Lately, financial technology companies have stepped into the student loan space to offer more competitive refinance rates and new approaches to repayment. Fintech ventures often target the underserved, and in the case of student loan repayment, the underserved could easily be classified as the borrowers holding the 11.4% of student loans that were 90 days or more delinquent or in default in the fourth quarter of 2018. Finding innovative approaches to repayment and more accessible and affordable refinance options could help to get some of these borrowers back on track.
These fintech companies offer refinance options. Some offer rates based on the more traditional credit rating systems, while others simply make options more accessible to millennials. A few of these companies offer rates and options based on factors like education level and their own algorithms to rate your credit worthiness in new ways.
Fintech Student Lending Options
Companies like SoFi, Laurel Road and Splash Financial are just a few of the fintech industry names that have made their way into the student lending world. A benefit they each can offer over traditional banks and credit unions is an application and loan management process that is often simplified and much more integrated into online dashboards and mobile apps.
Always do your due diligence in researching and comparing as many options as possible before making a decision, to get yourself the best rate.
Refinance Rate Comparison Tools
Credible. This is a platform that allows you to compare student loan refinance rates from eight different lenders. For a consumer, it can simplify options across fintechs and credit unions in an easy-to-read comparison tool.
Just keep in mind that Credible works with a limited number of lender partners so there may be more competitive rates out there, which is why it is always important to do your research.
LendKey. Similar to Credible, Lendkey is a platform that allows the borrower to compare refinance rates side by side. This tool shows very little information on which companies are offering the rates until you pursue the application further, but compared with other similar platforms it provides a good number of lender options.
New Approaches From Fintech
CommonBond. A comprehensive fintech's approach to student lending, refinance and student loan repayment employee benefit options make CommonBond an interesting innovator. CommonBond for Business offers a flex contribution program that includes an option to directly contribute to paying down employee student loans, or to work with employees on financial literacy techniques for reducing their debt.
Gradifi. Gradifi is another fintech offering refinance options, bundled with employee benefits packages called SLP, or "student loan paydown". Gradifi also offers employers a plan called College SaveUp to support employees' 529 college savings plans for their children's education. With the student debt issue not going away anytime soon, programs like this are becoming an increasingly viable option for employers.
Earnest. This fintech offers refinance options to individuals with a more limited credit history that may not qualify for other traditional options. According to the Earnest website, it considers healthy saving patterns and high-earning potential in addition to credit scores and credit histories. This can result in more options for better rates, if you fall into this category.
FutureFuel. FutureFuel uses behavioral economics, which is the study of human behavior to explain economic decisions people make. This helps the company to customize its offerings of employee benefit plans for addressing student debt. Like many fintechs, it is focused on the needs and behaviors of millennials, with innovative approaches to reaching them on the platforms they are most comfortable with.
As you consider your options to take out new student loans or refinance existing ones, be sure to advocate for yourself or seek the help of a certified nonprofit student loan counselor. Even though many of these fintech companies offer refreshing approaches, remember that they are also looking to make a profit. Like anything else, do your homework and use all available resources to put yourself in a better financial position.
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