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Your money: Now you can get
miles for your student loan
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 [June 27, 2017]
By Reyna Gobel
NEW YORK (Reuters) - Dana Friend was
skeptical about all the offers flooding her inbox to refinance her
student loan with a private company, but what sold her in the end was
not the offer to cut her interest rate in half – it was the bonus of
50,000 JetBlue miles.
The 30-year-old psychologist from Boynton Beach, Florida dropped from
paying 6.8 percent to 3.75 with lender SoFi, and also scored free trips
to New York and Jamaica.
“When I got the email for refinancing directly from JetBlue, I figured
they must be legit if a major airline is working with them,” said
Friend.
SoFi and CommonBond, two startup private student loan refinancing
companies, are getting increasingly aggressive with their signup bonuses
to get new borrowers to refinance with them. Both companies offer cash
referral programs – SoFi’s offer is $300 and Commonbond’s is $200. In
addition, Credible.com, a student loan comparison site, offers between
$250 and $1,000 per referral.
CommonBond and SoFi also both offer social programs, like happy hours
and lectures, and career services. Unemployed borrowers who ask for help
generally average three months to find a new job, said Phil DeGisi, a
CommonBond spokesperson.
CommonBond also has a social impact program where for every person who
borrows a new student loan, one child’s education is paid for in Ghana.
JetBlue is SoFi’s first outside partner, but over the next 15 months,
the company plans on adding new opportunities, said Catesby Perrin,
SoFi’s partnership manager.
“A lower payment isn’t enough anymore to encourage refinancing.
Borrowers want to know the private lender cares about them,” said
Perrin.
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A student walks on the campus of San Francisco State University in
San Francisco, California June 30, 2009. REUTERS/Robert Galbraith
But no matter how low the interest rate is or services or bonuses, there are
tradeoffs, said Thomas Harnisch, director of state relations and policy analysis
at the American Association of State Colleges and Universities. “These plans
generally do not have a strong safety net like federal student loans for
borrowers that cannot make their payments.”
It is important to first check eligibility for income-driven repayment plans and
public service loan forgiveness, programs where remaining balances can be
forgiven after 10 years of payments and work deemed by the U.S. Department of
Education to be of public service, said Harnisch.
Going private also means giving up guaranteed breaks from repayment that came
with your federal student loan when you have an economic shortfall. CommonBond
offers up to 24 months of forbearance, while SoFi offers a program of up to 12
months when unemployed. The repayment break timeframes should be in each
lender’s contract.
Friend found refinancing through a private company well worth it. Cutting her
interest rate in half means with the same payment, she will pay off her balance
in 5 years rather than 10.
(Editing by David Gregorio)
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