Higher education remains a crucial stepping stone for individuals seeking better opportunities and financial security. However, financing college expenses continues to challenge many aspiring students across the country.
While federal loans provide essential support for degree financing, funding gaps frequently persist. Private student loan providers like Earnest step in to bridge these financial shortfalls, helping students achieve their educational goals.
Is Earnest the right choice for your student loan needs? This comprehensive review covers everything you need to know about this private lender before submitting your application. Let’s dive in!
What is Earnest?
Based in San Francisco, California, Earnest operates as an online fintech company specializing in education financing solutions. The company was established in 2013 by founders Louis Beryl and Benjamin Hutchinson.
Beryl conceived the idea for Earnest while pursuing his M.B.A. and Public Policy degree at Harvard. Despite his strong earning potential, traditional lenders rejected his loan applications.
This experience revealed how traditional banks maintain rigid lending criteria and how expensive, inaccessible private loans can be for many qualified borrowers.
Rather than relying solely on credit scores and conventional metrics, Earnest takes a holistic approach to loan evaluation. Their assessment includes factors like income potential, spending patterns, educational background, and savings behavior.
Understanding Private Student Loans
Private student loans serve the same purpose as federal loans—covering college expenses—but originate from banks, credit unions, or online lending platforms.
Students should exhaust federal loan options first due to their advantages, including no credit history requirements and typically lower interest rates. However, federal borrowing limits often leave students needing additional funding sources.
Private student loans fill these critical funding gaps.
Earnest Loan Programs
Private Student Loans
Earnest provides these private student loan categories:
- Undergraduate
- Graduate
- Student loans with cosigner
- Parent
- MBA
- Medical School
- Law School
Loan eligibility requires that applicants:
- Be a U.S. citizen or permanent resident
- Maintain full-time enrollment and have reached the age of majority (as defined by state of residence)
- Possess at least 3 years of credit history with a FICO score of 650 or higher, no bankruptcy history, no current collections accounts, and minimum annual income of $35,000
Students who don’t meet these criteria can still qualify by adding a qualified cosigner to their application.
Key Features of Private Student Loans
Earnest’s private student loan offerings include these borrower benefits:
- Eligibility check
- Offers fixed and variable rates
- 0.25% auto pay discount
- Nine-month grace period
- Skip one payment a year
- Choice of loan terms
- Can get up to 100% of your school’s certified cost of attendance
- Minimum loan amount of $1,000, up to the full cost of attendance
Interest Rates and Fees
Borrowers can select between fixed and variable interest rate structures. Fixed rates maintain consistent interest throughout your loan term.
This eliminates concerns about rate fluctuations and ensures predictable monthly payment amounts. Fixed rates currently begin at 2.99% (including auto pay discount).
Variable rates can change over time, potentially raising or lowering your monthly obligations.
Current variable APR starts at 0.99% (including auto pay discount). While variable rate student loans may offer lower initial rates, they carry the risk of increases throughout the loan term.
Earnest charges no origination fees, regardless of your chosen rate type or loan terms. This practice aligns with most private student lenders, unlike federal loans that may include origination costs.
Additionally, Earnest doesn’t impose late payment penalties.
Student Loan Refinancing with Earnest
Earnest’s student loan refinancing program enables borrowers to consolidate existing federal and private debt while securing lower interest rates and improved repayment terms.
Key details about Earnest’s refinancing options are outlined below.
$5,000 Minimum Loan Requirement
Earnest’s refinancing program requires a combined minimum of $5,000 in existing federal and private student debt. The maximum refinancing amount equals your total outstanding student loan balance.
State Availability Restrictions
Student loan refinancing through Earnest isn’t available nationwide. Current restrictions exclude residents of Kentucky, Nevada, and Delaware.
Current students seeking refinancing must be enrolled less than half-time with existing loans in active repayment status.
Additional Earnest Financial Products
While student loans remain Earnest’s core offering, the company has expanded into other financial services, including these recently launched products.
Personal Loans
For borrowers dealing with credit card debt, personal loan obligations, or emergency expenses and home improvement needs, Earnest has partnered with Fiona to expand your financing options.
Fiona operates as a search and comparison platform for personal lending products, connecting users with customized loan offers without affecting credit scores.
Loan matching occurs within 60 seconds. Available terms span 24 to 48 months, with borrowing amounts between $1,000 and $100,000, plus competitive rates starting at 4.99%.
Earnest Credit Card
The new Earnest credit card is currently available through a waitlist system. This follows a trend of other education lenders like Sallie Mae entering the credit card space.
The card features 1.5% cashback rewards specifically designed for student loan repayment, applicable to both federal and private loan balances. Alternatively, cardholders can direct 1.25% cashback toward their credit card balance, though this option provides less value for borrowers with outstanding student debt.
Earnest Advantages
Earnest stands out among private student loan providers with numerous appealing features for both new loans and refinancing products. Here are the most compelling benefits of their offerings.
Comprehensive Deferment and Forbearance Options
Earnest provides robust payment deferral options for borrowers facing financial challenges. Remember that interest continues accumulating during any payment suspension period.
Available deferment conditions and timeframes include:
- Returning to grad school (must be at more than half-time) – Up to 36 months deferment
- Disability rehabilitation – Unspecified
- Active military duty – Duration of active duty plus 180 after demobilization
- Economic hardship – Up to 12 months forbearance
- Involuntary unemployment – Up to 12 months forbearance
- Natural disaster – Unspecified
- Temporary hardship – Up to 12 months forbearance
Additional Relief Options
Borrowers may also qualify for these contract modifications and relief programs:
- Death or disability discharge – Loans can be discharged if the borrower dies or becomes totally and permanently disabled
- Skip a payment – Borrowers can skip one payment every 12 months
- Unpaid maternity/paternity leave – Earnest considers this a temporary hardship for forbearance
Streamlined Application Experience
Traditional bank and credit union loan applications often create frustrating experiences for borrowers. As a digital-first company, Earnest has prioritized creating an intuitive, user-friendly application process.
The student loan application process is straightforward, and prospective borrowers can review loan offers without impacting their credit scores through instant rate quotes.
Hard credit inquiries only occur when borrowers accept loan offers and submit complete applications.
Versatile Repayment Options
Before finalizing your Earnest loan, you’ll have the opportunity to customize your repayment strategy. Multiple repayment options ensure you can select the approach that best fits your financial situation.
Available in-school repayment strategies include:
- $25 monthly payment – These manageable, fixed payments help reduce interest accumulation on your loan
- Defer payment – Take advantage of your grace period while enrolled, postponing payments until after your nine-month post-graduation grace period
- Interest-only payments – Cover accrued interest while in school to prevent balance growth before full repayment begins
- Principal and interest payment – Begin full repayment immediately to minimize total borrowing costs
These four approaches provide extensive flexibility for managing your Earnest loan obligations. Borrowers also enjoy repayment term customization.
Cosigned loans offer repayment terms of 5, 7, 10, 12, or 15 years. Independent borrowers can select 10, 12, or 15-year terms.
Regardless of your chosen repayment strategy and terms, utilize Earnest’s payment calculator beforehand.
While it won’t provide exact payment amounts, the calculator delivers reliable monthly payment estimates based on your selected term and interest rate.
Extended Nine-Month Grace Period
Earnest offers a more generous grace period compared to competing student loan providers. Payment deferrals extend through your enrollment period plus nine months following graduation.
Most competitors only provide six months post-graduation. The additional three months can prove valuable if job hunting extends beyond typical timelines.
However, consider that utilizing the complete grace period will increase your total loan debt. Interest begins accruing immediately upon fund disbursement.
This means you’ll face a larger balance when repayment begins. Ideally, consider making in-school payments to reduce interest accumulation, lowering your overall debt burden and making monthly payments more manageable.
Earnest Disadvantages
Despite Earnest’s attractive features like flexible repayment options, varied loan terms, and payment skipping benefits, these advantages may not offset potential drawbacks for every borrower.
Stringent Credit Requirements for Approval
Every student loan provider maintains specific criteria for credit scores, income consistency, and other qualification factors. Borrowers with poor credit or those failing to meet eligibility requirements may need to explore alternative lenders.
Earnest’s borrower qualifications include (applicable to borrowers or cosigners with strong credit and steady income):
- Minimum credit score of 650
- Minimum income requirement of at least $35,000
- 3 years of credit history
- No bankruptcy or accounts in collection on your credit report
- History of on-time payments
No Cosigner Release Available
Student borrowers typically cannot meet Earnest’s income, credit score, or other qualification standards independently. This necessitates a creditworthy cosigner to improve approval chances.
Cosigners like parents share equal responsibility for loan obligations. Payment delays or defaults affect their credit profiles as well.
Furthermore, cosigners experience increased debt-to-income ratios due to loan obligations appearing on their credit reports.
Without cosigner release options, your cosigner remains liable for the entire loan duration. The only exception would be refinancing your student loan later.
Should You Choose an Earnest Student Loan?
Rates and Terms – 4/5
Earnest’s student loan interest rates remain competitive within the private lending market. However, borrowers should understand that advertised starting rates apply only to the most qualified applicants.
Cosigned loans offer term options spanning 5, 7, 10, 12, or 15 years. Independent borrowers still receive solid choices with 10, 12, or 15-year terms available.
Fees – 5/5
Earnest eliminates application and origination fees for both private student loans and refinancing products. Prepayment penalties don’t exist, allowing borrowers to pay off loans early without additional costs.
Another standout feature: Earnest doesn’t charge late payment fees.
Product Range – 4/5
Beyond undergraduate private loans, Earnest offers comprehensive graduate student loan options, plus refinancing services for existing private and federal debt.
Through their Fiona partnership, they’ve expanded into personal lending for various purposes: debt consolidation, home improvements, large purchases, or emergency expenses (rent/mortgage assistance during financial hardship or medical bill coverage).
However, they don’t currently offer private parent loans and lack cosigner release capabilities.
Customer Service – 5/5
The Better Business Bureau awards Earnest its highest A+ rating, reflecting their track record of resolving customer complaints promptly and appropriately.
Their comprehensive help center addresses common questions about loan applications, student loan refinancing, and general lending topics.
Live chat support connects users with knowledgeable agents for immediate assistance. Customer service operates Monday through Friday, 8 a.m. to 5 p.m. Pacific Standard Time, excluding holidays.
Phone support is also available during these hours at 888-601-2801.
