Brazos Higher Education is a classic example of a company that should make the big student loan lenders worried if they streamline their borrower application process. Brazos is a non-profit lender in Waco, TX that exclusively makes loans to Texas residents.
Brazos has been around since 1975 (!) and owns studentloans.com. To be honest, I have no idea why they’ve kept it as they’d be better off selling it for a ton of money and investing the proceeds on improving their website.
Why should you care about Brazos if you live in Texas and have student loans? In many cases, they offer much lower interest rates than the big names in student loan refinancing. They also happen to offer Student Loan Planner readers a large cash back bonus if you apply through our link (check the main refi page for the latest bonus).
In this Brazos student loan refinancing review, I’ll cover who needs to apply, the quirks that exist in their process, and how you could benefit with a Brazos student loan refinancing.
What I Love About Brazos: Their Non-Profit Mission to Serve Texans with Student Loans
Regional specific student loan refinancing companies often offer deals that are better than national lenders, otherwise, they wouldn’t be able to exist. Look at how First Republic Bank offers below-market deals to customers who live in the Northeast and California.
Texas is large enough that it deserves to have a regional specific lender, and Brazos wants to fill that void. While it’s unclear where Brazos gets its money, my guess would be that Texas’s Permanent Reserve Fund plays a large role.
Texas has boatloads of oil money. Similar to Norway and its sovereign wealth fund from the North Sea oil riches, Texas has lots of additional revenue to spend on primary, secondary, and higher education that other states simply do not have.
This source of funds means that Brazos does not need to worry about making a profit, they just need to break even to justify sticking around. That’s what allows Brazos Higher Education to offer rates at below market levels to some borrowers.
Who Can Apply with Brazos Student Loan Refinancing?
Brazos wants to see a credit score over 720 with income of at least $60,000 to consider you for a student loan refinancing. Their minimum loan size is $10,000 and their maximum loan size is $150,000 for bachelor’s degree holders and $250,000 for borrowers with professional degrees.
While they allow cosigners, they still ask the primary borrower to have a minimum income and credit score, which is unusual.
You’ll need to be a permanent resident of Texas and have a degree from a Title IV school (ie Caribbean med and vet schools would be ineligible). Note that your degree can be from anywhere. It does not have to be issued from a Texas institution. You only need to be a resident.
Who Will Get a Fantastic Offer from Brazos?
As a small non-profit with a regional focus, Brazos has an odd way of doling out interest rates. Brazos focuses on FICO score. If you go on their website, you’ll notice that they will tell you what kind of rates you can qualify for based on your credit score.
The most popular refinancing term is the 10-year fixed rate by far in my experience watching hundreds of readers and clients refinance. Luckily, that’s where Brazos really shines. If you have over an 800-credit score, you’ll get rates as much as 0.5% below the national lenders for this popular term.
However, Brazos 5-year and 15-year fixed rate loan terms are roughly equivalent with the prime offers from national lenders. The 7-year fixed rate is around 0.25% better than national lenders for highly qualified borrowers.
Recall the max amount that Brazos will refinance is $250,000 for graduate or professional school degree holders. Luckily there are not too many degree programs in Texas that will make you owe more than that. However, plenty of degrees outside Texas will carry price tags above this level.
If you need to refinance, you live in Texas, but you owe more than $250,000, you could refinance the max with Brazos and take advantage of their superior 10-year offer while refinancing the rest with another lender. This would allow you to pick up two cash back bonuses as well.
How Does the Brazos Student Loan Refinancing Application Process Work?
When you visit the Brazos website, it’s very confusing where to begin your application. The yellow button in the top right-hand corner that says “Apply Now” is where you should begin.
Brazos does not have the infrastructure to support an extensive refinancing process internally. For that reason, Brazos contracts with First Mark Services (a Nelnet company) to handle the servicing and application for their student loan refinancing.
If you have the minimum income and know your credit score, you’ll know what kind of rates you could qualify for at Brazos. The next step is to consent to a hard credit check. This is normal and shouldn’t worry you too much. Make sure you apply to other lenders at the same time so that this hard credit check only counts against your score one time.
The Brazos process requires that you sign a Credit Agreement, which is the most frustrating part of their process. Their final Approval Disclosure document is what actually makes the loan fund. If you just want to see what you could qualify for and aren’t ready to commit, do not sign the Approval Disclosure until you’re ready. After you sign the Approval Disclosure, you have 3-4 days waiting period when you can still cancel the loan funding.
If you call First Mark Services, you might get a rep that’s of minimal help, so make sure to call back and ask for someone different if they don’t answer your questions to your satisfaction. I’ve had several readers get approved with Brazos, so I know it’s fairly straightforward.
That said, most other lenders have a much smoother process. Know that you’re going to jump through a couple hoops to see if you could qualify for Brazos below market rates.
Limited Forbearance Protection at Brazos
Brazos should be willing to give you a few months of forbearance is you fall into hard times and lose your job. That said, the protection won’t be anywhere near as good as what’s offered by the federal government.
You should only refinance student loans with Brazos if refinancing makes sense for your overall strategy. If you owe less than 1.5 times your income and work in the private sector, you will probably get a better deal by refinancing instead of using federal repayment programs.
The reason is that you’ll pay less in interest. At Brazos, you could be paying significantly less interest than with the federal student loan program. Just make sure that you don’t refinance if you owe way more than what you earn. In that case, forgiveness strategies make more sense.
Brazos Higher Education Focuses on Credit Too Much
Brazos is one of the only lenders I know of that exclusively focuses on credit score to make decisions on what interest rates to offer to borrowers. FICO scores are a huge part of our lending process in the US, but the FICO score is very flawed.
A dentist who makes $200,000 a year whose income has limited exposure to the economy could have a much lower credit score than a worker with a corporate job who could get laid off. The FICO score cares a lot about credit history and how you’ve handled your loans in the past.
Companies like Earnest and Commonbond use holistic underwriting criteria that reflect things like savings rate, how low your housing payment is, and how risky your degree is. If you have a 730-credit score, I would expect that one of these two companies could probably beat Brazos because of its old-school underwriting criteria. After all, Brazos has been around over 40 years, so they must change a lot to catch up.
Brazos Really Needs to Improve Its Website, So Be Patient
Would you spend an extra hour trying to figure out a clumsy website for an extra 0.5% rate discount? I would answer yes particularly if I planned to keep the loan around a long time. If your hourly wage is particularly high, the less than perfect application process might make it easier to just apply to one of the well-known national companies with an easy application process.
My conversations with Brazos suggest that they want to significantly improve their process, website, and ease of application so they can expand and help more Texans pay off their student loans more quickly.
I would expect you’ll see big investments in the Brazos website in the coming months and years. Until that happens, if you happen to have a high credit score and live in Texas, its worth the trouble to apply.
Get the Brazos Referral Bonus for Student Loan Planner Readers
Brazos is offering an aggressive cash back bonus to Student Loan Planner readers. If you have a decent income, solid credit score, live in Texas and have a stable job in the private sector, apply with them and see if you could get their fantastic 10-year fixed rate offer.
You’ll pay off your loans more quickly and can move on to other exciting financial goals once you’re finally debt-free. Hopefully, I’ll be updating this article in a couple years with the story of how Brazos student loan refinancing dominated the market for student loan refinance options in Texas. Stay tuned and see if you could get one of its stellar rates for highly qualified Texans.
Have you ever heard of Bravos and what are your thoughts on student loan refinancing?
If you have questions about refinancing your student loans or want to determine whether it’s the right option for you, consider booking a one-on-one consult with a student loan expert.