Updated May 12, 2022

ELFI Review: Is It Good?

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Struggling to repay your student loans? ELFI offers lower interest rates and reduced monthly payments. But is this refinance program right for you?

5-point scale (the higher, the better)

Pros and Cons

  • Low fixed rates
  • Up to 12 months forbearance
  • Minimum $10,000 to refinance
  • No cosigner release

Bottom Line

Good choice for low rates, but high eligibility requirements

ELFI (Education Loan Finance) Basics

ELFI, or Education Loan Finance, is a loan refinance program. It allows borrowers to combine multiple federal and private student loans into one single loan with lowered interest rates. The program is available in all 50 states plus Washington D.C. and Puerto Rico.

ELFI offers loans for 5-, 7-, 10-, 15-, and 20-year terms with both variable and fixed interest rate loans. It accepts:

  • Federal Loans borrowed by parents
  • Parent PLUS loans
  • Private loans

You Should Know
Parent PLUS and private loans are not typically included in student loan consolidation and refinancing programs. With ELFI, if your child qualifies, responsibility for the Parent's PLUS loan will transfer to the student.

Who provides ELFI loans?
ELFI is offered through SouthEast Bank, a regional bank headquartered in Tennessee. SouthEast Bank has 18 years in the student loan refinancing industry. Their holding company, Educational Service of America Inc, has been in the industry since 1988.

Who services ELFI loans?
MOHELA and American Education Services (AES) service ELFI loans on behalf of SouthEast Bank. MOHELA has over 30 years' experience in the student loan servicing industry.

What is the difference between a student loan provider and a servicer?
The provider creates (originates) the loan and holds the title. But the provider may not be the original lender since most student loans are sold to secondary markets.

The secondary market then becomes the provider. Servicers do not hold financial title to the loans. Instead, these companies provide administrative and financial maintenance of student loans.

How does ELFI refinance compare to federal and private student loan refinancing companies? Read on.

Consolidation with ELFI

Education Loan Finance also offers a consolidation option for federal loans only. Consolidation is designed to reorganize your student loan debts into one payment for a set amount of time (up to 30 years).

When a borrower consolidates their federal loans into a federal Direct Consolidation Loan, the interest rate is determined from a weighted average of the original loan's rates.

This may reduce the cost of your monthly payments. But it won't save you money. Without the lower interest rate, as in an ELFI refinance, the debt will cost you more over the life of the loan.

How ELFI's Rates Compare

Lower interest rates are one of the ELFI's top advantages compared to refinancing.

  • Variable APR: 5.28% - 8.99%
  • Fixed APR: 5.48% - 8.69%

So what's the difference between a variable and fixed interest rate?

Variable Rate
These may change as the market does. If that happens, your monthly payment will be recalculated and may increase. On the other hand, if your interest rate decreases, repayment of the loan could cost you less over the life of the loan.

ELFI has a variable rate cap, so borrowers with variable loan rates will never see their rate exceed 9.9% APR (Annual Percentage Rate). The rate will also not increase more than once every three months.

APR reflects interest rates and fees charged by the lender. Since Education Loan Finance does not charge origination or other finance fees, the APR and interest rate will be the same. Late fees are charged when payment is made 10 days or more beyond the due date.

Fixed Rate
Locks in at the same rate through the life of your loan despite fluctuations in the market. That means your monthly payment remains the same until the loan is paid in full.

Remember: Interest rates can make a huge difference in what is paid over the life of a student loan.

Keep reading to see if you qualify for ELFI.

ELFI Requirements

Refinance and consolidation requirements vary by lender and even loan type. To qualify for Education Loan Finance, you must:

  • Be a United States citizen or permanent resident
  • Be at least 18 years old
  • Have at least $10,000 in student loan debt
  • Have a bachelor's degree or higher from an approved education institution
  • Have income of at least $35,000.
  • Have a minimum credit score of 680
  • Have at least 36 months of credit history
  • Have a debt-to-income ratio that reflects your ability to pay back the loan

Consider an income-based repayment options if you don't qualify for ELFI. Graduation is not mandatory for approval and repayment is based on your discretionary income.

The maximum amount that can be refinanced varies based on eligibility, which includes your credit score, income, and debt-to-income ratio.

Co-signer on an ELFI Loan

If you do not qualify for ELFI based on your own credit score, income, or debt-to-income ratio, Education Loan Finance may require a co-signer. This is a person with a stronger credit history who agrees to pay the back the loan if you default on payments. In other words, it's a person who will share responsibility for your loan.

With student loans, a co-signer is usually a parent or relative. Note that ELFI does NOT offer co-signer release, so choose your co-signer carefully.

Learn the benefits and drawbacks of ELFI student loan refinancing before you apply.

Take advantage of ELIF's referral program. You'll earn $400 cash if a friend successfully registers. And they'll get a $100 bonus as a reduction to the principal balance of their loan.

Education Loan Finance Advantages

Varied Repayment Terms
ELFI's 5-, 7-, 10-, 15- and 20-year options are more flexible than the choices private lenders usually offer.

A larger monthly payment with a lower interest rate means less total cost to you over the life of the loan.

If you choose a longer term to reduce the monthly payment amount, you will pay more over the life of the loan due to the higher interest rate.

Tax Deductible
Education Loan Finance's loans are considered student loans for tax purposes. That means you'll retain your student loan tax deductions. Certain restrictions may apply, however, so contact a tax professional for more information.

Eligible for Economic Hardship Forbearance
Education Loan Finance offer an economic hardship forbearance for circumstances like a financial or medical difficulty. Forbearance must be approved by the lender, SouthEast Bank, and lasts up to 12.

No Early Payoff Penalty
You can pay an additional monthly amount without incurring any penalty.

Easy Online Access
Create an Education Loan Finance login account and apply for refinance in one online location. Once your ELFI loan is processed, MOHELA or AES, the loan servicer, will reach out so you can set an online account and 24-hour access to your account information.

Keep reading to see why ELFI might not be right for you.

ELFI Disadvantages

Co-signer Requirement
If you have less-than-stellar credit, as many students do, you may need to find a co-signer to be eligible.

Must Hold a Bachelor's Degree or Higher
Students with a lower degree—and those who never finished—don't qualify for an ELFI loan

No Autopay Discount
Education Loan Finance only approves borrower payments made through an electronic payment or transfer. If you prefer to pay by mailing in checks, this isn't the loan for you.

Minimum and Maximum Student Loan Debt
You'll need at least $10,000 in qualified student loan debt.

Loss of Federal Student Loan Benefits
You will lose access to federal student loan benefits like low-income repayment plans and forgiveness programs, deferments, and forbearances with ELFI loans. If you think you might need these perks in the future, it might be best for you to keep your loans with the federal government.

If you are in the 6-month grace period with your federal student loans, wait until it expires to apply for ELFI. Repayment with ELFI will start 30-45 days from the date your loan is refinanced, which may shorten that grace period.

Instead, create a login account at Education Loan Finance and reach out to an application specialist. They can help you determine the optimal timing for your ELFI application.

Prepare to Apply for an ELFI Student Loan

ELFI offers a simple online application process. But you'll need to have some important information at hand, including:

Required Information:
  • Your student loan account number(s)
  • Your billing address (the address you make payments from)
  • Billing account information for automatic debit
  • Most recent pay stubs (for the past 30 days) or proof of employment
  • W-2s
  • Current student loan balance or payoff amounts
  • Most recent tax returns if you are self-employed

You'll also need a copy of your most recent student loan billing statement. The statement must show the total remaining amount due as a specific date and should not be more than 30 days old.

If your most recent statement does not show the total remaining amount due as a specific date, for example, $5,111 total payoff if paid on 5/1/2019, ask your lender or current servicer for a payoff statement.

Ready to apply? Keep reading to learn how.

ELFI Application Process

The ELFI application is a 4-step process:

  1. Application
    Create an account and begin your online application for ELFI here.

  2. Pre-Qualification Approval
    The initial application is considered a prequalification request and a soft credit inquiry is pulled at this time. A soft credit inquiry does not affect your credit score. Once you've applied and received prequalification, Education Loan Finance will provide you with preliminary interest rates and repayment terms that you qualify for.

  3. Provide Additional Documents as Requested
    Once you accept a loan product, Education Loan Finance may request additional documents from you. You will supply the requested documents through uploads.

  4. Underwriter Final Approval
    Your loan application then goes through an underwriter review, which includes a hard credit inquiry. Hard credit inquiries decrease your credit score by an average of 5 points, which will remain on your credit report for 12 months.

Bottom Line

Why pay more for your student loans than you have to? ELFI offers ways to reduce your interest rate, which can help you get out from under student loan debt sooner. Consider whether ELFI is right for you before you apply.

Write to Mary Humphrey at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website 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. You do not have to use our links, but you help support CreditDonkey if you do.

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