Earnest is a relatively new company that provides an exciting new option to refinance and consolidate student loans. This company may appeal specifically to students who have low credit scores, but who have demonstrated that they are fiscally responsible in other ways. Thus, this company aims to meet the needs of the increasing number of students who are having difficulty refinancing their loans due to a low credit score or inadequate income. Rates may begin at 1.90% and are attract students who are looking for flexible repayment options. Loans may be spread out over a period of somewhere between five to twenty years and there is no minimum credit core or income level in order to be eligible. This refinance option offer students unprecedented flexibility and control of their loans during the duration of the repayment process. The company was founded in 2014 by Louis Beryl and is located in San Francisco. Mr. Beryl himself experienced difficulty obtaining a reasonable loan while returning to graduate school, which inspired him to create a mechanism to make obtaining a higher education more affordable. He developed a new system that allows the company to consider the whole financial picture of an applicant, rather than relying on a credit score provided by Experian or another major credit reporting company. This is excellent news for students who have just graduated, who likely need some time to get back to work in order to rebuild their credit!  

What is Earnest Student Loan Refinancing?

Earnest offers a number of refinancing options to borrowers to account for all of the varying financial situations. The interest rates range from 3.25% to 6.39% APR for students who desire a fixed interest loan. Students who are more interested in a variable rate loan may receive an interest rate of somewhere between 2.57% and 6.19% APR. These rates include the 0.25% discount that the company awards to students who elect to pay using their AutoPay function, which enables students to set up recurring payments online directly from their bank accounts. This reduces the likelihood that a payment will be late or missed. Earnest loans use something called Precision Pricing. This unique feature is a sliding tool which enables users to view and choose different loans and interests rates based on their desired monthly payment amount. The company allows users to elect untraditional loan terms, such as seven years and 2 months. Many other companies require something like a traditional ten year loan term.  

Who is Eligible for Refinancing Through Earnest?

In order to be eligible to refinance student loans through Earnest, students must have graduated college or have less than six months until their graduation date. Students who have completed either an undergraduate or graduate degree are eligible to apply. Furthermore, students must hold at least $5,000 in federal or private student loan debt. Additionally, students must be at least 18 years of age or older. Students must be employed or have a job offer (in the form of a letter) from a prospective employer. At the time of the application, students are not permitted to add a cosigner. However, the company may suggest a cosigner after the application is reviewed. In addition to these criteria, the company website indicates that successful applicants typically have: enough income to support repaying a loan and living expenses, hold positive bank accounts, have savings to support themselves at least one month of typical living expenses, and have a history of timely payments. As of 2015, Earnest loans are available in almost thirty states. Make sure to see if your state is one of states where Earnest offers loans prior to applying. Students may check here. If Earnest refinances loans in your state, you should consider applying. Upon receiving applications from prospective clients, Earnest will review a number of different criteria to determine loan refinance eligibility. The criteria include: academic background, present and past income and debts, savings accounts and other assets that you may hold, and your work history. Prior to beginning the application process, anyone interested in refinancing through Earnest may complete a self-report application and authorizing a soft credit check, which will have no effect on the applicant’s credit score. This full application can be slightly lengthier than other companies since they consider other financial indicators, such as education and work history and previous and current savings.  

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What are the Benefits of Refinancing with Earnest?

Earnest loans offer students a low interest rate, which make them an appealing choice. However, there are other benefits. First, the repayment process is flexible and can be changed at different times throughout the repayment process if the graduate has extra money to pay or is unable to pay the full amount one month. As such, Earnest encourages students to focus on how much they would like their monthly payments to be rather than setting rigid criteria for monthly repayment amounts.  The innovative system that customers use allows them access see how much interest they would accrue or reduce by decreasing or increasing payments each month. Another advantage of using the Earnest platform for repaying loans is that students are able to make payments twice a month, instead of just once a month. This is especially helpful for students who get paid twice a month and want to allocate some money for loan repayment from each paycheck. Lastly, customers can switch the type of loan they have every six months (i.e., variable to fixed or vice versa) if they desire, at no cost. This option allows students to opt for a low-interest variable rate when the rates are low or to decide to switch to a fixed interest loan if the interest rate rises above what they want to pay. Like many other loan providers, Earnest offers forbearance and unemployment benefits. A deferment of up to three years may be considered to students pursuing a postgraduate degree. Earnest also boasts no hidden fees and makes it easy for students to understand how to customize their payments to match their unique situation to help them pay off their student loans in the most efficient way possible. 


Why Consider Earnest?

Flexibility and customizability make this loan very appealing. Additionally, the fact that decisions are based on additional criteria,  aside from only a credit score, is nice for students who are just starting out. In fact, one of the optional components of the application is the URL for your LinkedIn account. Funders would like to see your career choice and whether you have a demonstrated work history. They will consider your earning potential and previous savings history, in addition to other factors. Lastly, no cosigner required makes this loan a nice option for students who are on their own in terms of loan repayment!