Objection! Stop Paying High Interest Rates on Your Law School Loans

law blogBy: Pete Blau, Callie Blumenfeld and Roy Luo

 

“I landed a job as an associate at a top law firm. So why am I still paying 7% on my student loans?”

 

Our bank, DRB, specializes in refinancing and consolidating student loans for lawyers and other top tier professionals, so I often field questions like this one. This guide will help new associates avoid paying rates they don’t deserve on their student loans.

 

People with good credit pay the lowest rates… Right?

Not for conventional student loans. That’s because they’re not risk-priced.  In other words, everyone pays the same rate regardless of their credit score and financial qualifications.

 

So that law associate with a $150,000 annual salary is paying the same rate as someone who might be unemployed or may not have even completed their graduate degree.

 

Here’s the sad truth: bad risks are “priced-in” to your current rate.

Student loans have relatively high default levels compared to other loan types.  Even if you have practically zero risk of non-payment, as evidenced by high income and a top FICO score, your rate reflects the overall risk of the entire borrowing population.

 

Today, the most qualified borrowers can pay less than 2.5% on a car loan, less than 4% on a 30 year fixed mortgage…but up to 7% or more on a grad school loan.

 

We think that’s unfair.

 

What’s a fairer way to price a student loan rate?

At DRB, we conducted extensive analysis to set rates that are fair to the most creditworthy working professionals.

 

We’ll show you our whole range of rates below, not just our lowest “teaser” rate. If you compare us to other student loan refinancing lenders, you’ll see that our rates are lower. In fact, they’re amongst the lowest in the U.S.

 

Rates below reflect a 0.25% ACH discount:

 

Term Fixed APR Variable APR
5 Yr 3.50-4.75% 1.97%-3.68%
10 Yr 4.50-5.50% 2.63%-3.88%
15 Yr 5.00%-6.00% 2.98%-3.98%
20 Yr 6.25% 3.98%

 

Why is there a range of rates? Why do rates go up the higher the term (year)?

Our objective is to price as fairly as possible. Even though all our borrowers are stellar, our lowest rates go to the creditworthiest among them.  Our rates are lowest for variable as well as our shortest (5yr) term fixed rate loan because these loans represent lower risk to our bank.  Locking in a longer-term fixed rate subjects us to greater risk and merits a higher rate.

 

How much could I save?

Here’s an example: A $100,000 borrower could save $13,200 over the life of a 10 year loan after refinancing. Your savings, of course, depend on your current loan rate(s), refinance rate, loan balance, and term of loan. Click here for savings example details.

 

We don’t just lend at lower rates. We lend more.

Another area where we beat competing lenders is in the size of our loans. We have no maximum amount that we lend out which enables a professional to consolidate college and grad school loans regardless of whether they are Federal or private. If you are a lawyer with $500,000 of law school loans comprised of Federal and private, DRB can refinance it.

 

Is the student lending business just about price?

No. It’s also about respecting your time.  As any law associate working 12 hour days can tell you, time is money. That’s why we utilize a streamlined online refinancing application process and have experienced bankers to walk you through any obstacles that might pop up.

 

So is DRB’s business model working?

It certainly is.  Over the past two years, we refinanced hundreds of millions of dollars in student loans in all 50 states. Our borrowers include graduates from Harvard, Yale, Columbia, Stanford, NYU, UC Berkeley, and UVA. Our business relies heavily on word of mouth and referrals by satisfied customers.

 

Are you in the same boat as that law associate paying too much for student loans?

 

If so, I invite you to contact us, or even to begin your application right now.  There’s no cost to apply, no origination fee, and no obligation to accept our loan offer. Please visit our site at www.student.drbank.com or call us at (855) 245-0989.

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