Earnest Student Loan Refinancing Review
Earnest was founded in 2013 by Louis Beryl and Benjamin Hutchinson. Beryl was a former partner at the Silicon Valley VC firm Andreessen Horowitz, and Hutchinson, among other things, was the Head of Commercial Finance at BBC.
In March of 2014, when Earnest launched their first personal loan product, they focused on the Boston area. Since they wanted to target students and recent grads, Boston seemed like a great place to start. The area has a very large concentration of young professionals, and seemed like a logical starting point.
Since their original launch, Earnest had grown very quickly. Now, they lend in over 35 states, and that number continues to grow. Earnest wanted to make getting loans for recent graduates simple, especially since many students have very limited credit history.
Their CEO, Louis Beryl stated, “If you’re financially responsible, you should want someone to look at that and give you credit for.” As a result, Earnest is able to offer lower percentage rates to many potential borrowers that would otherwise be unable to find those rates elsewhere.
What does Earnest offer to Potential Borrowers?
Earnest allows student loan borrowers to both refinance and consolidate their student loan debt for free. They also offer personal loans.
Refinancing a student loan allows you to change both the interest rate and repayment term length. Typically borrowers opt to reduce their repayment terms or keep them the same, which results in a lower interest rate. Some, alternatively, choose to extend their repayment lengths so they receive lower monthly payments. This, however, usually results in paying more over the life of the loan.
When you refinance your existing loans you can also consolidate them into one, more manageable loan. You should probably consider this option if you have a bunch of federal loans. Payments can get really complicated, especially if you’re a grad student and you have over 10 loans. It will simplify things for you.
Since Earnest offers lower rates, their borrowers save an average of over $17,000 over the life of their loans.
Earnest offers a range of loan repayment terms, ranging anywhere between 5 and 20 years. Variable rates start at 2.13% while fixed rates start at 3.50%. These are the lowest rates currently on the market today.
Earnest borrowers also enjoy unemployment protection, extremely flexible loan terms, and your loan will never be passed off to a third party servicer.
The unemployment protection program offers a deferment to borrowers who lose their jobs. As with SoFi, borrowers who refinance with Earnest can defer payments for up to three months at a time. In total, each borrower can defer his or her payments for up to twelve months. As long as you let them know, Earnest works very hard at making things work for you. Be forewarned, however; when you defer you loans, the still accrue interest.
Earnest also offers uniquely flexible loan terms. Borrowers are able to change their loans as their lives and needs change. Earnest offers borrowers the ability to refinance their loans for free, change their payment dates, and switch between variable and fixed rates. They even allow their borrowers to skip a payment once a year and make it up at a different time.
If you want to skip a payment, first you need to make at least 6 consecutive payments on your loan. If you’ve done this, then all that follows is a simple phone call to their “client happiness team.” Then, your skipped payment will be spread out over your remaining payments.
Earnest's Eligibility Requirements
Earnest follows all applicable laws, as does every other institution regulated by the Consumer Financial Protection Bureau. If you’re refinancing, you need to meet all of the following requirements to be eligible:
· You must be 18 years old
· You and your cosigner, if applicable, must either be U.S. citizens or permanent residents
· Your debt must be from a Title IV accredited school
· Your debt needs to be for either a completed degree, or one that will be completed by the end of the current semester
· You must either be employed, or have written job offer
· You need to be the primary borrower on the student loans
· You also need to reside in one of these states: AK, AR, AZ, CA, CO, CT, FL, GA, HI, IL, IN, KS, MA, MD, ME, MI, MN, MO, NC, NE, NH, NJ, NM, NY, OH, OK, OR, PA, SC, TN, TX, UT, VA, WA, Washington D.C., WI, WV, and WY
As mentioned above, Earnest places little weight in credit score. The lender has no minimum credit score requirement, no minimum gross income, and no maximum debt-to-income ratio.
That being said, Earnest usually approves borrowers who have a positive bank accounts, enough of an income that allows them to pay their everyday expenses as well as their student loans, secure jobs, and enough income that they can cover a month of regular living expenses.
How to Apply for Refinancing Through Earnest
Applying for an Earnest loan is really simple. Just go to their website and click the “2 min: Get Your Rate” button, which is located on their home page. Then you just fill out a quick application, all of which takes, you guessed it, two minutes. Checking your rates won’t hurt your credit, and it will give you a good idea of what to expect.
Then, if you want to move forward, just continue with the application. There aren’t any strings attached to the free rate check, so you might as well give it a try
Earnest also has no application, origination, or prepayment fees. This is important because you don't want to have pay to find out if you are eligible to save money and you shouldn't be penalized for paying off your loans faster. Earnest also doesn't charge any personal-check processing or late payment fees.
Earnest is a great option for recent graduates with little to no credit history. According to a statement from their executives, 90% of earnests customers are under the age of 35.
Their approval process is geared towards financially responsible millennials. While they will look at your credit score, it’s merely one over 80,000 data points Earnest uses to analyze a potential borrower. IF you are considering applying for student loan refinancing, Earnest might be a good lender to start with.