.

If you are applying for closed school debt relief, you must do so through your loan servicer. You may send them this application or contact them directly to see if they have their own application. There is no deadline to apply.

Instructions for applying for debt relief under a borrower defense to repayment are still under development; however, in the meantime, you can apply by submitting Borrower Defense to Repayment materials (a list of these materials is available on this page). Note that if you attended a Heald College location, you may be eligible for an expedited application process.

In either case, it may take time for your application for debt relief to be processed. You can request that your student loan payments be put into forbearance while your application is being considered (for up to 12 months), though you should note that interest will continue to accrue during this period.

What about my private loans?

The two types of debt relief listed above apply only to federal loans. If you took out private loans to attend a Corinthian school, contact your private lender to ask whether debt relief is an option.

Where can I find more resources?

The Department of Education has comprehensive resources available on its website for individuals who have attended a Corinthian school and are interested in applying for debt relief. You should read through these pages thoroughly before applying:

The government has also set up a borrower defense hotline at (855) 279-6207 for students who have questions about borrower defense to repayment.

If you need to find out who your loan servicer is, log into your borrower account at the Federal Student Aid website or call (800) 4-FED-AID.

Additionally, you can contact Next Steps EDU, an organization created to offer support and resources to students of Corinthian Colleges, through its website.

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