December 14, 2016

Earnest Student Loan Review: Pros and Cons

This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

Student lender Earnest offers a brilliant way for graduates to save money on student loan debt. Read on to learn why Earnest is legit.

Earnest Steps Back and Looks at the Big Picture

Earnest sets itself apart by the way it evaluates potential borrowers. They are interested in college graduates who have a job or a solid offer of employment and who can show they are capable of saving money and handling their finances responsibly.

Earnest leverages important information that other lenders don't even consider. For instance, information such as your savings pattern and career trajectory. That way they can better assess your creditworthiness.

Read on to find out what the pros and cons of refinancing with Earnest are and how it compares to the competition.


  1. You could potentially save a lot of dough. The goal of refinancing your student loans is to avoid paying more money than you need to on your debt. According to the company website, the average Earnest user saves close to $21,810 after refinancing.

  2. You can knock major points off your rate. Earnest claims to offer some of the most competitive rates around.

    One caution about variable rate loans: While you can get a lower rate (while interest rates are at historic lows), you run the risk of them going up in the future, which will affect your monthly payment. If you go with this kind of loan, you need to be sure your budget can handle potential rate increases. (See #6 for a unique feature of working with Earnest.)

  3. You won’t pay a bunch of fees. Unlike other refinance lenders, Earnest doesn’t charge any fees to apply for a loan. There’s also no origination fee and no prepayment penalty if you decide to pay off your loans ahead of schedule. When you’re trying to save as much money as possible, that’s an advantage you don’t want to overlook.

  4. You’ve got payment flexibility. One thing that makes Earnest unique from other lenders is the ability to choose your own payment. You can decide how many months you need to pay the loan off, pay biweekly instead of monthly, schedule extra payments whenever you like, and change your payment amount when needed, all at no charge.

  5. You can skip a payment if you need to. Normally if you skip a student loan payment, your lender would be breathing down your neck, but that’s not the case with Earnest. If you make six months of on-time payments, you’ll be eligible to skip a payment every 12 months. Just keep in mind that the principal and interest from the skipped payment would be spread out over the rest of the loan term.

  6. You can change your rate. Another thing Earnest does differently is give its borrowers the ability to change their rate. You can switch from a fixed rate to a variable rate or vice versa every six months without paying a fee.

  7. You don’t need to panic if you lose your job. Getting fired or being laid off is no picnic, but it doesn’t have to spell disaster for your student loan repayment. If you lose your job, Earnest may allow you to permanently reduce your payments by extending your loan term or put you on a three-month forbearance until you get back on your feet.

  8. You don’t need to have a lot of debt to refinance. With some refinance lenders, you have to bring $10,000 or $15,000 in loans to the table to refinance. With Earnest, the minimum is set at just $5,000, so you can still get a deal even if you don’t have much left to pay off.

  9. You can defer your loans if you go back to school. If you decide to go back to school to get a graduate or professional degree, Earnest, like other lenders, will let you defer your loans. You can do so for up to three years if you’re attending an accredited school at least half time. The only drawback is that interest would still accrue on the loans during this time.

  10. You won’t lose your grace period. If you just graduated, your loans are probably still in the grace period where no payment is due. Earnest will honor your grace period when you refinance so you don’t have to worry about coming up with a big payment right away.


Refinancing student loans is all about getting a better rate. If you see one but you wait too long to pull the trigger, you’ll miss out.

Rates are relatively low right now, but that doesn’t mean they’ll stay that way. Whether you should move ahead with a refinancing deal sooner versus later all comes down to how good your credit is and what your bigger financial picture looks like.


Refinancing with Earnest isn’t foolproof. Watch out for these potential snags:

  • You may not be approved. Getting denied for a refinance loan is frustrating on it own, but that rejection could hurt you when you try to approach another lender. At some point, Earnest will do a hard pull on your credit, which will knock a few points off your credit score. If your application isn’t approved, then you’re stuck going to a different lender with a potentially lower credit score — or having to wait until you can build up your credit.

  • Be careful of the variable rate. Earnest offers fixed rate and variable rate loans. If you go with a fixed rate, it stays the same until the loan is paid off. A variable rate may be lower to start, but it can go up or down based on the market index that it’s tied to. If rates rise substantially, you could end up paying more in interest than you would if you had chosen a fixed rate.

  • You risk losing federal loan perks. Consider refinancing your federal loans carefully and thoroughly. Refinancing them will mean losing perks such as loan forgiveness if you work in a public sector. Federal loans also have a payment plan based on income, so if your income is not too high, you may need that feature.


Earnest takes a merit-based approach to lending, which sets it apart from traditional banks. Instead of just factoring in basic figures, like your credit score and income, Earnest takes a personalized approach to deciding how financially responsible you are.

So what does that mean? Basically, Earnest considers how well you’ve managed your money up to this point and compares that to your long-term financial outlook. This could include if you pay your bills in full each month, if you never have late payments, if you save each month, and if you save in an IRA or 401k.

This kind of personalized approach is great if you’re financially responsible, but just haven’t had time to establish a lengthy credit history yet. Earnest will still consider you, unlike other lenders who may only judge you based on your credit score.


Not everyone will be able to get a refinance loan with Earnest. Here’s a look at what you need to qualify:

  • You have to be at least 18 years old and a U.S. citizen or permanent resident
  • You must have gone to a Title IV accredited school
  • You must have graduated or be scheduled to graduate at the end of the current semester
  • You have to be employed or have a written job offer
  • You must be the primary borrower on the loans and remain the primary borrower after you refinance
  • You can’t be taking out loans for additional schooling
  • You have to live in one of the states Earnest offers loans in

Earnest also looks at your credit history and money management skills to decide if you’re a good candidate for a refinance loan. Specifically, the company is interested in whether you have a history of paying your bills on time, how big of a savings cushion you’ve got in the bank, and what you can reasonably afford to pay based on your income.


Refinancing your student loans with Earnest starts with getting your rate quote. To do that, you need to fill out a quick online application. Here’s what you’ll need to provide:

  • Your name, address, and email
  • The name of your school and the type of degree you earned
  • Your employer’s name and your job title
  • Your income and assets (including retirement and investment accounts)
  • Your loan balance
  • Citizenship status
  • Your Social Security number

Once you’ve plugged in all that information, you can get a rate quote in two minutes or less. At this stage, Earnest does a soft pull on your credit, which won’t show up on your credit report. If you’re happy with the rate, you’d have to agree to a hard inquiry, which will be reported to the credit bureaus.

You’d also have to upload additional documentation to move ahead with your application, like copies of your pay stubs and loan statements. Once the new loan is approved, Earnest pays off your old loans within 10 days. From then on, you’d make biweekly or monthly payments to Earnest.


Refinancing can reduce your interest rate and save you money on your monthly payments, but it’s really a numbers game to decide if it’s worth it to you. For example, if you’re not able to get the lowest rates possible because your credit isn’t that impressive, you may not save all that much in the end.

The same goes if you’ve already paid down a big chunk of your loans. Instead of refinancing, you might be able to save just as much money by stepping up your payments to clear the debt faster. Take a look at what you owe, what your current rate is, and what kind of rate you’d qualify for to decide if refinancing is going to pay off.


Anyone can get a rate quote from Earnest without having to sign their life away for a quote. Comparing their rate with rates from other student loan refinance lenders can give you an idea of which company is going to offer you the best deal.


Earnest’s approach to lending is different from a traditional bank, but that doesn’t guarantee that everyone’s going to get approved. The best way to tell what the odds of getting a loan are is to see how you measure up based on the eligibility criteria.

Someone who’s saved up a month or two of expenses and is able to keep their bank account in the black, for example, is going to have a better shot than someone who’s constantly bouncing checks or hops from one job to another.

Aside from your current situation, Earnest also looks at the long term. If you haven’t been working that long yet, it won’t be held against you if you’ve got the potential to advance quickly. The same goes if you’re not making a lot of money but you’re starting out in a lucrative field.


You don’t want to commit to any refinance lender without seeing what else is out there. We’ve compared Earnest to three other companies that specialize in refinancing student loans.

  • SoFi, one of the largest refinance lenders in the game, has a few things in common with Earnest. Both lenders offer fixed and variable rate loans, both allow for refinancing of federal and private loans, and both feature loan terms ranging from 5 to 20 years.

    What we like about SoFi: SoFi gets high marks for being easy to use. You can apply online or through your mobile device, and it only takes a few minutes. One nice perk SoFi offers that Earnest doesn’t is help with landing a new gig if you lose your job.

    Why we like Earnest more: Even though they are so similar, we’d choose Earnest because you get so much more flexibility in terms of your payment.

  • CommonBond is a newer company in the student loan refinancing game, but it’s making big strides already. The company recently expanded its refinance program to include both undergraduate and graduate loans, and its rates are comparable with what Earnest offers.

    What we like about CommonBond: Unlike Earnest, CommonBond doesn’t restrict lending to certain states, and you can get a refinance loan anywhere in the U.S. CommonBond offers both fixed and variable rate loans, but there’s also a third option called a hybrid loan. This kind of loan lets you pay a fixed rate for five years and a variable rate for the other five, which may be appealing to some borrowers.

    Why we like Earnest more: In terms of the rates, Earnest offers very competitive rates. If you’re refinancing a lot of student loan debt, even half of a percentage point can make a huge difference in how much you’ll save. One of the other things we like about Earnest is the option to request to skip a payment without having to put your loans in forbearance. Terms and restrictions apply.

  • Darien Rowayton Bank (DRB) is a more traditional refinance lender that operates in all 50 states. They offer competitive rates, with loan terms ranging from 5 to 20 years. You can refinance loans for an undergraduate degree, graduate program or professional degree, including an MBA or law degree.

    What we like about DRB: DRB doesn’t cap the amount you can refinance, which is good if you went through medical school, for example, and you’ve got hundreds of thousands of dollars in loans. One nice feature that you typically don’t get with other private lenders is the ability to get your loans discharged if you become permanently disabled.

    Why we like Earnest more: Earnest lets you switch between a fixed and variable rate after you refinance, which is something many others don't offer. Terms and restrictions apply.


There’s a lot to like about Earnest if you’re in the market to refinance your student loans. Getting approved could save you thousands (or more), depending on how much you borrow and what rates you qualify for.

The biggest potential drawback is the fact that Earnest doesn’t offer loans in every state. Comparing Earnest’s rates to those offered by other lenders and crunching the numbers on how much refinancing will cost with a shorter or longer loan term can point you towards the right refinance option.

Rebecca Lake is a journalist at CreditDonkey, a student loan comparison and financial education website. Write to Rebecca Lake at Our data-driven analysis has been recognized by major news outlets across the country and has helped young adults make savvy financial and lifestyle decisions. (read more)

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

More from CreditDonkey:

How to Build Wealth in Your 20s

10 Financial Pitfalls to Avoid in Your 20s

Smart Career Moves

More Articles in Reviews


Lenovo Reviews

Lenovo laptops are popular. But does that mean this brand is a must-have? Read this review before you buy a laptop.

    24 Best Ways to Pay Off Student Loans Fast

    Paying off student loans takes hard work, but you can do it. Learn how to pay off your debt faster with these 24 smart strategies.

    Best Student Loan Refinance

    Refinancing your student loans is one of the best money moves you can make. But where should you start? Here are our top recommended student loan refinancing providers.

    FedLoan: What You Need to Know

    Is FedLoan your student loan servicer? Learn how to avoid common problems. Read this to find the best repayment options and contact information.

    10 Grants to Pay Off Student Loans

    It's possible to pay down student loans without money from your own pocket. Graduates in certain fields have free money waiting for them. You just have to know where to look.

About CreditDonkey®
CreditDonkey is a student loan comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.