Earnest has announced a new unorthodox refinancing policy for student loans that will revolutionize student loan repayment for millennials and generations to come.  Following a recent close of $17 million in investments by Maveron, Earnest is slated to expand across the nation as they implement a new underwriting process that turns out refinanced student loans with especially low interest rates.
While the student loan debt toll increased to $1.3 trillion, companies were awarding loans based off of the backward-looking underwriting process that focused solely on credit history.  In short, loans were being disbursed based off past earning potential and history of a student or co-signer; therefore, rates were assigned based on inaccurate data pertaining to other individuals besides the primary borrower.
With the help of new data driven software analysis, Earnest offers highly tailored loans based off of new factors instead of strictly credit history.  Loans are designed and awarded based off of analysis of full financial profiles and future earning potential rather than solely examining a traditional FICO score.  This earns Earnest a much better probability of receiving a return on investment.
Each loan is highly flexible and specific to individual cases, so borrowers have considerable flexibility when choosing the terms and conditions to their student loan.  Interest rates are based on future earning potential and overall financial health which leads to interest rates as low as 1.92% APR.  In addition to low rates, the recipient can switch between variable and fixed interest rates whenever they see fit.
Instead of a few payment terms to choose from, borrowers can pick whatever term fits their financial situation following graduation; additionally, this choice directly affects the size of monthly payments.  This payment term plan can be adjusted whenever the borrower sees fit.
Multiple payments per month are allowed in order to help cut interest payments.  There are no hidden expenses such as origination or prepayment fees.  Additionally, Earnest guarantees ownership of a client’s loan throughout the life of that loan, so no third parties will pick up and collect an Earnest loan.
Overall, the moves being made by Earnest aim to revolutionize the student loan process by providing tailored loans and extremely flexible payment options.  Borrowers can pick the plan that fits their financial needs which reduces their chance of default.  These solutions cannot fix the problems immediately, but they are a huge step towards slowing down the increasing debt.