Updated April 8, 2019

Earnest Student Loan Review: Pros and Cons

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Earnest offers low student loan refinance rates and customizes payments based on your budget. But approval may be harder. Read on for the pros and cons.

Earnest

Overall Score

4.6

Customer Service

4.0

Loan Term

5.0

Ease of Use

5.0

Interest Rates

5.0

Payment Flexibility

4.0
5-point scale (the higher, the better)

Pros and Cons

  • Looks beyond your credit score
  • Custom term based on budget
  • Option to skip one payment every 12 months
  • Tougher requirements
  • No co-signer option

Bottom Line

Merit-based lender with custom terms

Earnest student loan refinance is best for borrowers who have demonstrated financial responsibility. Earnest is unique in that it offers a precise, customized term based on what you can afford to pay each month.

Read on to see what makes Earnest different.

Earnest At-A-Glance:

  • Loans from $5,000 to $500,000
  • Custom terms of 60 months to 240 months
  • Fixed or variable rates
  • No origination fee or prepayment penalty
  • Refinance federal, private, consolidated, and Parent PLUS loans
  • Minimum credit score of 650

MERIT BASED LENDING

When approving you for a loan, Earnest takes a more personalized approach. Unlike lenders who only consider your credit score, Earnest will look at your bigger financial picture.

Most young college grads still haven't had time to establish a strong credit history, so your score could be low. Earnest knows this and will still consider you for a loan.

It wants to see that you're capable of saving money and handling your finances responsibly. It'll consider factors like:

  • Your savings pattern
  • Payment history
  • Career potential
  • Living expenses

This kind of personalized approach is great if you've been financially responsible. But it does mean the qualification requirements are tougher. It could also exclude you if you don't have much savings or had a couple of late bill payments.

EARNEST RATES & TERMS

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Earnest offers a special kind of term option called "Precision Pricing". Earnest is the only student loan refinance lender who offers this.

Here's how it works:

Usually, when you apply for a loan, you're boxed into standard terms, such as 5, 10, 15, or 20-year terms. The longer the term, the higher the interest rate, which means the more you'll end up paying.

But Earnest will use your budget to customize your rate and term - down to the month. You say what you can afford to pay each month. And Earnest will give you a custom term anywhere between 5 to 20 years (60 to 240 months, for a total of 180 term options).

This way, you get a term tailored exactly to your budget. And interest will be minimized.

How does Precision Pricing help?
For example, let's say you can afford to pay $500 each month towards student loans. You can't quite afford the monthly payments for a traditional bank's 10-year loan, so you're pushed to the 15-year loan instead (since there are no in-between options). This lengthens the term of your loan and the total interest.

But with Earnest, a custom term means that you can get a precise term that matches your budget (for example: a 11.2 year loan). You get to pay what you can afford, while saving a lot in interest.

Earnest offers competitive rates, though it may be slightly higher than some competitor student loan refinance lenders. But Earnest will consider you for a loan even if you have lower or limited credit, so it's a give and take.

Earnest's rates are currently:

  • Fixed: 3.89%-7.89%
  • Variable: 2.54%-7.27%

Compare with other lenders. Shop around with different lenders to see who gives you the best rate. You can get multiple rate quotes with no obligation. Check out some of those top student loan refinance lenders.

STUDENT LOAN REFINANCE FEATURES

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  1. No fees
    No application fee, origination fee, or prepayment penalty. There's even no late fee if you accidentally miss a payment.

  2. Option to skip a payment
    Earnest knows that life stuff happens. After you've made 6 months of on-time payments, you can be eligible to skip a payment. You can do this once 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.

  3. Payment flexibility
    You can increase your payments to pay off the loan faster. Schedule extra payments whenever you like and change your payment amount, all at no charge.

  4. Change your rate
    You can switch from a fixed rate to a variable rate (or vice versa) every 6 months without paying a fee. The APR will be based on prevailing interest rates and your financial profile at the time of your request.

    One caution about variable rate loans: A variable rate may be lower to start, but it can go up or down based on the market. If rates rise substantially, you could end up paying more in interest than you would if you had chosen a fixed rate. If you go with variable rate, you need to be sure your budget can handle potential rate increases.

  5. 0.25% discount
    When you enroll in auto-pay, you'll receive a 0.25% discount off your rate.

  6. Refinance while still in school
    Earnest lets you refinance if you're in your final semester at school, as long as you have a written job offer. This is good for those who want to get a head start on paying back loans.

  7. Hardship assistance
    If you run into financial hardship, Earnest may grant you a forbearance. If you go back to school, you can defer your loans for up to 3 years. Note that interest will still accrue during forbearance and deferment.

    In the event of death or total and permanent disability, Earnest will discharge all student loans.

  8. Honor grace period
    If you just graduated and your loans are still in the grace period, Earnest can match it for up to 9 months. Though be aware that interest will still accrue on the loan during the grace period.

Consider refinancing federal loans carefully. Refinancing federal loans will mean losing perks such as loan forgiveness and income-based repayment plans. If you may want to take advantage of those government programs, you can just refi your private loans.

PROS & CONS

PROS:

  • Custom payment and term based on your budget
  • Looks at other factors other than your credit
  • Option to skip a payment once every 12 months
  • No prepayment penalty
  • No late fees
  • High refinance limit up to $500,000

CONS:

  • No option to apply with a cosigner
  • May not be approved if you don't have enough savings
  • Rates not as low as some other lenders
  • Not available in every state

IS NOW A GOOD TIME TO REFINANCE?

Ideally, you want to refinance your student loans when interest rates are low. If you wait too long, you may miss out.

Rates are relatively low right now, but that doesn't mean they'll stay that way. Whether you should refinance now or later depends on how good your credit is and where you are financially.

EARNEST REVIEW PROCESS

The entire application process is s done online. Here's how it works:

  1. Quick Rate Check. First, you'll get a rate check in minutes. You'll fill out some general information (like your estimated loan balance, degree, income, and housing payment). Earnest will conduct a soft pull on your credit and give you an estimated rate. This has no impact on your credit.

    If you like the rate, you can continue on to the full application.

  2. Officially apply. During the official application, you'll have to provide in-depth information. This includes:

    • Your educational and employment history
    • Connecting your LinkedIn profile
    • Linking your financial accounts
    • Tax documents
    • Personal info like government ID and SSN

    Earnest uses your financial accounts to get an idea of how you manage your money. They look at stuff like: if you pay your bills in full each month, if you never have late payments, if you save each month, how much you spend compared to income, etc.

    Is it safe to link financial info to Earnest? Earnest has read-only access to your financial accounts. It can only view the transaction and balance history, not make charges. Earnest does not store or have access to your usernames, passwords, or login credentials.

  3. Get final offer. Based on the info you provided, Earnest will decide whether to approve you for the loan and your rate and term options. This is a hard pull and will impact your credit report.

    Once approved, Earnest will provide a range of rate and term options. You can choose your exact monthly payment based on your budget. You can pick your precise term.

  4. Approve loan. You have 30 days to accept Earnest's loan offer. Once you accept, Earnest will pay off your student loans. After that, you will just make one payment to Earnest each month.

Am I Obligated Once I Apply?
Earnest provides rate quotes with no obligation, so you're not locked in if your rate isn't as low as you'd like. You're actually better off shopping around with different lenders to see what kind of loan terms you might be able to qualify for.

ELIGIBILITY REQUIREMENTS

Not everyone will be able to get a refinance loan with Earnest. The requirements are:

  • At least 18 years old
  • U.S. citizen or have a 10-year (non-conditional) Permanent Resident Card.
  • Attended a Title IV accredited school
  • Have graduated or are in your final semester
  • Be employed or have a written job offer
  • Credit score of at least 650
  • All student loan accounts in good standing
  • Current on your rent or mortgage payments
  • Reside in one of the states Earnest offers loans in

Earnest is not available in Alabama, Delaware, Kentucky, Nevada, and Rhode Island. Variable loans cannot be offered for those in AK, IL, MN, NH, OH, TN, and TX.

Besides these above must-have criteria, Earnest will also look at other factors. Other factors include:

  • How much savings you currently have (Earnest wants to see that you have enough for 2 months' of living expenses)
  • If you spend less than you earn
  • If you have increasing bank account balances
  • How much credit card debt you have
  • If you have a history of making on-time payments
  • If you regularly get charged late or overdraft fees
  • Your earning potential

Will I get approved? Applicants with good financial habits, savings, and solid employment history will make good candidates for a loan. Earnest will also look at the long term. For example, if you just started work or are not earning much, you can still be approved if you've got the potential to advance quickly or you're in a lucrative field.

IS REFINANCING WORTH IT?

Refinancing can reduce your interest rate and your monthly payments. But it may not be right for everyone. It could be a smart idea to refinance with Earnest if:

  • Your credit has improved since college. With a better credit score, you'll be able to qualify for a better interest rate, which will save you a lot in the long run.

  • If you've managed your money well. If you have a lot of savings, good payment history, and spending habits, Earnest may give you a better rate.

  • If you've still got a lot of time left on your debt. If you're only a couple of years away from being debt-free, you've pretty much paid most of the interest by this point. It's probably better to just step up your payments to clear the debt faster.

  • If you don't plan to apply for forgiveness programs. Before refinancing federal loans, make sure you don't plan to take advantage of federal forgiveness programs. You'll lose the ability to take part in them.

HOW IT COMPARES

Look at other options before committing. We've compared Earnest to three other popular student loan refiance companies.

SoFi:
SoFi is one of the largest refinance lenders in the game. It's known for very competitive rates (offering both fixed and variable rate loans). However, SoFi only has terms of 5, 7, 10, 15, and 20 years. Whereas Earnest offers a custom term down to the month.

SoFi also requires a minimum credit score of 650 to be eligible. It also looks at other requirements too, like income, career, other debts, etc. SoFi allows you to get a loan with a co-signer, so that may help you if your own credentials aren't as good.

One nice perk SoFi offers is that it'll help with landing a new gig if you lose your job. This is a perk Earnest lacks.

 Earnest Student LoansSoFi Student Loans
 

Earnest Student Loans

SoFi Student Loans

 

Benefits and Features

Variable APR
2.54%-7.27%
2.500% to 7.115% APR (with AutoPay).
Fixed APR
3.89%-7.89%
3.890% to 8.074% APR (with AutoPay).
Minimum Amount
$5,000
$5,000
Maximum Amount
$500,000
No maximum
Loan TermCustom term from 5 to 20 years (180 term options)
5 to 20 years
State ResidencyMost states with the exception of: AL, DE, KY, NV, and RI and no variable rate loans to residents of: AK, IL, MN, NH, OH, TN and TX
All states eligible
Degree Requirements
Associates or higher
Associates or higher
Income Requirements
None
None
Employment RequirementsMust be employed or have an offer for a position to start within 6 monthsMust be employed or have an offer to start within 90 days
Interest Only Payments
No
No
Origination Fees
None
None
Prepayment Penalty
None
None
Can use a cosigner
No
Yes
Can release a cosigner
Only on existing loans
No
Auto-Pay Interest Rate Reduction
Yes
Yes
Soft Credit Check
Yes
Yes
Unemployment Protection
Yes
Yes
Customer Service
Loan Term
Ease of Use
Interest Rates
Payment Flexibility
 Terms Apply. SoFi Disclaimers

Earnest: Pricing information from published website as of 03/21/2019

SoFi: Pricing information from published website as of 04/12/2019

CommonBond:
Commonbond is a newer company in the student loan refinancing game, but it's making big strides already. It allows both undergraduate and graduate loans, and its rates are comparable with Earnest's (and may be even lower).

One unique thing about CommonBond is that besides fixed and variable rate loans, it also has a third option called a hybrid loan. This lets you pay a fixed rate for the first 5 years and a variable rate for the other 5. The rate is lower than the typical 10-year fixed rate, so it's good if you think you can prepay.

We also like CommonBond's social mission. For every loan refinanced with CommonBond, they will fund the education of a student in need in the developing world.

CommonBond is available in all states.

 Earnest Student LoansCommonBond Student Loans
 

Earnest Student Loans

CommonBond Student Loans

 

Benefits and Features

Variable APR
2.54%-7.27%
2.55% to 7.07% (with AutoPay)
Fixed APR
3.89%-7.89%
3.20% to 7.25% (with AutoPay)
Minimum Amount
$5,000
$5,000
Maximum Amount
$500,000
Up to $500,000
Loan TermCustom term from 5 to 20 years (180 term options)5 to 20 years; Hybrid loans are 5 years of fixed payments and 5 years of variable payments
State ResidencyMost states with the exception of: AL, DE, KY, NV, and RI and no variable rate loans to residents of: AK, IL, MN, NH, OH, TN and TX
All states eligible
Degree Requirements
Associates or higher
Associates or higher
Income Requirements
None
None
Employment RequirementsMust be employed or have an offer for a position to start within 6 monthsMust be employed or have an offer
Interest Only Payments
No
No
Origination Fees
None
None
Prepayment Penalty
None
None
Can use a cosigner
No
Yes
Can release a cosigner
Only on existing loans
Yes
Auto-Pay Interest Rate Reduction
Yes
Yes
Soft Credit Check
Yes
Yes
Unemployment Protection
Yes
Yes
Customer Service
Loan Term
Ease of Use
Interest Rates
Payment Flexibility

Earnest: Pricing information from published website as of 03/21/2019

CommonBond: Pricing information from published website as of 10/18/2018

Laurel Road:
Laurel Road (formally DRB) is a more traditional refinance lender that operates in all 50 states. They offer competitive rates, with loan terms of 5, 7, 10, 15 or 20 years. You can refinance loans for an undergraduate degree, graduate program or professional degree, including an MBA or law degree.

Laurel Road doesn't cap the amount you can refinance. This is good if you went through medical school, for example, and you've got hundreds of thousands of dollars in loans.

 

Earnest Student Loans

Laurel Road Student Loans

 

Benefits and Features

Variable APR
2.54%-7.27%
2.99%-6.42%
Fixed APR
3.89%-7.89%
3.5%-6.99%
Minimum Amount
$5,000
$5,000
Maximum Amount
$500,000
No maximum
Loan TermCustom term from 5 to 20 years (180 term options)
5 to 20 years
State ResidencyMost states with the exception of: AL, DE, KY, NV, and RI and no variable rate loans to residents of: AK, IL, MN, NH, OH, TN and TX
All states eligible
Degree Requirements
Associates or higher
Bachelor's or higher
Income Requirements
None
None
Employment RequirementsMust be employed or have an offer for a position to start within 6 monthsMust be employed or have an offer
Interest Only Payments
No
No
Origination Fees
None
None
Prepayment Penalty
None
None
Can use a cosigner
No
Yes
Can release a cosigner
Only on existing loans
Varies case by case
Auto-Pay Interest Rate Reduction
Yes
Yes
Soft Credit Check
Yes
Yes
Unemployment Protection
Yes
Yes
Customer Service
Loan Term
Ease of Use
Interest Rates
Payment Flexibility

Earnest: Pricing information from published website as of 03/21/2019

Laurel Road: Pricing information from published website as of 03/18/2018

EARNEST PERSONAL LOANS

Besides student loan refinance, Earnest also offers personal loans, which can be used for anything from debt consolidation to home improvement to weddings.

Just like for the refinance loan, Earnest will factor in your personal financial habits when considering you for the loan. Here are some details about Earnest's personal loans:

  • Credit score requirement of 680
  • Loan amounts of $5,000 to $75,000
  • Loan terms of 3 to 5 years
  • No origination fees
  • No prepayment penalty
  • No late fees
  • Decision within 5-10 business days

THE BOTTOM LINE

Earnest is a very solid student loan refinance lender. The Precision Pricing feature is something that no other lender does. You can fine-tune your term and payments according to your budget. This will help a lot of borrowers afford their payments and save on interest.

Just be aware that Earnest does have tougher requirements. Besides a 650 credit score, they want to see that you have good financial habits and a bright career. This can be good or bad depending on your situation.

The biggest potential drawback is the fact that Earnest doesn't offer loans in every state. Before you commit, it's smart to compare Earnest's rates to those offered by other lenders.

Rebecca Lake is a journalist at CreditDonkey, a student loan comparison and reviews website. Write to Rebecca Lake at rebecca@creditdonkey.com

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy 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.

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