Earnest Student Loan Refinancing Review
- December 3, 2018
- Posted by: Jeff Gitlen
- Category: Student Loans
At a Glance:
Earnest is a student loan refinancing lender known for its low interest rates and unique approval criteria. Earnest uses a broader set of criteria beyond just credit scores to evaluate borrowers.
If you are looking for a way to refinance your student loan debt, Earnest is one option that might be worth considering. The company offers student loan refinancing and Parent PLUS refinancing at potentially lower interest rates than what your current loans have.
One differentiating feature is that borrowers have some ability to customize loan payments to meet their budgets and repayment timelines. It also uses a broader method of evaluating a borrower’s eligibility. Instead of just relying on credit scores, it uses other factors to better understand a borrower’s needs and current financial standing.
Earnest offers an initial rate estimate by doing a soft credit check which won't hurt your credit. Borrowers can apply online, and if approved, they can manage their account through the company’s mobile app. But before you start the loan application process, take a closer look at what Earnest offers and see if it’s a good fit for you.
On this page:
- Getting to Know Earnest
- Earnest Student Loan Refinancing
- Earnest Parent PLUS Refinancing
- Alternatives to Earnest
Getting to Know Earnest
In 2017, this San Francisco-based company was acquired by the student loan servicer Navient, but the company still operates under the Earnest brand and retained their original management.
Earnest loans are not available in Alabama, Delaware, Kentucky, Nevada, or Rhode Island. But if you live in an eligible state, you can apply for refinancing if you meet the following requirements:
- You're over the age of 18
- You’re a U.S. citizen or permanent resident alien
- You have debt from a Title IV accredited college
- You have either graduated or are in your final semester of college
- You have a job or a job offer
- The loan amount you're refinancing is over $5,000
Earnest also favors applicants who have enough in savings to cover at least two months’ worth of expenses, have increasing bank balances, are current on rent or mortgage payments, and do not carry high amounts of credit card or personal loan debt, among other factors.
Earnest Student Loan Refinancing
Earnest offers student loan refinance loans with competitive interest rates. Variable-rate loans start as low as 2.47% APR, and fixed-rate loans start as low as 3.89% APR (with a 0.25% rate reduction for autopay). To get the best rate, you'll need to meet Earnest's credit and financial criteria.
Unlike other lenders who only allow borrowers to choose among specific term lengths, Earnest offers terms ranging anywhere from 5 to 20 years. You can choose a term length, and therefore a monthly payment, that best fits your budget.
Earnest requires borrowers to refinance at least $5,000 in student debt but there is no limit on how much borrowers can refinance. This is helpful for borrowers with a lot of high-interest student debt.
There are many other benefits to refinancing your loans with Earnest. Earnest doesn’t charge origination fees or prepayment fees.
Earnest also allows borrowers to schedule additional payments when extra money becomes available. This can help borrowers pay down the student loan debt faster, which can ultimately save borrowers money on interest costs over time. Earnest also has policies in place to help borrowers deal with financial hardship. Borrowers can apply for temporary deferment or forbearance.
Another great thing about Earnest is that the company has favorable feedback on consumer review websites (such as Trustpilot) about its customer service.
Finally, Earnest allows their borrowers to skip one payment a year after they have made on-time payments for six months. Keep in mind, skipping a payment would result in higher payments in the following months.
Of course, there is always room for improvement, and Earnest is no exception. For instance, Earnest doesn’t accept cosigners, so borrowers with limited credit history or who do not meet the expanded criteria might have a harder time getting approved. And it is not available in all 50 states, so this limits the lender’s reach considerably.
Earnest Parent PLUS Refinancing
Parent PLUS loans are federal loans taken out by parents to help pay for their children’s college. They have higher interest rates than other federal loan options – PLUS loans disbursed between July 1, 2018, and July 1, 2019, carry a fixed interest rate of 7.6% APR.
Currently, 3.5 million Parent PLUS loan borrowers owe $83.7 billion in student loan debt. And the only income-driven repayment plan these loans are eligible for is Income-Contingent Repayment (ICR), which bases monthly payments at 20 percent of the borrower’s discretionary income or a fixed payment with a 12-year loan term, whichever is lower. Parent PLUS loans are also not eligible for loan forgiveness.
Fortunately, more lenders are beginning to offer Parent PLUS refinancing—including Earnest. Earnest offers Parent PLUS refinancing with variable rates starting at 2.47% APR with auto-pay. Fixed-rate loans start at 3.89% APR with autopay.
And Earnest offers the same flexible repayment options and service to Parent Plus borrowers.
Alternatives to Using Earnest
Earnest offers several noteworthy features, but it’s still a good idea to weigh all your options before deciding on a lender. Make sure you receive quotes from multiple lenders so you can see what kind of offers you have available.
If you have federal or private student loans with high interest rates, then you might be able to save a decent amount of money by refinancing. However, it’s important to keep in mind that any time you refinance federal student loans, you will lose access to certain benefits. This includes student loan forgiveness, Income-Driven Repayment plans, and federal deferment or forbearance.
Earnest has quickly emerged as a leader in the student loan refinancing industry. However, you should consider other lenders as well. When you refinance your loans, you are essentially given a new student loan servicer, so this is something to consider, as well.
Shop around and get quotes from multiple lenders so you can find the lowest rate and best offer possible. And make sure any lender you seek a rate quote from uses soft credit checks (rather than a hard credit check) that won’t impact your credit while you compare your options.
Author: Jeff Gitlen
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