Student Loan Refinancing
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Wells Fargo was one of the largest private student loan lenders in the country. As of 2020, Wells Fargo had over $10.6 billion in its student loan portfolio, making up approximately 8% of the private student loan market.
However, Wells Fargo sold its student loan business in 2020, so it no longer issues college loans. It also transferred existing loans to another company for servicing.
If you have Wells Fargo student loans and were affected by the sale, you can use student loan refinancing to save money, lower your payments, and change loan servicers. Continue reading to learn how to refinance Wells Fargo student loans.
Prior to the sale of its student loan business, Wells Fargo offered a range of student loan products, including:
In addition to private student loans, Wells Fargo also offered student loan refinancing for both federal and private student loans. Borrowers could choose between fixed and variable-rate loans, and have five to 20 years to repay their debt.
However, Wells Fargo sold its entire student loan segment, including its refinancing loans. As a result, Wells Fargo no longer offers student loan refinancing for new or existing customers.
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If you took out private student loans or refinanced your debt through Wells Fargo, you may be wondering who took over Wells Fargo student loans.
After the sale of Wells Fargo’s student loan business, the company transferred existing loans to Firstmark Services, a student loan servicing company that is a division of Nelnet. You don’t get to choose a different loan servicer; Wells Fargo made an agreement with Firstmark Services, and all existing loans are automatically transferred over.
Going forward, Firstmark Services will handle:
You should have received a notification in the mail about the transfer and your new account information. If that hasn’t happened, contact Firstmark Services right away to avoid late fees. You can reach Firstmark Services at 833-531-1307 or by emailing [email protected].
Student loan refinancing is a popular strategy for managing education debt. To refinance your loans, you work with a lender — often a bank, credit union, or online lender — to take out a loan to pay off the current ones, effectively combining your loans into one. You can refinance both federal and private student loans, simplifying your payments. The new loan will have entirely different terms than the previous ones, so refinancing can help you lower your interest rates, reduce your payments, or adjust your repayment term.
Although Wells Fargo doesn’t offer student loan refinancing any longer, that doesn’t mean you’re stuck with your current loan terms or loan servicer. Student loan refinancing is still an option; you’ll just have to work with another lender.
There are many companies that will refinance Wells Fargo student loans and offer low interest rates to qualified borrowers.
Why would someone refinance their Wells Fargo student loans? There are several key reasons.
During the time Wells Fargo operated its student loan business, it didn’t have the best reputation for customer service. According to the Student Borrow Protection Center, Wells Fargo was fourth in terms of customer complaints. It received over 1,700 complaints from consumers about its loan servicing and customer service.
It also was the subject of complaints from the Consumer Financial Protection Bureau (CFPB). In 2016, the CFPB took action against Wells Fargo, alleging that the company used illegal private student loan servicing practices that made loans more expensive for borrowers. As a result, Wells Fargo paid the CFPB a $3.6 million penalty.
Why is that information important? Student loan refinancing gives you the ability to change loan servicers. When you refinance your loans, you can choose a new lender and loan servicer. If you’re unhappy with the level of service you’ve gotten from your current loan servicer, refinancing can be a smart idea.
[Tip: Make sure you find out who your loan servicer will be before refinancing your loans; it’s often different than the lender issuing the loan. Firstmark Services handles loans for a wide range of lenders beyond Wells Fargo. For example, it also handles loan servicing for Brazos, Citizens Bank, and CommonBond.]
Depending on when you took out your loans from Wells Fargo, you could have a high interest rate. For example, the interest rate on Wells Fargo’s fixed-rate graduate loans was as high as 9.740%. If you refinanced your loans and qualified for a lower rate, you could save thousands.
For example: if you had $25,000 in student loans at 9% interest and a 10-year repayment term, your overall repayment cost would be $38,003.
If you refinanced your Wells Fargo student loans and qualified for a 10-year loan at just 5.5% interest, your overall repayment cost would be just $32,558. Refinancing would help you save over $5,400.
Like many private lenders, Wells Fargo offered both fixed-rate and variable-rate loans. Variable-rate loans can be appealing because they usually have lower initial rates than fixed-rate loans, but they can increase over time.
For example, the initial rate for Wells Fargo’s variable-rate graduate loans ranged from 3.5% to 8.24%. However, Wells Fargo’s rate cap was 18%, meaning your rate could reach that level if the market changes.
If you’re worried about rate fluctuations — and changing monthly payments — you could refinance your loans and switch to a fixed-rate loan. By doing so, you’ll have the same interest rate for the duration of your loan, and you’ll have predictable monthly payments.
By refinancing your loans, you could get a lower interest rate. Or, you can opt for a different loan term. To give themselves more breathing room in their budgets, many borrowers select longer loan terms, such as 15 to 20 years. Borrowers will pay more in overall interest charges with the longer term, but they’ll get smaller monthly payments.
For example, if you had $25,000 in loans at 9.00% interest and a 10-year term, your monthly payment would be $316.69 per month. If you refinanced and qualified for a 10-year loan at 5.5% interest, your payments would be just $271.31 — a savings of $45 per month.
You could save more money each month by extending your loan term to 20 years. If you qualified for a loan at 8.50% interest, your monthly payment would be $216.91 — a savings of about $100 per month. However, you’d pay a total of $52,070 because of the longer loan term.
Use Purefy’s student loan refinancing calculator to find out how refinancing can lower your monthly payments.
[Tip: The majority of refinancing lenders don’t charge prepayment penalties. You can refinance to a longer term to lower your monthly payment amount, but make extra payments later on to reduce interest charges and pay off your loans sooner if your finances approve later on. And, you can always refinance your student loans again if your credit improves to take advantage of lower rates.]
According to Wells Fargo’s loan disclosure documents, most borrowers needed a co-signer to meet the lender’s credit and income requirements. If you had a co-signer on your loans, you know how much of a stressor it can be.
Co-signing a loan is a big responsibility. The loan shows up on their credit reports, affects their ability to qualify for other forms of credit, and the co-signer has to make payments on the loan if the primary borrower falls behind. If your co-signer plans to apply for a mortgage or car loan, your student loan debt can be a barrier.
If your financial situation has improved since you originally took out the student loans — for example, if you’ve established your credit history, boosted your credit score, and secured a good job — you could refinance your loans in your own name. The co-signer’s obligation would be removed, and the loan would show up as closed on their credit reports.
Student loan refinancing combines your current loans into a single loan with a new rate and term. See how much you can save by entering your loan information below, or by getting quotes from multiple lenders using Purefy’s rate comparison tool.
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While it can make a lot of sense to refinance your Wells Fargo student loans, there are some drawbacks to weigh against the benefits:
Wells Fargo is a major financial services company and bank that offers checking accounts, savings accounts, investment products, and loans. If you were an existing Wells Fargo customer when you took out your private student loans, you may have qualified for special relationship discounts that reduced your interest rate by 0.50%.
If you were eligible for that discount, you could have gotten a lower-than-average rate. By refinancing your loans, you’ll no longer qualify for that discount, so you may not get a lower rate than you have now. The good news is that if you have taken care of your credit, you may qualify for the lowest rates offered by refinance lenders.
Not all student loan borrowers can qualify for student loan refinancing on their loan. Typically, lenders require established credit histories, good to excellent credit scores, and they usually have a minimum income borrowers must meet.
If you don’t meet the lender’s criteria by yourself, you may qualify for a loan by adding a co-signer to your application. Your co-signer can be a parent, relative, or even a good friend — anyone with a good credit history and steady income willing to co-sign the loan. But it’s a big favor to ask, so make sure you both understand the pros and cons of co-signing a student loan refinancing application.
[Tip: Many student loan refinancing lenders offer co-signer releases. If you make your payments on time for a specific period — such as 24 to 48 months — and meet the lender’s borrower requirements, you can apply for a co-signer release. If your request is approved, your co-signer is removed from the loan and is no longer legally obligated for it.]
One of the main benefits of student loan refinancing is the ability to get a lower interest rate. While refinancing rates are still quite low, not all borrowers will qualify for a low rate. In the following scenarios, you may only qualify for a rate that is the same or higher than you have now:
In those situations, refinancing may not allow you to lower your interest rate. But you may be able to reduce your monthly payments and consolidate your loans into one.
[Tip: You can improve the odds of securing a better rate by adding a co-signer to your application and by selecting a shorter loan term.]
After evaluating the pros and cons of refinancing, you may decide to move forward with the process. Here’s how to refinance Wells Fargo student loans in five easy steps:
Before shopping around or requesting quotes, spend some time reviewing your credit reports and cleaning up any credit issues. You can view each of your credit reports from the three major agencies — Equifax, Experian, and TransUnion — once per year for free at AnnualCreditReport.com.
[Note: You can view your credit reports for free on a weekly basis through April 2022.]
Make sure all of the information on your credit reports is accurate. Common inaccuracies that can occur include:
If you find any discrepancies, you can dispute those items with the credit bureaus online:
The credit bureaus will investigate the dispute and, if they find the information is inaccurate, they will remove those items from your credit reports. Once the items are removed, you could see an improvement in your credit score.
You can save time during the application process by gathering information and documentation. When you apply, lenders will ask for the following information:
Before submitting a full loan application, it’s always important to shop around. Rates and terms can vary by lender, so it’s in your best interest to get multiple quotes. Many lenders allow you to get rate quotes without undergoing a hard credit inquiry, so there’s no impact on your credit.
As you request quotes and compare lenders, keep the following factors in mind:
Once you’ve found a loan that matches your goals, you can complete the full application. You will usually have to submit your personal information, details about your income and employment, and information about your existing loans.
To process your application, lenders will prompt you to consent to a credit check. Because they’re determining whether to issue you a loan, lenders require hard credit inquiries at this stage, which can cause a modest decrease to your credit score.
After you submit your application, the lender will notify you if your application has been approved or denied. If you’re denied, they will send you the reason why, such as having insufficient credit.
If your application is approved, the lender will send you loan documents to review and sign. You must sign the loan agreement before the lender will pay off your existing loans.
It can take several weeks for the process to be completed, so continue making the required payments toward your existing loans by their due dates until the lender tells you they have been paid in full.
Wells Fargo was one of the largest private student loan companies in the country. If you are one of the millions of people that took out Wells Fargo student loans to pay for school, you may have been shocked by the sale of its student loan businesses.
As a Wells Fargo student loan borrower, your loans were automatically transferred to Firstmark Services. However, that doesn’t mean your loans have to stay in their current state. Now that you know how to refinance Wells Fargo student loans, you can refinance your loans to transfer them to a new service, get a lower interest rate, or secure a low fixed interest rate.
To start the student loan refinancing process, you can check today’s rates through Purefy without affecting your credit score.
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