Forgive the silly analogy, but if Chip and Joanna Gaines on HGTV ran a student loan refinancing company, it would probably be Earnest. The reason I say this is that Earnest student loan refinancing focused on your individual circumstances to try and offer the best rate possible independent of traditional metrics like a credit score.
Student Loan Planner readers get a $300 cash back bonus when they refinance with Earnest through this link.
You need a 650 FICO score or higher to get through the initial screening process, but Earnest has some really unusual ways to qualify you for a lower interest rate on your student loans that other companies do not have.
I expect they’ll show up especially high on the list for folks who happen to have a lot of savings, investments, and an upward trend in their employment history. Borrowers who have higher incomes or exceptionally high credit scores might find better deals elsewhere, but Earnest is almost always worth a look.
You’ll learn if you should apply with Earnest, what makes them different among all the lenders out there, and what your application will need to qualify for Earnest student loan refinancing.
Who Should Consider Refinancing Student Loans with Earnest
My starting point for recommending refinancing is owing less than two times your income for borrowers with federal student loans. You also need to be working in the private sector with no immediate plans for a decline in income or a big change in employment status.
That way, you can be confident that you won’t be using student loan forgiveness programs.
When you refinance student loans with Earnest (or anybody for that matter), you now have a big fixed monthly payment. There are some student loan forbearance options we’ll get into later, but you don’t get three years total of forbearance with income-driven repayment options obviously.
The plus for refinancing is the interest rate. By shaving off as much as 2% off your federal student loan interest rate, you’re able to pay more money towards principal and get out of debt sooner.
There is absolutely risk and reward with refinancing. In my view, once you owe less than two times your income in the private sector, the benefit of the lower interest charges starts to outweigh the required monthly payment.
Earnest Offers the Most Flexible Student Loan Refinancing Options
What if you could pick your own monthly payment for your student loans and cut thousands off the cost of your interest while paying it all back?
That’s Earnest student loan refinancing in a nutshell. The biggest difference between Earnest and other student loan lenders is the flexible repayment terms. While most lenders give you five options (5, 7, 10, 15, and 20-year refinancing terms), Earnest gives you 180 options.
How does this work? Earnest allows you to choose the year and month you want it to take to pay off your loans. 6 years and 8 months? Cool. 12 years and 2 months? That’s fine too.
The reason why that matters is that you can choose an option that fits comfortably into your monthly budget. Owe $150,000 and want to pay $1,250 a month? Earnest can probably do that, while other student loan refinancing companies cannot.
Some readers love this feature, while others do not care quite as much. It’s certainly something that sets Earnest apart from the competition though.
Why Earnest Asks You to Link Accounts Like Savings, Investments, and Even LinkedIn
Remember that I said that Earnest wants to use unusual data points to offer you the best interest rate they can. Like any lender, they will not be the best in every case, but this gives them a fighting chance to offer you something no other lender can.
That’s one reason that Earnest asks you to link your checking account at a minimum so they can verify your employment history. They’ll also ask you to link other accounts like investments and savings.
That might make you feel uncomfortable, but there’s a very good reason they do this and it’s in your best interest. If you do not happen to have very large investments or savings, they might not give you as good a rate as other lenders.
However, if you happen to be frugal and put money away in index funds every month, then that means you could easily be a better credit risk than someone else with a higher credit score. Earnest wants to use this data to give you a better rate than if they just went off traditional metrics like older stodgy lenders.
Pretend you were lending someone money. You could make a loan to someone with a $50,000 savings account and $80,000 income or someone with a $5,000 savings account and a $120,000 income. What interest rate would you charge them?
A lender that never looks at assets might give a significantly better rate to the borrower with the higher income even though he might present the same or higher credit risk than the frugal borrower with lower income.
Another thing Earnest does sometimes is look at your LinkedIn profile to prefill some info on the application. I assume they might evaluate it as well to see if your employment history seems to be on the up and up.
Earnest Doesn’t Offer Federal Government Level Protections, but They’re Great for a Private Lender
No private lender ever will be able to beat the level of protection offered by the federal government. With federal student loans, you get up to three years of economic hardship forbearance. You can defer for a very long time if you go back to school. If you die or become disabled, the government forgives the debt.
Even though Earnest doesn’t offer protections at this level, they’re among the best among private lenders. Earnest forgives student loans entirely in the event of death or disability of the borrower.
Earnest also offers forbearance protection that has to be approved three months at a time. The maximum forbearance period they offer in total is no more than 12 months. Remember that if you think you might need to use forbearance at all, then refinancing is probably not for you.
That said, if you experience an involuntary loss in income, unexpected expenses, or other financial hardship, they’re among the few lenders willing to work with you to make sure you get back on track with payments.
In my experience, these kind of forbearance protections are nice to have for peace of mind then something you might need.
Earnest also offers deferment options for up to 36 months if you decide to go back to grad school for another degree, provided you’re enrolled at least part-time. They’ll also consider deferment if you want to go for a tour in the Peace Corps.
Where Does Earnest Lend?
Private refinancing companies need to get a lending license from state regulators in each state where they want to lend. Some states like Nevada require a physical location in their state for a lender to offer a student loan refinancing, so most lenders avoid it.
Right now, Earnest cannot lend in Kentucky, Delaware, Rhode Island, Alabama, or Nevada. They’re probably working with government officials there to expand, but you should be covered with other student loan refinancing options if you can’t use Earnest.
You also need to live in the US to be able to use Earnest’s services.
What Employment Requirements Does Earnest Have?
At the risk of stating the obvious, Earnest wants you to have a job in order to offer you a good student loan refinancing deal.
They’ll also lend if you have a signed contract offer starting within 6 months of when you refinance student loans. That means they’ll probably work with you if you’re about to get a huge pay bump and just want to lock in a lower rate so you can come out of the gate fast with your first big paycheck going to pay down your loans.
You need to be a US citizen or permanent resident and at least 18 years of age.
One Benefit of Earnest: They Service Your Loan Internally
One thing you’ll find with many other student loan refinancing companies is that they’re merely a platform to connect you with a lender or sell your loan to investors.
In contrast, Earnest actually services your loan in-house. That’s a positive difference because it means the same company that gave you the loan will help you out when you need to make extra payments, enter new banking information, or request a temporary pause in payments.
Most student loan refinance companies send your loan to an outside party that handles payment collections. I’ve heard of some complaints specifically because of a loan servicer chosen by a refinancing company not listed on my site. Hence, I think that Earnest adds some value here.
Top Three in Customer Service Among Student Loan Refinancing Companies
I’ve visited Earnest offices in San Francisco, and I must say I’m impressed by the commitment of their people and that they seem to care about a lot more than just working their tails off for big stock options and huge paydays.
Earnest is a partner of Student Loan Planner, and so I have that bias in that I’d like for them to offer you a great deal so you get $300 and I get a referral bonus as well if you fund a loan with them.
I was recently introduced to a manager at Earnest who mentioned that he’d be out on paternity leave, and that’s pretty cool to me that a company in the intense work culture of San Francisco cares that much about their employees.
I saw some other examples of the work culture they try to create when I visited their HQ in California. These are real people trying their best to help you out on the other end of the website.
If dealing with loan servicers like FedLoan or Navient is any guide, you want employees to be happy and engaged so they make dealing with them as a customer a pleasant experience.
I would still look for the lowest interest rate when shopping around for a student loan refinancing. Still, it’s nice to know that the company you’re working with has caring employees with a strong sense of ethics.
How Do You Apply with Earnest?
The steps are pretty straightforward.
- Get your rate estimate in about 2 minutes by listing your name, income, SSN, housing payment, and savings and investments. There’s an impact on your credit from looking for an estimated rate. That’s because Earnest uses a soft credit pull at this stage.
- Next, they’ll ask you for more info like your employment and educational history, including what degrees you have.
- Like any lender, Earnest will want to verify the info you gave them in step 1. So you’ll need to connect your checking account and savings and investment account for a shot at their best rates.
- Submit to a hard credit pull so they can double check one last time that there aren’t any surprises lurking in your credit report. This does impact your credit but very minimally and for a short period of time.
- Choose your payment and upload your documents. You’ll need to choose the monthly payment that works with you and prove that you’re a citizen or permanent resident.
Once Earnest has everything that they need, you should find out a decision pretty quickly in less than a couple weeks.
One suggestion I have for you is that you should shop around at least two other places since credit bureaus only penalize you one time even if you should around at multiple lenders and submit to multiple hard credit inquiries. They consider this rate shopping.
Always try to get a finalized offer in front of you and compare it to other offers you receive from other lenders. Sometimes the final offer can be a bit higher if they discover something about you in the hard credit check, but usually, the estimated rate that took you 2 min to get ends up being the one you’re offered.
Any Downsides to Using Earnest Student Loan Refinancing?
The biggest risk to using Earnest is that they’re owned by Navient Corporation. Yes, that’s the same Navient that seems to fight with FedLoan for the title of worst customer service for student loan borrowers.
Earnest didn’t use to be owned by Navient. They put themselves up for bid and Navient was the one with the best offer. The original investors, I assume Venture Capitalists, decided to sell them. Navient wanted a sleek modern loan operation and Earnest needed the capital.
The reality is that the two businesses operate totally separately. Earnest frankly targets a higher income borrower with higher credit scores, and type of employee that works at the different companies is also very different.
Once you agree to the loan terms, Earnest can’t change them on you. However, they could potentially have some of Navient wear off on them in a worst-case scenario.
I really wouldn’t worry too much about this though, as you could always refinance again with yet another lender to a shorter term if their excellent service ever changed.
Because Navient also owns Sallie Mae, you won’t be able to refinance Sallie Mae Signature Student and other private loans with Earnest because they’re owned by the same parent company.
Another issue with Earnest is unlike many of the big lenders, they don’t accept cosigners for their loans. That’s probably a business decision more than anything, as the vast majority of student loan refinancing happens without a cosigner.
If you want to refinance student loans with a cosigner, you might be able to apply in your own name to take advantage of Earnest student loan refinancing, then remove them from the loan documents.
Earnest: A Great Student Loan Refinancing Option for Good Savers and Folks Who Like Flexibility
If you have over an 800 FICO score with over $300,000 of loans, then I fully expect another lender to offer you a better deal than Earnest, particularly if you don’t have a bunch of savings.
However, if you have a credit score in the 600s to 700s, have above average savings, like the idea of picking a payment that fits with your monthly budget, and are ready to save some money, Earnest is a fantastic option to refinance and pick up your $300 cash back bonus to boot.
I’m eager to know your thoughts about Earnest? Have you ever heard of Earnest and are you wondering if refinancing your student loans is the best decision for your situation.
You can also book a one-on-one consult with me to look over your loans and help you determine the best repayment strategy.