If you are looking for a private student loan to help you fill the gaps and cover educational expenses not covered by federal student loans, then you may have heard of Earnest. Before choosing to work with any lender, it’s important to know a bit more about the company and how they operate.
Below, we explore Earnest, including their relationship to Navient, the types of student loans they offer, the interest rates they charge, how to apply for a loan, and more.
Who is Earnest?
Earnest is a financial technology startup that began life in 2013 as a company offering private student loans and student loan refinancing options for borrowers. They are based in San Francisco, California
In addition to factors such as credit score and current income levels, Earnest uses a number of unique factors when determining whether or not to approve a borrower, including their spending and saving habits as well as their income potential.
Earnest and Navient
In 2017, Earnest was purchased by Navient, a major player in both federal student loan servicing as well as private student loans. The deal was for approximately $155 million. If you have had issues with Navient in the past, and are therefore considering Earnest for student loan refinancing, you may wish to take this relationship into account.
What does Earnest do?
Earnest is a private lender. This means that they make their money by lending a borrower money, and then charging interest while the loan is in repayment. Earnest originates new private student loans for borrowers who need funds to pay for their education, but also provides refinancing services for borrowers with existing student loans who would like to change the terms of their repayment.
Types of Student Loans Offered by Earnest
Earnest offers a number of different types of private student loans, including:
- Undergraduate Private Student Loans: These loans are for student borrowers earning their undergraduate degree
- Graduate Private Student Loans: These loans are for student borrowers earning a graduate degree
- Cosigned Private Student Loans: These are private student loans for borrowers applying with a cosigner, which can increase chances of approval and lead to lower interest rates.
- Business School Loans: These loans are specifically designed for borrowers pursuing their MBA.
- Medical School Loans: These loans are specifically designed for borrowers pursuing a medical school degree, including during their residency.
- Law School Loans: These loans are specifically designed for borrowers pursuing a law degree.
In addition to the private student loans mentioned above, Earnest offers student loan refinancing for borrowers who are looking to potentially lower their monthly payments or interest rate.
Earnest Interest Rates
As a private lender of student loans, Earnest is allowed to charge borrowers whatever interest rates they see fit. Though they of course aim to be competitive with other lenders, these rates can vary substantially depending on a number of factors, including:
- Your credit score: This is a measure of your “creditworthiness,” or how likely you are to repay your loans. As a student, you may have limited credit history, which can negatively impact your interest rates.
- Income level: Whether or not you have a source of income, and how much you make, will impact your interest rates.
- Whether or not you apply with a cosigner: Applying for a student loan with a cosigner can help you increase your chances of being approved for a student loan and can also help you qualify for lower interest rates. This is because a cosigner offers more stability for the lender and less risk that they will lose money.
How to Apply for a Student Loan Through Earnest
Applying for a student loan through Earnest is fairly easy. All you need to do is visit their website and click “Get Started” at the top of the screen. After that, you will complete your application by answering questions around:
- The type of student loan you are applying for
- Your name, email address, and physical address
- Your date of birth
- Your citizenship/residency status
- The name of the school you will be attending
- Your enrollment status (full-time, half-time, or part-time)
- Your expected month and year of graduation
- Your income level (if you have made money in the past 12 months)
- Your credit score
- The length of your credit history
Submitting this form will allow Earnest to very quickly determine if you will be eligible for a loan through them. In just a few seconds, you will see a number of options for both a cosigned loan and independent loan. These options will list a range of interest rates which you may qualify for.
By selecting an option, you will then be prompted to complete an account to complete your application. The full application will ask more detailed questions about your income, etc. and will involve a hard credit pull, which may have a slight impact on your credit score.
If you are applying with a cosigner, you will need to invite them to apply as well.
Earnest Pros and Cons
Unique Benefits of Borrowing From Earnest
Because the student loan marketplace is a competitive landscape, many borrowers offer unique benefits as a way of attracting borrowers. Some of the unique benefits offered by Earnest include:
- 9-month grace period: This is 3 months longer than the grace period offered by most lenders, including the federal government.
- Skip a Payment: Once each year, borrowers are allowed to skip one payment should the need arise. While this will prolong the repayment period, it can be helpful during an emergency.
- 0.25% Interest Rate Discount for Auto Pay: Borrowers who opt into auto pay will receive a quarter percent discount on their interest rate.
- Variety of special student loans: Student loans for law school, medical school, and business school take into account the unique circumstances that accompany each of those degrees, and offer borrowers variety.
Cons of Borrowing from Earnest
While Earnest offers competitive benefits and rates, it does still carry a number of negatives as a private lender:
- Interest rates not set by law: Federal student loan interest rates are set annually by Congress. Private loans are not subject to these rates, meaning that Earnest can charge as much or as little as they want. While the site advertises exceptionally low interest rates, the lowest rates always go to borrowers with the highest credit scores.
- Limited deferment: Though Earnest offers its “Skip a Payment” feature, it is limited to once per year. Federal student loans are eligible for a range of deferment and forbearance options depending on your unique situation.
- No forgiveness options: Though federal student loans may be eligible for forgiveness under certain situations, private student loans are not.
- No guaranteed acceptance: By law, all undergraduate students are approved to borrow unsubsidized federal student loans, regardless of credit score or financial situation. This is not true when borrowing from Earnest.
How to Contact Earnest
Current and prospective borrowers can contact Earnest through the options below. Business hours are Monday through Friday, 8am to 5pm Pacific Time.
Earnest does not list an email address for inquiries, though you can submit a form by visiting this page on their website.
Earnest Live Chat
Earnest utilizes a live chat function on their website which can help you answer common questions.
Alternatives to Earnest
While Earnest offers a number of unique features that help it compete with other private lenders, the fact remains that they are a private student loan company.
Typically, we recommend that borrowers first exhaust federal student loan, state-based student loan, and institutional student loan options before turning to private lenders, as these options can offer lower interest rates, a greater likelihood of acceptance, and other powerful borrower benefits like deferment and forbearance options.
If you do decide to turn to private student loans, it is important to shop around to ensure that you are getting the best possible interest rate and terms. For that reason, we often recommend that borrowers begin their search through a student loan marketplace.