Written By: Louis DeNicola
Refinancing your student loans through a private student lender could help lower your monthly payments, decrease your interest rate and save you money. Once you’ve considered the pros and cons of refinancing and decided that it makes sense for you, it’s time to choose a lender and an offer.
Shopping for lenders lets you zero in on the loan offer that best suits your needs. Even if you set fees and interest rates aside, you want to compare lenders — they may offer different terms and repayment options, or have different eligibility requirements.
College Ave is a new fintech company that offers student loan refinancing. Unlike many other lenders that offer student loan refinancing, refinancing is available in every state. There are other perks as well, such as the ability to choose your loan term and decide between two repayment plans. However, College Ave also has a higher interest-rate range than you’re apt to find with some other lenders, and you can’t release a co-signer (let that person out of his/her obligation).
What is College Ave?
College Ave was co-founded by two former Sallie Mae executives, Joe DePaulo and Tim Staley, in 2014. It is one of the newest companies in the student loan space.
Unlike some major banks that offer student loans or student loan refinancing in addition to traditional lender services, College Ave focuses solely on student loans. When it launched, the company offered private student loans to help people pay for school. Then, in 2016, it began offering student loan refinancing as well.
The application for refinancing is simple, it can take just three minutes to complete, and you’ll find out if you qualify right away. You can also personalize your new loan by choosing the interest type, repayment term and repayment plan.
However, College Ave falls short on clarity at times.
College Ave student loan refi in a nutshell
|Fixed APR range*||3.35 to 7.50% with autopay discount|
|Variable APR range*||2.75 to 7.25% with autopay. Capped at 25%.|
|Loan terms offered||You can choose from five to 15 years|
|Fees||If you don’t make a minimum payment within 15 days of the due date, the late fee is the lower of 5% of the unpaid monthly payment or $25. (There’s also a returned check charge of $25.)|
|Loan amount||$5,000 to $150,000 for graduate or undergraduate programs. Up to $250,000 for medical, dental, pharmacy and veterinary programs.|
|Repayment plans||Interest-only for the first 24 months, or you can start full interest and principal payments at the outset.|
|Savings opportunities||You can get a 0.25% interest rate discount if you set up automatic debit payments.|
*As of Oct. 12, 2017
How College Ave compares with other lenders
Compared with some traditional banks or credit unions, College Ave’s easy-to-follow application process is certainly a plus. Customer service is also quick to pick up the phone and answer questions.
While College Ave has an online calculator that you can use to estimate your loan terms and savings, it doesn’t offer prequalification or preapproval. With a prequalification or preapproval, other lenders can tell you if you’re likely to qualify, and your approximate terms, with a soft credit inquiry (one that doesn’t hurt your credit score).
College Ave’s interest rate range is also higher than other lenders, and you may be able to save money by comparing your options and getting a lower rate elsewhere. However, don’t assume that the lender with the lowest advertised rate is the one that’s going to offer you the best terms. Lenders have different criteria for evaluating applicants, and you might find that you get the best refinancing offer from a lender that has mid-range advertised rates.
Being able to choose your loan terms is certainly a plus for College Ave, and a feature that most student loan refinancers don’t offer. However, other lenders offer longer terms of up to 20 or 25 years, which could lower your monthly payment compared with what you’d get under College Ave’s maximum of 15 years.
You may also contrast interest rate types and repayment plans when reviewing lenders. College Ave offers variable- and fixed-rate loans, which is common but still a perk that some other lenders don’t have.
Another potentially important distinction among lenders: forbearance and deferment options. These programs let you temporarily stop making payments when you have a financial hardship, such as a medical emergency or a job loss, or if you return to school or join the military.
Navient services College Ave’s refinanced loans, so it determines the forbearance and deferment requirements and manages the programs. A Navient representative said it allows for in-school and military deferments, and offers forbearance in three-month periods with a maximum 12 months for the life of a loan.
Advantages of refinancing with College Ave
Personalized loan terms. Most lenders let you choose from two or three term options, such as five, 10 or 15 years. But with College Ave, you can choose any term from five to 15 years. Your term impacts you interest rate and monthly payment, and being able to choose a nonstandard repayment term, such as nine years, could help you minimize your overall loan cost.
Graduated repayment option. When you refinance with College Ave, you can choose between making interest-only payments for the first 24 months or full interest and principal payments from the start. Interest-only payments could be a good option for those who want to refinance and lower their monthly payments in the short term, but be advised: Doing so will increase your overall borrowing costs and could mean higher monthly payments later.
Referral program. You can earn $250 for referring others to College Ave, and the person you refer will get a $100 bonus.
Open to residents of every state. Some lenders can only refinance loans to residents in select states, but College Ave refinancing is available across the country.
Relief on fees. College Ave charges neither an application fee nor an origination fee.
Drawbacks of refinancing with College Ave
Lack of transparency. Although College Ave aspires to offer clarity, it falls short on several fronts. Unlike some other student loan refinancers, College Ave doesn’t list a minimum credit history or income or debt-to-income (DTI) requirements to qualify for refinancing. However, these are all factors that a representative said are important in determining your eligibility and terms when refinancing.
The College Ave savings calculator tool lets you estimate your loan terms based in part on your credit score. The tool doesn’t let you choose a credit score below 680. A spokesperson for the company told SimpleTuition that the minimum required credit score is in the “high 600s” and confirmed that you likely won’t be able to get approved for a College Ave loan with a score in the low- or mid-600s.
Other information, such as the late-payment fee and cap on variable interest rates, isn’t listed on the pages for refinancing or in the FAQ. A customer service representative shared the information over the phone, however, and you can find it on a loan disclosure form once you start the application process.
No refinancing parent loans in the student’s name. If a parent took out either a loan from a private student lender or a federal parent PLUS loan to pay for your education, you may want to take over the legal responsibility for the debt. Some lenders let you refinance your student loans and parents’ loans together. With College Ave, you can only refinance parent loans if the parent co-signs your new loan. However, that still leaves your parent with a legal responsibility for the debt.
No option to release a co-signer. Some lenders let you apply for refinancing with a co-signer and offer an option to release the co-signer once the primary borrower makes a series of full on-time payments and is eligible on his or her own. Refinancing through College Ave doesn’t give you this option.
You must graduate to be eligible. In order to refinance your student loans, you must graduate from an eligible school and earn a degree. If you took out loans but didn’t earn a degree, you’ll have to refinance with a different lender that allows you to do so.
College Ave doesn’t publish a list of eligible schools, but at a minimum, the school must be Title IV-eligible, meaning it complies with the requirements to be part of federal student aid programs. You can send an email to firstname.lastname@example.org with the school’s name to confirm its eligibility.
Serviced by Navient. After refinancing your loans with College Ave, you’ll receive a welcome letter from Navient, which partners with College Ave. You’ll make payments, receive statements and have to turn to Navient if you have questions about your loan. While many refinancers partner with loan servicing companies and this isn’t inherently a drawback, if you’re turning to College Ave because of its customer service or ease of use, you won’t necessarily have the same experience once the refi is done.
What it takes to qualify:
|Credit score, credit history, income and debt-to-income ratio||Not disclosed|
|Loan types||Private and federal student loans. You can refinance parent loans only if the parent co-signs the new loan.|
|School and state eligibility||You must graduate from a Title IV-eligible undergraduate or graduate program. Refinancing is available in all states. You can send an email to email@example.com with a school’s name to confirm its eligibility.|
What borrowers is College Ave best for?
As a new fintech company, College Ave may be a great fit for someone who is looking for a sleek and easy application process and personalized loan terms. Being able to choose your term, interest-rate type and repayment plan can help you manage your payment or long-term costs.
College Ave could also be a good option for borrowers who don’t qualify at other lenders because of their state of residence, since it provides loans nationwide.
If a particular features draws you to College Ave, be sure to look for other lenders that have a similar feature, then take time to compare and contrast.
For example, you may want to compare College Ave and Earnest if you’re looking for an option to customize your repayment term. However, Navient bought Earnest in 2017. While the initial announcement indicates that Earnest will remain a separate brand, keep an eye on post-acquisition reviews and possibly changes to Earnest’s refinancing terms.
Another example: Borrowers who want to refinance and then make interest-only payments could also look for offers from LendKey, which connects them to a network of regional banks and alternative lenders. Some of LendKey’s partner lenders offer interest-only payments for the first four years.
A closer look at the online platform
College Ave has an intuitive website and it’s easy to find the refinancing page and start an application. But before you do, you can use College Ave’s savings calculator to get an approximate idea of your new loan terms and overall savings.
Start by listing the student loan types you hold and your outstanding balance, monthly payment and years until your loans are paid off. College Ave uses this information to determine your current total cost of repayment.
On the next screen, you can toggle between different options to see how they could affect your monthly payment and overall savings.
The interest rate on your new loan depends on the interest rate type, loan term and credit score. If you’re not sure what your credit score is, you can check it for free through SimpleTuition’s parent company, LendingTree. However, keep in mind that the free score you get is a VantageScore, while College Ave uses a FICO score, so there will likely be a difference between the two. As an alternative, you can get your free FICO at Discover Scorecard. Check with your bank and credit card issuer as well, as many financial institutions now offer free FICO scores as a perk.
Aside from the student loan refinancing application and savings tool, there are several pages on the College Ave website devoted to student loans for current students, or parents of current students. The site also has a blog, where you’ll find informative articles on student loans, paying for school and personal finance.
There are several FAQ pages, with answers to common questions about student loans, student loan refinancing and repayment.
A look at the fine print
You won’t find a lot of fine print on College Ave’s website. But that could be construed as a negative. As with all financial contracts, it’s important to read the terms before signing. However, College Ave doesn’t display some potentially important information until after you start the application process.
For example, a College Ave representative confirmed by phone that refinanced loans have a late payment fee that’s the lesser of $25 or 5 percent of the amount due. The late fee is only charged once you’re 15 days past due, though.
Another representative confirmed that the variable-rate refinancing loan has a cap of 25 percent, inclusive of the 0.25 percent autopay discount. And she said there’s no way, as mentioned previously, to release a co-signer from your loan.
You’ll see all these fine-print items on the loan disclosure form, the second stage of the application process.
There are some fine-print items that are clearly listed on the refinance or FAQ pages, including the minimum and maximum loan amounts and loan term options. You’ll also read that College Ave doesn’t charge an origination fee and there’s no prepayment fee.
What to expect during the application process
College Ave has a short application that can take just three minutes to complete and submit.
The first page asks for your name, email, phone number, address, date of birth, citizenship status, Social Security number and household income. You’ll also have to share information about your school and degree.
If your school doesn’t appear after you enter the state and city, it may not be an eligible school for College Ave student loan refinancing. As we recommended earlier in this article, you can send an email to firstname.lastname@example.org with the school’s name to confirm its eligibility.
You can also share your employment information and an alternative contact whom the loan servicer can reach if it’s having trouble contacting you, but these fields are optional.
Worried about those hard inquiries eating away at your credit score? Moving to the next page will not result in a credit inquiry. After submitting the information, you’ll see a loan disclosure form. It isn’t an official offer for refinancing, but it shows a lot of those fine-print items you don’t see on the website, such as the late-payment fees and variable-rate cap. You’ll also be able to see examples of how choosing different interest-rate types and repayment plans can alter your repayment amount.
Moving forward in the application, you’ll choose whether you want to apply alone or with a co-signer. With either option, your application will get submitted and College Ave will then run a credit check. If you choose to go with a co-signer, you can email the co-signer a link to the application or fill in his or her information right away. The co-signer will need to share similar personal and financial details, such as his/her address, Social Security number and annual household income.
When you submit a completed application, you’ll generally receive official loan offers right away. In some cases, you may need to provide additional documentation to confirm your identity or financial particulars.
Continue making your loan payments as usual after accepting a refinancing offer. It could take up to three to four weeks for the lender to pay off your loans, and if you miss a payment in the meantime, you may have to pay fees and it could affect your credit.
Once you see that your original loans are paid off, stop paying those loans. Navient will service your new loan, and you’ll receive an email with your estimated first-payment due date.
How to compare student loan refi offers
Each lender has its pros and cons, and there isn’t a single best one for every student borrower. Still, there are ways to evaluate your options, and some key points you should compare before choosing which lender to use.
- Eligibility. Make sure you qualify for refinancing with the lender. You might be ineligible due to your state of residence, the types of loans you have, what institution you attended or whether you earned a degree.
- Desirable loan options. Decide if you want a variable- or fixed-rate loan, and consider your ideal loan term. Then look for lenders that offer loans with these features.
You can quickly compare general loan terms from multiple lenders on SimpleTuition. Some lenders let you apply for preapproval and to get approximate loan terms. Even if lenders don’t have a preapproval option, if you’re committed to refinancing you can still submit multiple applications to see your offers.
Credit inquiries from multiple student loan refinancing applications will only count as one hard inquiry for credit-scoring purposes if you complete the applications within 14 days.
Once you have all your offers, you can plug the terms into a refinancing calculator to see which one saves you the most money. However, be sure to consider more than just the savings. Deferment or forbearance options, and the option to release a co-signer, may be important even if they don’t have immediately quantifiable monetary value.