A Note from the Sherpa: First Republic has ended its unique student loan refinance program.
This review remains posted because of the noteworthy structure and rules for the First Republic Loan.
Borrowers looking to refinance their federal student loan will need to choose from the lenders still active in the refinance marketplace.
The first thing to know about First Republic student loan refinancing is that it isn’t actually student loan refinancing.
Instead, First Republic offers a large personal loan that student loan borrowers can use to pay off their debt.
The problem is that there are a ton of requirements that borrowers have to meet. Sadly, most student loan borrowers probably won’t be able to qualify.
If lenders like SoFi and Laurel Road are the high-end sports cars, and lenders like LendKey are the family sedans, First Republic is the private jet in the student loan refinance world. It is a great way to go, but not a realistic option for most borrowers.
First Republic Basics
Borrowers can use a First Republic loan to pay off federal and private student loans. Loans are available in 7, 10, or 15 year increments. Interest rates on the y-year fixed-rate loan start at 2.25%.
These interest rates are among the best available in the student loan refinance market.
Like other legitimate lenders, there are no prepayment, origination, or annual fees associated with a First Republic Loan.
Unfortunately, borrowers must meet a number of requirements to qualify for a First Republic loan.
First Republic Limitations
Borrowers will not be able to qualify for a First Republic Loan unless they can jump through a number of hoops.
High Loan Balance Requirement – Surprisingly, First Republic will not help borrowers with small or even average loan balances refinance their loans. The minimum loan amount is $60,000 and the maximum is $350,000. Most student loan refinancing lenders having a minimum refinance balance requirement of $5,000 to around $10,000.
Excellent Credit Required – First Republic has a reputation for being extremely selective.
Limited Geographic Range – Unlike most other student loan refinancing companies, First Republic borrowers have to finish their applications in person at a local branch. Branches are limited to California, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich and New York City. Unless you live within their “service area,” First Republic will not offer a loan. This means that geography precludes most people from getting a First Republic Loan.
Personal Liquidity Requirement – On their website, First Republic used to indicate that potential borrowers need documents to verify “personal liquidity with full account statements.” However, the site no longer indicates the amount of liquid assets necessary to qualify for a loan. Applicants may need to maintain a minimum savings or checking account balance in order to get approved.
Checking Account Requirement – A student loan lender requiring a checking account is not unheard of, however, the First Republic Checking account requirements are quite strict. The minimum balance to open an account is $500, but unless your average monthly balance is above $3,500 you will have to pay a $25 fee each month.
Auto Debit Requirement – The industry standard is that if you sign up for automatic withdrawals for your student loan payments you get a .25% interest rate deduction. First Republic imposes a strict penalty if you do not meet this requirement. Borrowers who refuse automatic withdrawals from their account have to pay their base interest rate plus 5.00%. That means if you have a 2.25% loan and do not sign up for the auto-debit, your interest rate will jump to 7.25%. The same 5.00% penalty is also imposed for borrowers who do not directly deposit their main source of income into their First Republic account.
Finally, it is worth noting that First Republic is not offering a student loan. They are offering a personal line of credit.
This has a couple major impacts. First, because it is not actually a student loan, borrowers will not be able to deduct student loan interest on their taxes. Second, if you refinance your federal loans, you will never be able to utilize programs like student loan forgiveness or income-driven repayment plans.
Other Refinance Options
Most borrowers will not be eligible for a First Republic Loan due to geography or First Republic’s strict credit, income, and asset requirements.
The good news is that there are a number of other lenders to consider.
At present the following lenders offer extremely low interest rates competitive with First Republic:
| Rank | Lender | Lowest Rate | Sherpa Review |
|---|---|---|---|
| T-1 |  | 5.28% | ELFI Review |
| T-1 |  | 5.28%* | Splash Financial Review |
| 3 |  | 5.49% | Laurel Road Review |
Final Thoughts on using First Republic for Student Loan Refinancing
Given First Republic’s extremely low interest rates, their student loan refinancing option cannot be generating much income for the bank.
Instead, it appears that First Republic is offering these low rates to attract wealthy individuals into becoming long-term private banking and wealth management customers.
Borrowers who are able to jump through all of First Republic’s hoops will be in a position to save a great deal of money on their student loans. If we looked purely at lenders from an interest rate perspective, First Republic would rate highly in our student loan refinance rankings.
However, due to the unique nature of the First Republic refinance option and the fact that the overwhelming majority of borrowers will not be able to qualify, we will not include First Republic in our rankings.
Do you know why this loan is different than other options (I use LendKey right now) in terms of deducting student loan interest?
The First Republic Refinance Product is not actually a student loan, hence no student loan interest deduction at tax time.
As for why first republic would want to structure its loan in this manner, I can only speculate. Usually lenders want the debt to be classified as student loans because the lender protections are so strong for student debt. There must be a provision that First Republic wants in place that disqualifies it from being considered student debt. It might be the personal liquidity requirement, but I don’t know the applicable banking regulations to give you anything more than a guess.
Due* not “do” in your last paragraph
You are right Jeff. Thanks for catching that and taking the time to point it out!