How to Pick the Best Student Loan Refinancer... and Feel Good About It

James Herbert, SVP and Co-Head of Eagle Lending, First Republic Bank
December 13, 2018

There’s no magic formula to becoming more financially stable, and graduates who carry student loan debt often feel as though they’re pushing a boulder up a hill when trying to get a handle on their finances. To help alleviate the burden, many turn to student loan refinancing. While you may lose special student loan benefits like forbearance and income-based repayment, refinancing student loans could save you money in the long term.

However, not all lenders are created equal and there are endless options out there. Knowing which company to trust or choose can feel very daunting.  If you’re a good candidate for student loan refinancing, here are four tips to help you determine the best option for refinancing.

 

Get the best rate and pay down debt faster

You may have spent upwards of 10 years working hard for your degrees. Why should it take longer to pay for them? One of the most effective strategies to pay off your student loans faster and save money on your overall loan repayments is to refinance to a shorter loan term at the lowest possible interest rate. Below are two pay-down scenarios that demonstrate the impact of refinancing at a lower interest rate.

 

1. Refinancing to a 5-Year Loan

 

First Republic1

Other Lender

Loan Amount

$100,000

$100,000

Term

5 years

5 years

APR

1.95%2

4.65%

Monthly Payment

$1,751

$1,871

Total Interest Savings

$7,232

 

 

In this hypothetical example, you want to refinance $100,000 in student loan debt and are comparing two lenders. One lender offers a 5-year loan at 1.95% APR and another lender offers the same loan at 4.65% APR. Simply by selecting the first lender, you will save over $7,000 on your loan repayments. That’s real money you can put toward a down payment on a home, a new car or growing your savings.

 

2. Refinancing to a 10-Year Loan

 

First Republic1

Other Lender

Loan Amount

$100,000

$100,000

Term

10 years

10 years

APR

3.95%

6.25%

Monthly Payment

$1,010

$1,123

Total Interest Savings

$13,527

 

 

In the second example, refinancing $100,000 to a 10-year loan at 3.95% APR versus 6.25% APR saves you a whopping $13,527 over the life of the loan. It’s easy to see how securing the lowest interest rate will provide significant savings as you pay back your student loans.

 

Accelerate your financial growth

The success you’ve achieved to date is just the start of what lies ahead. In addition to refinancing your student loans, our team of bankers can connect you with a wealth manager who will help accelerate your overall financial growth. What are your life goals? Do you want children? Do you want to retire by 45? Are you looking to take more vacations? These are the kinds of questions your First Republic banker will ask to help set you up for financial success. Whether you’re saving for retirement in an IRA, looking for more stable investments like CDs, opening a new practice or firm, or are ready for full private wealth management, having a financial partner will help you achieve your goals.

 

Feel good about your lender

Reputation matters, and you want to feel good about your lender. A quick Google News search can provide insight into recent events and noteworthy incidents regarding the organization. However, to understand how a company is perceived by its clients, the Net Promoter Score (NPS) provides a measure of customer experience and loyalty. The score ranges from -100 to +100; anything above 0 is considered good, above 50 is excellent and above 70 is world-class. Here’s how some of 2017’s top service-focused brands were ranked as a measure of NPS:

 

image1.jpg

 

Pick a partner with a proven track record

Stability of a company matters more than ever in today’s economic environment. You want to believe that your loan isn’t going to be sold to another provider in a couple of years, moving your relationship to some other new bank. Having a lender with decades of consistent, positive performance gives you confidence it can weather any tough economic times. It also provides insight into its leadership’s focus on longevity.

You’ve worked hard to get where you are and deserve a partner whose mission is to help you succeed.

When you’re ready to accelerate your financial growth, we’re here to help with student loan refinancing and beyond.

 

1This is not a student loan. For more information, go to firstrepublic.com/student-loan-refinancing. Terms and conditions apply. All loans are subject to First Republic Bank’s underwriting standards. The product mentioned above is not available in all markets. For a complete list of locations, visit firstrepublic.com/locations.

2Annual Percentage Rate. Rates effective as of August 1, 2018, and are subject to change. Borrower must open a First Republic ATM Rebate Checking account (“Account”). Terms and conditions apply to the Account. If the Account is closed, the rate will increase by 5%. Rates shown include relationship-based pricing adjustments, including a 2.00% rate adjustment for maintaining automatic loan payments and direct deposit with the Account; and a 0.50% rate adjustment for depositing and maintaining a minimum deposit balance in the Account.

3Source: SATMETRIX NPS (2017) for brands listed, excluding FRC. Please note: the brands listed under ‘Top Service-Focused Brands’ are selected for comparison purposes.

4Source: FRC/Greenwich Associates NPS Study (2017).

5Over 50% of First Republic clients self-designate First Republic as their “Lead Bank.”

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document. First Republic does not provide tax or legal advice. We make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained here. This information is governed by our Terms and Conditions of Use.