Article Updated 4/2/20 to reflect the latest interest rate information and a new lender bonus program.
In a relatively short period on the market, ELFI has proven to be one of the better student loan refinance options.
ELFI’s low interest rates combined with higher than expected approval rates have led to good outcomes for many borrowers. Typically banks and newer lenders are extremely selective on their loans. It appears as though ELFI hasn’t fallen into this trap.
While we are concerned about the limited time in the market, the fact that ELFI loans are a bank product gives us some comfort due to the much higher level of oversight on banks. Finance startups typically face less regulation.
Because ELFI is a product of a longstanding bank and offers extremely low interest rates, it currently rates at number seven in our student loan refinance rankings. As we get reader input on their experiences with ELFI, we will adjust its ranking accordingly.
Getting Started: The ELFI Basics
EFLI offers student loan refinance and consolidation for both federal loans and private loans. ELFI offers loans in 5, 7, 10, 15 and 20 year terms. The ELFI variable-rate loans start at 3.50%, and the fixed-rate loans start at 4.25%. The variable-rate loan has an excellent starting rate while the fixed-rate loan lags behind other lenders. However, the highlight for ELFI might be the 15 and 20-year fixed-rate loans where they are among the lowest rates on the market.
To qualify for an ELFI loan, a borrower does need to have a degree and pass a credit check. Like most legitimate lenders, there are no loan application fees, origination fees, or prepayment penalties.
One area where ELFI is a little more strict than other lenders is that they require a minimum student loan balance of $15,000 to refinance. Borrowers with smaller balances should look at lenders like CommonBond and Laurel Road, who require a minimum of only $5,000.
ELFI does offer a co-signer release program, but co-signers can only be released if the borrower can pass a credit check on their own.
Education Loan Finance Advantages
ELFI offers more than just the lowest interest rates on the market. Their call centers are all located in Tennessee, and borrowers get a single point of contact with a direct number to call for support. This should make resolving any issues go significantly smoother.
ELFI is currently running a promotion that provides new borrowers a bonus of $150 who sign up following this link. While $150 is a decent chunk of change, we should note that it is still critical to shop around — borrowers with larger balances will be much better off in the long run if they chase the lowest rate rather than the biggest bonus.
Borrower Beware: An Important ELFI Concern
The concern we have with Education Loan Finance applies to pretty much every student loan refinance company.
Even though it makes sense for some borrowers to consolidate their federal student loans with a private lender, this move can also be a mistake. Refinancing your federal loans means you lose federal perks such as repayment plans based upon your income and student loan forgiveness programs. We look at these programs as an insurance policy. The cost of that insurance policy is higher interest rates.
If you think you might lose your job or not be able to afford your student loans, it is best to keep your loans with the federal government. If you have no problem paying off the debt, locking in a low interest rate could be a smart move.
ELFI Review: The Final Thoughts
The Education Loan Finance option sticks out due to the low interest rate offerings in a variety of loan categories.
Ultimately, advertised rates are a tiny part of the refinance equation. What matters is the actual rate offered. Because ELFI combines the stability of a longstanding bank with very low interest rates, it is a lender worth serious consideration.