Student Loan Hero offers borrowers plenty of information about refinancing, but they make their money by referring borrowers to their affiliate refinancing partners. This business model should make you proceed with caution as refinancing may not always be in your best interest.
In this article, we will provide an in-depth explanation of who Student Loan Hero is, what they do, and things to be wary of when it comes to refinancing through them.
Who is Student Loan Hero?
Student Loan Hero is a web-based company that is on a mission to help borrowers manage and repay their student loan debt. Its founder started the company back in 2012 after struggling to find helpful information about his own student loans. Student Loan Hero assists borrowers by providing helpful articles, financial calculators, and refinance options.
What Services Does Student Loan Hero Offer?
Quick & Easy Refinancing
Student Loan Hero primarily serves borrowers by making the refinance process quick and easy. It does this by partnering with affiliates who offer refinancing services. You cannot directly refinance through Student Loan Hero, but you can see and compare offers from their partners.
Savings Plan Tool
Along with presenting your refinance options, Student Loan Hero provides a customized list of savings plans you may be eligible for. It does this through the Repayment Plans tool on its My Loans page. You simply link to or manually input your federal and private student loan data. Then, it prompts you to answer a few questions about your ability to make payments, income, and job sector. Your list of recommended repayment plans may include private refinancing, federal consolidation, or income-driven repayment plans.
Student Loan Hero also offers a number of financial calculators similar to the calculators and eligibility assessment tools you can find right here on Student Debt Relief. These tools help borrowers make educated decisions about their federal and private student loans.
Can You Trust Student Loan Hero?
Fair & Balanced
Student Loan Hero provides useful information to borrowers and helps people secure lower interest rates on their refinanced loans. As a company, one of their main missions is to provide unbiased information to borrowers. However, when it comes to any type of student loan company, it is best to approach things with caution.
Motivated by Money
A lot of student loan companies, including Student Loan Hero, are good at what they do. But, what they do might not always be right for you. Student Loan Hero’s main source of revenue is through its affiliate partners that offer refinancing services. For you as a borrower, this has its ups and downs.
On the plus side, this means that Student Loan Hero tries to partner with affiliate companies that offer competitive rates on refinancing. The companies it partners with are already vetted, so you do not have to worry about falling into a scam. Plus, its easy-to-use tools let you compare these refinance companies all in one place. This saves you time and the stress of navigating your options alone.
On the downside, Student Loan Hero has extra incentive to encourage you to refinance your student loans. Why is that? Because when you refinance through one of their partners, Student Loan Hero makes a commission. That is to say, that they benefit more if you refinance your federal student loans privately rather than consolidate them through the federal government.
Student Loan Hero is Trustworthy
All in all, you can trust Student Loan Hero, but you still need to stay informed and think critically about your situation before refinancing through them.
Things To Do Before Refinancing Through Student Loan Hero
As a borrower, your safest bet is to be wary of companies that advise you to refinance your federal student loans without presenting any alternatives. Rushing into things may cause you to lose out on the many benefits offered by the federal government.
Before refinancing through Student Loan Hero, there are a few steps you should take.
Review Government Forgiveness and Repayment Plans
Before you refinance your federal student loans, it is important to understand what you are giving up. The federal government offers several repayment and forgiveness plans designed to help you manage your federal student loans. Many of these programs can help you lower your monthly payment and offer forgiveness after a set number of years. Refinance, and you lose out on all of these benefits.
Some of these student loan forgiveness programs include:
- Income-Driven Repayment Plans: 20-25 year forgiveness w/ reduced monthly payments
- Public Service Student Loan Forgiveness: 10-year forgiveness
- Total Permanent Disability Discharge: Immediate discharge
- Teacher Loan Forgiveness: 1-5 year forgiveness
- Military College Loan Repayment Program: 4-6 year forgiveness
What exactly does missing out on these programs mean for you? It means that you would miss out on full loan discharge if you become severely disabled or pass away. If you work in the public sector or plan to, you would lose eligibility for student loan forgiveness after 10 years. Most notably, you would lose your eligibility for reduced monthly payments if your financial situation changed. You may not need any of these programs now, but you could later down the road.
Evaluate Your Financial Stability and Health
For some people, refinancing both your federal and private student loans does make sense. If you have a steady job, can easily afford the new monthly payment, and are in good health, you may not need the programs offered by the federal government. Refinancing is not as risky and can potentially save you a lot of money. However, if you have health programs, struggle to make your current loan payments, or have trouble holding a job, refinancing your federal student loans becomes very risky. Opting for federal consolidation or an income-driven repayment plan is often a smarter choice.
Consider Only Refinancing Your Private Loans
You may be wondering, can I refinance part of my student loans? The answer is yes. Just because you have federal and private student loans does not mean that you must refinance them together. In many cases, it is actually better to only refinance your private student loans. Keeping your federal student loans with your federal loan service provider keeps you eligible for federal student loan forgiveness and repayment programs.
Examine All of Your Refinancing Options
Although Student Loan Hero does a great job compiling a top list of refinancing companies, their list is not exhaustive. It is always worth it to speak to yours or your cosigner’s bank, credit union, or mortgage company. Many of these financial institutions offer special discounts to existing account holders.
You should also check out the local credit unions that you do not currently bank with. Credit Unions are non-profit organizations designed to serve members and not pad their bottom line. This means they can offer lower interest rates or better terms than many banks.
Calculate Your Weighted Average Interest Rate
Calculating your weighted average interest rate is the first step to discovering if refinancing will actually save you money. A weighted average interest rate is the interest rate of your combined student loan debt. It takes into account the balance and interest rate of each of your loans. If you only have one loan, then the weighted average interest rate is simply the interest rate for that single loan. Use our weighted average interest rate calculator to save time. Ideally, you want your refinanced loan to have a lower interest rate than your weighted average interest rate.
Use Our Refinance Calculator
If you want to refinance, you are likely doing it to save money. With our refinance calculator, it is easier than ever to compare refinancing quotes to your current student loans. You just need your current student loan balance, weighted average interest rate, loan term, new interest rate, and new loan term to use it. The calculator will show you the savings and new monthly payment amount associated with that refinance quote.
Should You Use Student Loan Hero?
Securing a lower interest rate or better loan term through refinancing can help save tons of money and relieve some stress. This is especially attractive when you are drowning in debt and need payment relief. However, it is not a decision to be taken lightly. Make sure you do your research and thoroughly contemplate your financial situation, and what federal student loan benefits you may lose prior to refinancing through companies like Student Loan Hero. If after you’ve done that research you still believe a private student loan refinance makes sense for you, Student Loan Hero is a solid choice to refinance through.
Compare the Best Student Loan Refinance Rates
Still think a private refinance is the best option for you? We got you covered.
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust 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.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – 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.
2 – $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 04/26/2019. Variable interest rates may increase after consummation.
3 – 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.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 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% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.