Laurel Road is the refinancing arm of Darien Rowayton Bank. Many borrowers knew Laurel Road as DRB, but DRB changed its refinancing department’s name to Laurel Road in 2017.
While the company offers refinancing for undergraduate, graduate, and parent loans, it specializes in loans for health professionals. Doctors and dentists have the option of refinancing during their residencies. This makes it easier for them to get through their residencies and focus more on the future.
Laurel Road refinances loans with a minimum balance of $5,000. There is no maximum amount. Borrowers can refinance loans up to the full amount of their outstanding debt, and both federal and private loans are eligible.
Borrowers have the option of refinancing with a fixed or variable interest rate loan. Fixed rates currently range from 3.95 percent to 6.99 percent APR. Variable rates currently range from 2.99 percent to 6.42 percent APR.
People can choose from loan terms of 5, 7, 10, 15, and 20 years. Regardless of the term selected, Laurel Road does not charge origination fees or prepayment penalties.
Students also have the option of refinancing a parent loan into their names. Parents who no longer wish to bear the responsibility for their child’s debt can have their children look into this option. The loan will transfer over to the child and the parent will no longer be responsible.
Borrowers should have credit scores in the high 600s to qualify for loan refinancing with Laurel Road. The average borrower has a credit score of at least 750, so creditworthiness plays a major factor in the approval process for these loans.
There is no annual income requirement, but the debt-to-income ratio must be at 43 percent or less. Most borrowers earn at least $100,000 per year and have a debt-to-income ratio of 30 percent or less. It’s also important that borrowers illustrate their ability to repay the loan. Laurel Road is not a high-risk lender and only offers money to those who are likely to repay it without any issues.
Laurel Road offers a forbearance of up to 12 months. Borrowers must face economic hardship to qualify for this. The hardship must be documented. They can request a full or partial forbearance upon providing the proper documentation.
Benefits and Drawbacks
Many people turn to Laurel Road because they can refinance a parent loan in their name. Those who qualify based on their credit and income can typically do this without any issues.
Laurel Road also offers substantial perks for medical and dental residents. Those who qualify can lower their payments to $100 per month during their residencies. However, unpaid interest accrues on the account during that time. The interest is capitalized, meaning Laurel Road adds it to the balance. This causes residents to owe more than they initially borrowed. They need to consider the benefits and risks before lowering their payments this way.
There are a couple of drawbacks as well. First, federal loans come with certain perks, such as loan forgiveness and income-driven repayment plans. Students lose access to those perks when they refinance with Laurel Road. They need to make sure the benefits outweigh the drawbacks before they refinance.
Applying for Refinancing with Laurel Road
Those who want to refinance with Laurel Road need a government-issued photo ID, payoff statements for all loans they wish to refinance, and two recent pay stubs. They also need two years of tax returns. Those who have additional income should also include proof of that when applying for the loan.
The Bottom Line
Those who need to refinance their student loans might benefit from using Laurel Road. The interest rates are fair, and medical residents get special privileges that can help them make it through medical or dental school.
However, borrowers should weigh the benefits against the drawbacks. The drawbacks mainly consisting of losing federal loan privileges (as is the case with all refinance lenders) which must be considered before moving forward with the loan refinance.