The average borrower takes 20 years to repay their student loan debt, costing them around $26,000 in interest alone. While it may be tempting to throw all your extra cash toward your student debt to relieve that burden faster, sacrificing investing for retirement to do so may not be the best approach. That said, the decision to pay off student loans or invest isn’t that simple.
If you’re frozen with indecision, here are a few things to consider.
Should I Pay Off Student Loans or Invest?
As with any personal finance decision, deciding whether to pay off student loans or invest is personal. Which route is more advantageous for you will depend on your unique situation.
Generally speaking, however, there are a few main factors to consider:
What Interest Rates Your Student Loans Have
It’s important to consider the interest rate on your student loan(s) in comparison to what you believe the stock market will return. For example, the average student loan interest rate, across all types of student loans, is 5.8%. However, the average return of the S&P 500 is around 10%.
Most investing experts agree that the earlier you invest, the better. This is because of the power of compounding interest: the longer you allow your investments to grow, the greater return you will receive. But by the same token, the longer you take to pay off your student loan debt, the more interest will accrue.
If you have a low-interest student loan, investing may generate a greater return than the amount of interest that accrues on your student loan. However, if you have a high-interest student loan, the interest costs may far outweigh the 10% return from investing.
>> MORE: What is the average student loan interest rate?
What Type of Student Loans You Have
Federal student loans have the potential to be forgiven. Each student loan forgiveness program will have its own unique set of requirements. Nonetheless, many will require you to make a specific number of minimum monthly payments to qualify. After making the required payments, your remaining student loan balance will be forgiven.
Given that your debt will be forgiven upon making just the minimum payments, there is little benefit to making surplus payments. In this case, investing would make more sense than directing a surplus payment toward your student debt.
Private student loans, on the other hand, don’t have the potential to be forgiven. So, depending on your interest rate and loan balance, surplus payments may make more sense in comparison to investing.
>> MORE: Compare private student loan rates
Your Debt’s Impact on Your Mental Health
If your student loan debt is causing you an unmanageable amount of angst, it may make more sense to focus your attention on throwing all your spare cash toward it. Even if you recognize that the returns from investing will far outweigh the cost of your student loan interest, it’s okay to prioritize your mental health and pay off your student loan debt first.
When to Prioritize Paying Off Student Loans Over Investing
As a guideline, there are a few circumstances in which paying off your student loans before investing makes more sense:
- If your student loan interest rate is over 6-7% and you have a high loan balance. The larger your loan balance, the more interest you’re likely to accrue. For example, if you owe $10,000 at a 6% interest rate, you would pay $17,194 total over the course of a 20-year repayment term. However, if you owe $100,000 at a 6% interest rate, you would pay $171,943 total over the course of a 20-year repayment term. Notice how the higher outstanding loan balance results in significantly higher interest costs.
- If you are concerned about being unable to pay your student loan payments in the future. If you opt to prioritize investing, but later experience an inability to make your student loan payments, it may be a scramble to come up with the cash. While you can withdraw money from your investment account, you will likely face a penalty to do so.
If you predict a circumstance that will impact your ability to make your student loan payments in the future, it may make more sense to prioritize paying them off before investing. Directing surplus payments toward your student debt will lower your minimum monthly payment, which may make your future payments more manageable. - If your student loan debt is negatively impacting your mental health. If paying off your student loans will provide you with an immense amount of peace, paying them off before investing may make the most sense.
- If you simply don’t want to have any outstanding debt on your record. Paying off your student loans would not only remove the outstanding debt from your record, but it could improve your credit score as your debt-to-income ratio shifts.
When to Prioritize Investing Over Paying Off Student Loans
Here are a few instances in which investing before paying off your student loans makes more sense:
- If your student loan interest rate is less than 5% and you expect to return the average 10% on your investments. Even with interest costs, the average rate of return on investments will likely outperform most low-interest student loans.
- If your employer offers a 401k match and you are fully vested, meaning you are entitled to the full amount in your 401k including your employer’s match. If you currently contribute to a 401k with an employer match, you may be required to work for the company for a specific amount of time to be entitled to 100% of that employer match. If you decide to leave the company prior to being fully vested, you may only be entitled to a portion of your employer’s contributions.
- If you believe the return on your investments will far outweigh the cost of the student loan. In some instances, investing will far outperform the interest costs associated with making minimum monthly payments on your student loans. In those instances, it may make more sense to focus on investing over paying off your student loans.
Do the Math to See Which Option is Better
If you still aren’t leaning towards one option over the other, do the math to give yourself a concrete answer. Mathematically, one option will outperform the other, which can give you a clearer picture of what to do.
Let’s say you’re in an “either/or” situation — you either want to put an extra $500 on your student loan each month or invest it. Here’s how this would play out based on the average student loan debt and investing data.
| Pay Off Student Loans | $37,693 balance | 5.8% interest rate | 20 year repayment term | Total paid before $500/mo surplus payment: $63,771 | Total paid with $500/mo surplus payment: $43,360 | By adding a $500/mo surplus payment, you save $20,411 and pay off your student loans in 5 years instead of 20. |
| Invest | You invest $500/mo. | Average rate of return: 10% | Balance after 20 years: $361,993.36 | After 20 years, you contribute $120,000 but earn $241,993.36 in interest. | Balance after 15 years: $200,810.61. | After 15 years, you contribute $90,000, but earn $110,810.61 in interest. |
If you opted to direct the $500 a month toward your student debt, you could pay off your loan in 5 years instead of the full repayment term of 20 years. This would save you $20,411 over the life of the loan. Then, let’s say that after paying off your student loans, you began investing that $500 a month. After 15 years, you would have earned $110,810.61 in interest. In total, you “earn” $131,221.61 between both the savings on interest and the interest that accrued on your investments.
Now, if you chose to pay only the minimum monthly payment on your student loans and invest that $500 a month instead, it would take you the entire 20-year repayment term to pay back your student loans. However, you would have earned $241,993.36 in interest on your investments. Even after considering the additional $20,411 cost of making only the minimum monthly payments on your student loans, you still score a net earning of $220,933.36.
In this case, prioritizing investing over paying off your student loans makes mathematical sense. To calculate whether it makes sense for your specific situation, utilize investment calculators and student loan repayment calculators.
Create a Balanced Approach Between Debt Payoff and Investing
The examples we’ve discussed illustrate an “either/or” approach. However, it isn’t necessary to be successful in paying off your student loans OR investing. In fact, creating a balanced approach may work best for you.
If focusing solely on one leaves you anxious about your progress in regards to the other, find a middle ground. For example, in the case of having an extra $500 each month, it’s okay to split up your payments. Directing half towards your debt and half towards your investments isn’t a bad idea if it gives you peace of mind.
FAQs About Paying Off Student Loans vs Investing
The decision of whether to pay off student loans or invest may feel difficult. It’s normal to still have questions. Here are a few of the most common ones:
Is there a downside to paying off student loans early?
When borrowers ask this question, they’re often concerned about facing a prepayment penalty. A prepayment penalty is a fee charged when a borrower pays off their entire loan balance earlier than scheduled. While some lenders may charge a prepayment penalty, student loan lenders cannot.
With that said, the only notable downside to paying off your student loans early is that you may experience a temporary drop in your credit score. By paying off your student loans, you are closing an active line of credit. By doing so, the positive repayment history associated with the account will no longer be factored into your credit score.
Should I use all my savings to pay off my student loans?
While it may be tempting to use your entire life’s savings to wipe out your student loan debt, it isn’t the best approach. Before even considering investing or putting a surplus payment on your student loans, make sure you have a fully funded emergency savings of at least 3 to 6 months of expenses.
However, if you have a fully funded emergency savings, it may make sense to use the remaining balance to pay off your student loans.
What else can I do to pay off my student loans faster?
If it’s not feasible to make a surplus payment on your student loans, here are some ways to pay off your student loans faster:
Consider refinancing. In a simple sense, refinancing your student loan allows you to swap your current student loan(s) for one with a lower interest rate or more favorable terms. Then, you can save money over the life of the loan and expedite the process of getting your balance to zero.
>> MORE: Compare the best student loan refinance rates:
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ASLA
Minimum credit score
Fixed APR
Loans are made available by the Arkansas Student Loan Authority (ASLA), a division of the Arkansas Development Finance Authority, which is an Arkansas state government agency.
Loan terms are subject to change. All loans are subject to approval based upon underwriting guidelines determined by ASLA and its advisors. Interest rates for approved loans will be based upon the borrower’s credit history as reported under the FICO credit scoring system.
Non-Arkansas residents must attend an eligible institution of higher education within the state of Arkansas to be eligible for an ASLA loan. Arkansas residents may attend an eligible institution of higher education within or outside of the state of Arkansas to be eligible for an ASLA loan.
For more information related to the Arkansas Student Loan Authority and its loan products, visit www.asla.info.
Variable APR
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Brazos
Minimum credit score
Fixed APR
It is recommended that you utilize scholarships, grants and other federal student loans, such as the Federal Direct Student Loans, available to you before you use a Brazos Student Loan.
By providing your email, you are consenting to receive periodic emails from Brazos regarding the Brazos Student Loan, as well as general student loan information, information on other Brazos loan products or services, and other information we believe you will find informative and helpful.
Rates and terms provided as a result of a soft credit check do not mean you have been approved for the Brazos Student Loan but will give you an indicator of if, and on what terms, you may qualify. In order to qualify and be approved for the loan, you must apply, have a hard credit pull performed, and provide all necessary documents and information. A hard credit inquiry may impact your credit score.
Credit Review and Approval. If you choose to apply for a Brazos Student Loan, Brazos Parent Loan, or Brazos Refinance Loan and continue your application past the pre-credit eligibility stage, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for Brazos to be able to issue you a Brazos loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. The initial credit review is based on review of all the information you and your cosigner (if applicable) provide during the application process and the information obtained from your credit report(s). If you pass the initial credit review, you will need to provide acceptable documentation such as your income verification before the final loan approval.
Brazos Education Lending Corporation (Brazos) is a part of a group of several non-affiliated nonprofit companies that are all managed by The Brazos Higher Education Service Corporation, Inc. and are commonly referred to as the Brazos Managed Companies. The first of the Brazos Managed Companies was organized in 1975 in Waco, Texas, as a secondary market for student loans. Since that time, the Brazos Managed Companies have, on a combined basis, served an estimated 2 million student borrowers and have helped fund an estimated $30 billion in student loans.
Variable APR
It is recommended that you utilize scholarships, grants and other federal student loans, such as the Federal Direct Student Loans, available to you before you use a Brazos Student Loan.
By providing your email, you are consenting to receive periodic emails from Brazos regarding the Brazos Student Loan, as well as general student loan information, information on other Brazos loan products or services, and other information we believe you will find informative and helpful.
Rates and terms provided as a result of a soft credit check do not mean you have been approved for the Brazos Student Loan but will give you an indicator of if, and on what terms, you may qualify. In order to qualify and be approved for the loan, you must apply, have a hard credit pull performed, and provide all necessary documents and information. A hard credit inquiry may impact your credit score.
Credit Review and Approval. If you choose to apply for a Brazos Student Loan, Brazos Parent Loan, or Brazos Refinance Loan and continue your application past the pre-credit eligibility stage, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for Brazos to be able to issue you a Brazos loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. The initial credit review is based on review of all the information you and your cosigner (if applicable) provide during the application process and the information obtained from your credit report(s). If you pass the initial credit review, you will need to provide acceptable documentation such as your income verification before the final loan approval.
Brazos Education Lending Corporation (Brazos) is a part of a group of several non-affiliated nonprofit companies that are all managed by The Brazos Higher Education Service Corporation, Inc. and are commonly referred to as the Brazos Managed Companies. The first of the Brazos Managed Companies was organized in 1975 in Waco, Texas, as a secondary market for student loans. Since that time, the Brazos Managed Companies have, on a combined basis, served an estimated 2 million student borrowers and have helped fund an estimated $30 billion in student loans.
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College Ave
Minimum credit score
Fixed APR
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation.
This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
Variable APR
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation.
This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
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Earnest
Minimum credit score
Fixed APR
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 10.04% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.74% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. Sparrow receives compensation from Earnest on a per-funded loan basis.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit Lending Licenses – Earnest for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2022 Earnest LLC. All rights reserved.
Variable APR
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 10.04% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.74% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. Sparrow receives compensation from Earnest on a per-funded loan basis.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit Lending Licenses – Earnest for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2022 Earnest LLC. All rights reserved.
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EDvestinU
Minimum credit score
Fixed APR
APR or “annual percentage rate” is a calculation of what the loan will cost, taking into consideration interest, fees and length of loan. Accordingly, the APR is subject to increase or decrease due to factors such as changes in the interest rate of variable rate loans, changes in principle due to the capitalization of interest or presence of a cosigner.
Variable APR rates may increase or decrease depending on fluctuations in the 30-day average SOFR Index. Monthly interest rate accrual is based on the published 30-day average SOFR Index rate as of the second to last business day of the previous month plus your applicable margin. If the 30-day average SOFR Index is negative, it will be deemed to be equal to zero.
Lowest rate requires application with a cosigner and 0.50 percentage point interest rate reduction for automatic debit. Private Loans that are in a deferment (including borrowers who elect deferred repayment), grace period, or forbearance are not eligible to enroll and receive the automatic debit benefit until they enter into repayment. Once the repayment period commences, the borrower may enroll in automatic debit. Borrowers electing to enroll in interest-only or immediate repayment are eligible to enroll in automatic debit once all disbursements on the loan have been made and the loan is considered to be fully disbursed. The interest rate reduction for authorizing our servicer to automatically debit monthly payments from a savings or checking account will not reduce the monthly payment, but will reduce the monthly finance charge, resulting in a lower total cost of loan.
APR’s provided include a 0.50 percent interest rate reduction for authorizing our loan servicer to automatically debit your payments each month from your bank account.
Loans are funded by the New Hampshire Higher Education Loan Corporation (NHHELCO) NMLS ID# 1527348 www.nmlsconsumeraccess.org. EDvestinU® is a trademark of NHHELCO.
Variable APR
APR or “annual percentage rate” is a calculation of what the loan will cost, taking into consideration interest, fees and length of loan. Accordingly, the APR is subject to increase or decrease due to factors such as changes in the interest rate of variable rate loans, changes in principle due to the capitalization of interest or presence of a cosigner.
Variable APR rates may increase or decrease depending on fluctuations in the 30-day average SOFR Index. Monthly interest rate accrual is based on the published 30-day average SOFR Index rate as of the second to last business day of the previous month plus your applicable margin. If the 30-day average SOFR Index is negative, it will be deemed to be equal to zero.
Lowest rate requires application with a cosigner and 0.50 percentage point interest rate reduction for automatic debit. Private Loans that are in a deferment (including borrowers who elect deferred repayment), grace period, or forbearance are not eligible to enroll and receive the automatic debit benefit until they enter into repayment. Once the repayment period commences, the borrower may enroll in automatic debit. Borrowers electing to enroll in interest-only or immediate repayment are eligible to enroll in automatic debit once all disbursements on the loan have been made and the loan is considered to be fully disbursed. The interest rate reduction for authorizing our servicer to automatically debit monthly payments from a savings or checking account will not reduce the monthly payment, but will reduce the monthly finance charge, resulting in a lower total cost of loan.
APR’s provided include a 0.50 percent interest rate reduction for authorizing our loan servicer to automatically debit your payments each month from your bank account.
Loans are funded by the New Hampshire Higher Education Loan Corporation (NHHELCO) NMLS ID# 1527348 www.nmlsconsumeraccess.org. EDvestinU® is a trademark of NHHELCO.
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ISL
Minimum credit score
Fixed APR
Subject to credit approval. Loans are made by Iowa Student Loan Liquidity Corporation or Bank of Lake Mills. Bank of Lake Mills does not have an ownership interest in Iowa Student Loan Liquidity Corporation. Bank of Lake Mills is Member FDIC. Annual percentage rate (APR) shown is dependent on if you are viewing this page with or without the auto-debit discount applied. If viewing with auto-debit discount applied, the APR rate will range from 6.93% APR to 11.58% APR and assumes you are enrolled in and maintain auto-debit payments from the date of origination. Enrolling in auto-debit results in a 0.25% interest rate reduction. Without enrolling in auto-debit, the rate will range from 7.18% APR to 11.83% APR. Not all borrowers receive the lowest rate. If you are approved for a loan, the rate offered will depend on your credit profile, the term you select, your state of residence or your current lender and will be within the ranges shown above.
Variable APR
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LendKey
Minimum credit score
Fixed APR
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
Variable APR
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Nelnet Bank
Minimum credit score
Fixed APR
Credit Score
A soft credit pull—whether on Sparrow or on Nelnet Bank’s platform– will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Auto Debit (Auto Pay)
Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.
Cosigner Release
A request for the cosigner to be released can be made by either the borrower or cosigner when each of the following conditions has been met:
– The account must have been in full principal and interest repayment for at least 24 months.
– Twenty-four consecutive, on-time principal and interest payments, or lump sum equivalent, must have been made. NOTE: A lump sum payment does not replace the requirement to have been in full principal and interest repayment for at least 24 months. Interest-only or fixed-pay payments while enrolled in school do not qualify towards the 24 consecutive on-time payments.
– The loan must be current at the time of request.
– The loan must not have been in deferment, hardship forbearance, or other alternative payment assistance plan within the past 24 months.
– The loan must not have been permanently modified from its original terms in the credit agreement.
– The primary borrower must be a U.S. citizen or have permanent residency in the United States.
– The primary borrower must meet the age of majority requirement in their permanent state of residency.
Requirements are subject to change. If all of these conditions have been met, then an application for cosigner release may be submitted. The primary borrower is required to demonstrate they have the ability to assume sole responsibility for the loan(s) by providing proof of income, meeting debt-to-income requirements, and having a satisfactory credit history. (A credit report will be obtained during the review process).
If you have questions on cosigner release, or would like to apply, contact us via email or phone at Loans@NelnetBank.com or 800.446.4190.
Flexible Repayment
Nelnet Bank offers various payment assistance programs to assist you if you are currently struggling to make payments. Contact Nelnet Bank at Loans@NelnetBank.com or 800.446.4190 to get more information.
Loan Eligibility
Refinance Loan Eligibility:
You must be a U.S. citizen or permanent resident alien with a valid U.S. Social Security number, and be the legal age to enter into binding contracts in your state/territory of residency, or be at least 17 years of age and apply with a cosigner who is at least the age of majority in their state/territory. Non-residents can apply with an eligible cosigner who is a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. The student loans you refinance must be in their grace or repayment period, and you can no longer be enrolled in school on a half-time or more basis. You must have at least $5,000 in student loans to refinance. You or your cosigner must meet Nelnet Bank’s annual income criteria. Approval subject to credit review. Other credit criteria may apply.
Refinance Loan Limits:
Minimum loan amount: $5,000; Maximum student loan limits:$125,000 for borrowers with an undergraduate degree; $175,000 for borrowers with a graduate or doctorate degree; $175,000 for borrowers with an MBA or graduate law degree; $500,000 for borrowers with a graduate health professions degree.
Loan Refinancing Risks:
Federal student loans include benefits that may not be offered with private student loans. Carefully review any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. To learn more about what to take into consideration when refinancing federal student loans with private education loans, click here.
Interest Rates
Fixed interest rates range from 7.12% APR (with auto debit discount) to 10.79% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan. Variable interest rates range from 7.59% APR (with auto debit discount) to 14.49% APR (without auto debit discount). Variable rates for Nelnet Bank Refinance Loans are calculated using either (a) the One-Month SOFR; (b) the 30-day Average SOFR; or (c) the forward-looking term rate based on SOFR as published by the Federal Reserve Bank of New York and/or The Wall Street Journal “Money Rates” table on the twenty-fifth day (or the next business day) of the immediately preceding calendar month. The variable rate may reprice and change on the first day of each month if the SOFR index changes. This may result in higher monthly payments. The current One-Month SOFR index is 5.30% as of September 1, 2023. The lowest rate for each loan type requires automatically withdrawn (i.e., auto debit) payments, a five-year repayment term, and the borrower making immediate principal and interest payments. The lowest rate is available only to the most creditworthy applicants. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, (3) the loan type selected, and (4) the highest level of education attained. If approved, applicants will be notified of the rate qualified for within the stated range.
Savings
Your actual savings, if any, may vary based on interest rates, balances, remaining repayment terms and other factors. Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan.
Variable APR
Credit Score
A soft credit pull—whether on Sparrow or on Nelnet Bank’s platform– will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Auto Debit (Auto Pay)
Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.
Cosigner Release
A request for the cosigner to be released can be made by either the borrower or cosigner when each of the following conditions has been met:
– The account must have been in full principal and interest repayment for at least 24 months.
– Twenty-four consecutive, on-time principal and interest payments, or lump sum equivalent, must have been made. NOTE: A lump sum payment does not replace the requirement to have been in full principal and interest repayment for at least 24 months. Interest-only or fixed-pay payments while enrolled in school do not qualify towards the 24 consecutive on-time payments.
– The loan must be current at the time of request.
– The loan must not have been in deferment, hardship forbearance, or other alternative payment assistance plan within the past 24 months.
– The loan must not have been permanently modified from its original terms in the credit agreement.
– The primary borrower must be a U.S. citizen or have permanent residency in the United States.
– The primary borrower must meet the age of majority requirement in their permanent state of residency.
Requirements are subject to change. If all of these conditions have been met, then an application for cosigner release may be submitted. The primary borrower is required to demonstrate they have the ability to assume sole responsibility for the loan(s) by providing proof of income, meeting debt-to-income requirements, and having a satisfactory credit history. (A credit report will be obtained during the review process).
If you have questions on cosigner release, or would like to apply, contact us via email or phone at Loans@NelnetBank.com or 800.446.4190.
Flexible Repayment
Nelnet Bank offers various payment assistance programs to assist you if you are currently struggling to make payments. Contact Nelnet Bank at Loans@NelnetBank.com or 800.446.4190 to get more information.
Loan Eligibility
Refinance Loan Eligibility:
You must be a U.S. citizen or permanent resident alien with a valid U.S. Social Security number, and be the legal age to enter into binding contracts in your state/territory of residency, or be at least 17 years of age and apply with a cosigner who is at least the age of majority in their state/territory. Non-residents can apply with an eligible cosigner who is a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. The student loans you refinance must be in their grace or repayment period, and you can no longer be enrolled in school on a half-time or more basis. You must have at least $5,000 in student loans to refinance. You or your cosigner must meet Nelnet Bank’s annual income criteria. Approval subject to credit review. Other credit criteria may apply.
Refinance Loan Limits:
Minimum loan amount: $5,000; Maximum student loan limits:$125,000 for borrowers with an undergraduate degree; $175,000 for borrowers with a graduate or doctorate degree; $175,000 for borrowers with an MBA or graduate law degree; $500,000 for borrowers with a graduate health professions degree.
Loan Refinancing Risks:
Federal student loans include benefits that may not be offered with private student loans. Carefully review any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. To learn more about what to take into consideration when refinancing federal student loans with private education loans, click here.
Interest Rates
Fixed interest rates range from 7.12% APR (with auto debit discount) to 10.79% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan. Variable interest rates range from 7.59% APR (with auto debit discount) to 14.49% APR (without auto debit discount). Variable rates for Nelnet Bank Refinance Loans are calculated using either (a) the One-Month SOFR; (b) the 30-day Average SOFR; or (c) the forward-looking term rate based on SOFR as published by the Federal Reserve Bank of New York and/or The Wall Street Journal “Money Rates” table on the twenty-fifth day (or the next business day) of the immediately preceding calendar month. The variable rate may reprice and change on the first day of each month if the SOFR index changes. This may result in higher monthly payments. The current One-Month SOFR index is 5.30% as of September 1, 2023. The lowest rate for each loan type requires automatically withdrawn (i.e., auto debit) payments, a five-year repayment term, and the borrower making immediate principal and interest payments. The lowest rate is available only to the most creditworthy applicants. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, (3) the loan type selected, and (4) the highest level of education attained. If approved, applicants will be notified of the rate qualified for within the stated range.
Savings
Your actual savings, if any, may vary based on interest rates, balances, remaining repayment terms and other factors. Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan.
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PenFed
Minimum credit score
Fixed APR
It is recommended that you utilize scholarships, grants and other federal student loans, such as the Federal Direct Student Loans, available to you before you use a Brazos Student Loan.
By providing your email, you are consenting to receive periodic emails from Brazos regarding the Brazos Student Loan, as well as general student loan information, information on other Brazos loan products or services, and other information we believe you will find informative and helpful.
Rates and terms provided as a result of a soft credit check do not mean you have been approved for the Brazos Student Loan but will give you an indicator of if, and on what terms, you may qualify. In order to qualify and be approved for the loan, you must apply, have a hard credit pull performed, and provide all necessary documents and information. A hard credit inquiry may impact your credit score.
Credit Review and Approval. If you choose to apply for a Brazos Student Loan, Brazos Parent Loan, or Brazos Refinance Loan and continue your application past the pre-credit eligibility stage, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for Brazos to be able to issue you a Brazos loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. The initial credit review is based on review of all the information you and your cosigner (if applicable) provide during the application process and the information obtained from your credit report(s). If you pass the initial credit review, you will need to provide acceptable documentation such as your income verification before the final loan approval.
Brazos Education Lending Corporation (Brazos) is a part of a group of several non-affiliated nonprofit companies that are all managed by The Brazos Higher Education Service Corporation, Inc. and are commonly referred to as the Brazos Managed Companies. The first of the Brazos Managed Companies was organized in 1975 in Waco, Texas, as a secondary market for student loans. Since that time, the Brazos Managed Companies have, on a combined basis, served an estimated 2 million student borrowers and have helped fund an estimated $30 billion in student loans.
Variable APR
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SoFi
Minimum credit score
Fixed APR
Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
Variable APR
Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
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Yrefy
Minimum credit score
Fixed APR
Yrefy’s loan refinance program offers fixed rates from 3.65% APR up to 7.00% APR. Your interest rate will remain constant over the life of your loan and your monthly payment amount will remain the same. Not all borrowers receive the lowest rate. Get started now. To check the rates and terms you qualify for, Yrefy will conduct a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. If pre-approved for a refinance loan, depending on your creditworthiness, your loan approval may require the addition of a co-borrower.
If you are pre-approved as a Borrower, your interest rate will be in the range listed above. The estimated loan option and terms displayed are based on information you provided in the pre-approval application and are subject to change prior to acceptance. Yrefy LLC is not responsible for any inaccurate information disclosed on this website.
After seeing your offered interest rates, you may choose to continue your application online at https://apply.yrefy.com or by contacting Yrefy’s Advocate. With your prior authorization, Yrefy will complete a hard credit inquiry, verifying the information you provided, and collecting additional information from you (and your co-borrower, if applicable) for Yrefy to determine whether you qualify for a loan. A hard credit inquiry is required for any lender to be able to issue a refinance loan. Up to a 5% fee will be assessed at the time your private education loan(s) are refinances. This amount will be added to the principal balance of your refinanced loan.
Variable APR
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Opt into automatic payments. Many private student loan lenders offer a 0.25% interest rate discount to borrowers who opt in to automatic payments. While a small deduction, it can make a significant difference depending on your current interest rate and outstanding loan balance.
Cut back on expenses. If you don’t already track your spending, consider doing so. By understanding where your money goes, you may find that you’re able to cut back expenses in certain areas. Then, you can re-direct that money toward loan payments.
Pick up a side hustle. The average side hustle generates between $507 and $746 per month, according to USA Today. If you have the capacity to take on a side gig, the additional income could cut down your repayment period.
Final Thoughts from the Nest
When it comes to the decision of whether to pay off student loans or invest, there is no one-size-fits-all solution. Before making a decision, take the time to understand what makes most sense for your unique financial situation. If you still feel unsure, consider consulting a financial or investment advisor for personalized advice.
The content of this article is not, nor should it be, taken as financial advice. The content of this article is for educational purposes only. For personalized financial advice, please consult a financial or investment advisor.