Many banks and lenders are responding to the debt crisis faced by many student borrowers by trying to offer more enticing deals for the refinancing and consolidation of their loans.
One such lender, Affinity Federal Credit Union, recently rolled out a student loan consolidation program in response to members’ concerns about their debt and the struggles they had repaying it.
“We got a lot of feedback from members not liking the fact that they had to pay multiple payments to different lenders, and that they wanted to have one payment and to have it fixed,” said Theresa Williams-Barrett, vice president of consumer loans for Affinity.
The program, Williams-Barrett explains, is for graduates who have had a full-time job for the past six months. They would need to have a good credit score to qualify for refinancing, she said. Based on high credit score, a pay-off time of five years and a .25% discount with automatic payments, Affinity’s fixed loan rate starts at 3.49%.
Other lenders, too, are making it attractive for borrowers to take control of their student loans by participating in such a program.
The process allows borrowers to refinance and consolidate both private and federal student loans. Lenders tout benefits such as monthly savings, the opportunity to pay off loan faster or extend it for lower payments, and the convenience of one easy payment. In addition, moving to a fixed rate from a variable rate allows borrowers know exactly what they are expected to pay monthly.
LendingTree, which connects borrowers with multiple lenders so they can find the best deals on loans, credit cards, deposit accounts, insurance and more, recently came out with their top picks for student loan refinancing.
And while Affinity was not included on the list, LendingTree’s top picks had comparable rates with an additional discount for having automatic payments or a linked account. The top six include Earnest with a fixed rate of 3.47%, SoFi with a fixed rate of 3.49%, laurel road with a fixed rate of 3.50%, LendKey with a fixed rate of 3.64%, commonbond with a fixed rate of 2.37% and College Ave with a fixed rate of 3.24%.
Williams-Barrett said Affinity has gotten more applications than expected since the program began last month.
“Our intention is to try to help people have a reasonable payment that they can actually pay it down so they can start saving and move on with some of their life events,” she said, adding that they constantly hear that because of student loan, people are pushing off getting married and buying a home.