Updated July 24, 2016

DRB Student Loan Review: Pros and Cons

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If your student loan interest is too high, consider refinancing with DRB. But wait. Read this review to learn how it works and what to watch out for.

Darien Rowayton Bank (DRB) is one of the biggest players in the student loan refinancing market. If you feel strapped by the current high interest on your loans, refinancing is a great option to get a break on your rate.

But before you go ahead with one, remember:

Refinancing your debt is just as big a deal as signing up for the first loan - you need to do your homework and compare terms and lenders.

Read our review of DRB to find out what the benefits of refinancing are, what to watch out for, and how this bank measures up against other refinance lenders.

10 REASONS TO REFINANCE WITH DRB

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  1. Competitive rate. DRB offers some of the lowest and most narrow rate ranges around. As of July 2016, variable rate loans start at 4.19% APR, while fixed rate loans start at 4.80% APR.

  2. You can pick your loan term. DRB's fixed and variable rate loans come in terms of 5, 7, 10, 15, or 20 years, so you have a little flexibility in deciding how long you need to pay them off. Here's what the rates look like:

    TermsFixed APRVariable APR
    5 yr4.80% - 6.15%4.19% - 5.74%
    7 yr5.09% - 6.74%4.24% - 5.94%
    10 yr5.19% - 7.00%4.29% - 6.14%
    15 yr5.50% - 7.24%4.39% - 6.49%
    20 yr5.70% - 7.45%4.49% - 6.74%

    And if you want a different term, DBR will work with you to come up with the term you want, as long as it's under 20 years.

  3. You can save money. When you're paying less in interest on your loans, more of your money goes to the principal each month and you get the debt paid off faster.

    That means that over the life of the loan, more money stays in your pocket. According to the DRB website, someone who refinances $100,000 in loans could save more than $15,000.

  4. No limit on what you can refinance. Some lenders only let you refinance your student loans up to a certain amount, but DRB has no maximum limit. There is a minimum of $5,000 in loans to qualify.

  5. You won't pay fees to refinance. When the whole point of refinancing is to save money, you don't want to throw away any of your hard-earned dollars on fees. DRB doesn't charge an application or loan origination fee, and you won't pay a penalty fee for repaying your loans early.

  6. You can put your loans on hold if you lose your job. If you get laid off and face a temporary financial hardship, DRB will give you up to a 12-month forbearance period to find a new job.

  7. You won't lose your grace period. If your loans are in deferment with your current lender or you're still in the grace period, DRB will honor that when you refinance. If you're studying to be a doctor and you're in a medical residency, you may be able to defer your payments until six months after it ends.

  8. Additional rate discount if you're a DRB customer. Borrowers who have a checking account with DRB can get an extra 0.25% knocked off their interest rate when they set their loan up for automatic payments.

  9. You can get paid for spreading the word about DRB. Any time you tell a friend or family member about DRB and they refinance their student loans with the bank, you'll get a $200 cash referral bonus. There's no limit on how many people you can refer, so it's an easy way to earn extra money that you can put towards your loans.

  10. You're not restricted based on where you live. Some refinance lenders only offer loans in certain states, which is a problem for some borrowers. DRB is available in all 50 states, so that's one less obstacle you have to overcome.

WHAT ARE THE RISKS?

In most cases, refinancing student loans to get a lower interest rate seems like a smart thing to do. But there are a few things to consider:

  • You're taking a risk on refinancing federal loans. DRB will let you refinance your federal and private student loans together, but it's not necessarily a good idea.

    The minute you roll a federal loan into a private one, you lose several important benefits of the federal loan, like the option to enroll in an income-driven repayment plan and forgiveness of your loans if you go into a public service career. This is important to consider if you may want to work in the public sector or won't have a higher income for years.

  • You could end up with a much higher rate. DRB offers a variable rate loan option, with rates ranging from 4.19% to 6.74% to start.

    That sounds great, but your actual loan rate can go up substantially if the 3-month Libor index, to which the variable rate is tied, climbs. According to the DRB website, the maximum variable APR tops out at 9% for 5- and 10-year loans and 10% for 15- and 20-year loans. Those rates could be higher than what you have currently.

  • You may need a co-signer. When you apply for a refinance loan with DRB, your credit is going to be put under a microscope.

    If you can't meet the minimum standards, you'll need a co-signer to get a loan. If you're not able to find someone who's willing to put their credit reputation on the line for you, refinancing might be out of the question.

IS NOW A GOOD TIME TO REFINANCE?

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Common sense dictates that the best time to refinance is when interest rates are low. Right now, rates are near historic lows and have been for a while - but they won't stay that way indefinitely.

Ultimately, whether you should refinance now depends on what kind of rate you qualify for. If you can't get the best rates because your credit isn't that great at the moment, you may be better off waiting until it improves. On the other hand, if you've got a high score, you'll want to try and cash in on lower rates before they go up.

CAN ANYONE REFINANCE WITH DRB?

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Like any other lender, DRB has some particular guidelines you have to meet to be eligible for refinancing. Specifically, the bank wants to see that you've completed a degree and established yourself in a career. Your credit score and income still come into play, but those aren't the only things the bank wants to know.

Here's a rundown of what the bank requires:

  • You must be a U.S. citizen or permanent resident
  • You must have a bachelor's, graduate, or professional degree
  • You must be employed
  • You must have at least $5,000 in loans
  • You must meet the minimum credit underwriting standards

If you're a professional working in the medical field, you'll also need to have a license to practice and proof of malpractice insurance.

All applicants who decide to go forward with DRB will need to provide the bank with background information, such as pay stubs, student loan statements, and proof that you've graduated.

As far as getting approved goes, your credit history and score carry a lot of weight, as do your income and work history. If you don't have the kind of credit score that DRB is looking for, you'll either need to get a co-signer or look for another lender to refinance with. Taking a look at your credit reports before you apply can give you an idea of what your odds are.

WHAT'S THE APPLICATION PROCESS?

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Signing up for a DRB loan is similar to signing up for a bank account. To start a refinance application with DRB, you need to fill out a short online form to find out if you're eligible. You'll need to enter the name of your school, the state where it's located, your citizenship status, and email address.

If you're eligible, you can move on to the next phase. You'll need to create an account with a unique user name, password, and security question. From there, you'll add in more detailed information, including:

  • Your name
  • Address
  • Social Security number
  • Employer name
  • Income
  • Birth date
  • Driver's license number
  • Loan account information

After you've entered the required information, you can submit your application online. If you're approved, DRB will pay off your old loans with the new one. Once the old loans are zeroed out, you start making monthly payments to DRB.

IS IT WORTH IT?

Refinancing is all about getting the best rate that you can get. You may not get the lowest advertised rate you see. Some borrowers are going to save more money than others. If you've got great credit, you're more likely to get a better rate than if you just have an average FICO score.

And if the rate you're offered isn't as low as what you were expecting, there's no obligation to move forward with the refinance.

Someone who has a lot of time left on their loan is also going to get more value out of refinancing. Most of the money you pay in the early years of the loan goes towards the interest, so if you've only got a year or two left, refinancing might not be worth the effort.

HOW DOES IT COMPARE?

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There's a lot of overlap among the firms that refinance student loans, but they are also different in many ways. To finish up our review, we've compared DRB to three other companies that can help you save on your loans.

EARNEST

Like DRB, Earnest offers refinancing for fixed and variable rate loans, with terms lasting from 5 to 20 years. This lender handles both federal and private loan refinancing for borrowers who've completed a degree and have at least $5,000 in debt.

What we like about Earnest
One thing Earnest does differently is it gives borrowers the option to pick their own payment terms. You agree to pay a higher amount each month to pay off your loan faster - and Earnest won't hold it against you as some other lenders do. Not only that, you can switch your rate from fixed to variable and back again after you refinance. You don't have that kind of flexibility with a loan from DRB.

Why we like DRB better
Even though Earnest gives you more control over your payment terms, DRB has lower rates. The maximum fixed rate APR for a 20-year loan with Earnest is one full percentage point higher than what DRB offers, which can make a substantial difference in how much interest you end up paying.

CITIZENS BANK

Citizens Bank is another traditional bank with more than 1,100 branches around the country. You'll need to have at least $10,000 in loans to refinance with Citizens Bank, which won't snub you if you didn't get your degree. However, you can't be enrolled in school to qualify.

What we like about Citizens Bank
If you need a co-signer to get approved for a refinance, Citizens Bank gives you the option to release them from the loan after you make 36 months' worth of on-time payments.

Why we like DRB better
Citizens Bank limits you to refinancing $170,000 in loans. With DRB, there's no upper limit on the amount of debt you can refinance. That makes it the more attractive choice for professionals who borrowed heavily to get through medical school or law school.

LENDKEY

LendKey isn't quite as well known as DRB or the other lenders we've profiled, but it's still worth a look. The company connects borrowers with a network of credit unions to help you get the best deal on your federal and private loans.

What we like about LendKey
LendKey's rates are comparable to what DRB offers, but it has an advantage as far as repayment options go. For example, you could choose to make interest-only payments on your loans during the first four years. LendKey also offers a co-signer release, which is something DRB doesn't do.

Why we like DRB better
We'd still go with DRB based on how much borrowers stand to save. According to LendKey's website, their borrowers save an average of $12,500 versus the $15,000 average savings you could get with DRB. LendKey also limits fixed rate loans to a five-year term, which may not be reasonable if you have a lot of debt to refinance.

THE BOTTOM LINE ON REFINANCING WITH DRB

Refinancing with DRB makes sense for borrowers who have a lot remaining in outstanding loans and qualify for the best interest rates based on their credit. There is some risk if you're taking out a variable rate loan since the maximum rates are set so high, but that may not be an issue if you're going with a shorter loan term or making extra payments to clear the debt faster.

One other issue to consider is the lack of a co-signer release. If you need a co-signer to qualify, they might not be comfortable having their name on the loan for the long term.

Rebecca Lake is a journalist at CreditDonkey, a credit card comparison and financial education website. Write to Rebecca Lake at rebecca@creditdonkey.com. Our data-driven analysis has been recognized by major news outlets across the country and has helped young adults make savvy financial and lifestyle decisions. (read more)

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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