Laurel Road student loans

The Good

• No prepayment penalty
• No origination fees
• Cosigner with release option
• Forbearance option of 3 months
• Offers other services such as personal loans and mortgages
• Referral program of up to $400 each

Laurel Road Bank, formerly known as Darien Rowayton Bank, offers student loans, personal loans, and mortgages.

No Prepayment Penalty or Origination Fees

Laurel Road is not the largest company in the space, but it has refinanced and/or consolidated over $3 billion in federal and private school loans.  The company has been active since 2006 and has a very attractive offering with no origination fees or penalties.

Co-signer Option with Release

Laurel Road does offer the option to bring on a co-signer, which can be a parent but does not have to be, and they also offer a co-signer release.  This means that at a later date, you can remove the co-signer from the loan and their credit score is not impacted by your success (or failure) in paying on time.

Forbearance option of 3 months

Like any company, Laurel Road will charge you a fee if you pay late.  They charge 5% of the late payment or $28, whichever is less, and this occurs when a payment is 15 days late. However, they do have forbearance options that allow you to pay late if you notify them in advance. You get a 3 month grace period with this program, and you can use it up to four time.

Offers personal loans and mortgages

Unlike many lenders who specialize in student loan refinancing, Laurel Road is an actual FDIC insured bank.  That doesn’t necessarily mean it can offer better rates, but it does mean there are other services that can be bundled to possibly give them the incentive to be more competitive on your rate.  That’s the advantage – the disadvantage is below.

Referral program of up to $400

Laurel Road offers its student loan customers a referral program: if you refer a friend who refinances student loans with Laurel Road, you earn $400.  The program offers you a unique link that the friend can sign up through to give you credit.  You also have the option of splitting the reward with your friend.  This is really only a benefit if you’re already established Laurel Road as the right lender for you – definitely do not make your decision off of it.  But hey, $400 is real money.

The Bad

• Traditional banks with stricter underwriting
• Forbearance policies not as friendly

Traditional bank with stricter underwriting

As noted previously, Laurel Road is a traditional FDIC insured bank.  There are some upsides to this, but one downside is that they tend to have strict underwriting criteria.  I’ve spoken with multiple folks who were denied by Laurel Road, but then accepted and one our other leading companies for student loan refinancing.   The official policy of Laurel Road is posted as: “Laurel Road’s Underwriting policy is to deny any applicants who have had collections, short sales, foreclosures, civil judgments, charge-offs, or repossessions by credit providers in the past 7 years.”  So even if you have good credit, there isn’t any reason to apply if you have a charge-off on your current credit report.  Also, traditional banks tend move a bit slower and be a little less digitally savvy.  We haven’t found this to be the case with Laurel Road when testing the website, but it’s a general rule for things like customer service, websites, and mobile apps.

Forbearance policies not as friendly

While some lending partners like Earnest have programs to help borrowers make payments late (aka forbearance), Laurel Road has not spend a great deal of time and energy here.  Laurel Road has a forbearance program, but the criteria for qualifying appear more strict.  Also, they do not offer the ability to skip one payment with no penalty each year.

The Summary

Laurel Road offers really competitive interest rates to borrowers who don’t have any blemishes on the credit record.  For borrowers who meet this criteria – or have co-signers who do – check out Laurel Road.  But for borrowers who might have had a late payment, even if long ago, it remains on your record for 7 years.  So you may have a 700+ credit score, but Laurel Road will probably not be a great fit.