Earnest student loans in a nutshell

Acquired by Navient in 2017, Earnest now features education loans for both undergraduate and graduate students. To be eligible, you must be a full-time student seeking a bachelor’s or an advanced degree at an eligible university. You can confirm that you meet the criteria — without affecting your credit — simply by providing your school name and estimated credit score.

Earnest offers student loans of between $1,000 (unless specified by the state of residence) and 100% of your school’s cost of attendance. Other features include:

• Choice of a fixed or variable interest rate
• Loan terms spanning 10, 12 or 15 years, with cosigned loans also eligible for a five- or seven-year term
• A longer-than-usual nine-month grace period after leaving school
• Option of flat, interest-only or full payments while in school — or you can defer payments until the end of the grace period (unless specified by the state of residence)
• No loan fees, even for late payments
• 0.25% rate discount for enrolling in autopay

The highlights of Earnest student loans

With so much jargon, student loans can be confusing. For its part, Earnest attempts to demystify the borrowing process.

The company is extremely transparent about its eligibility criteria, for example. To qualify, you (or your cosigner) would need a 650 credit score, three years of credit history and at least $35,000 in annual income.

Clear-cut and up-front guidelines such as these, along with a solid customer service department — which it calls its “Client Happiness” team — might help explain why Earnest enjoys a five-star rating on review sites like Trustpilot.

Here are three more reasons you might like Earnest as your potential lender.

Competitive fixed and variable rates

Earnest offers variable rates for student loan refinancing starting at 1.81% and fixed rates beginning at 3.45%, counting its 0.25% rate reduction for signing up for autopay.

Those are relatively low rates when compared with many of the competing banks, credit unions and online companies out there. That may also be true if you’re a graduate student considering federal student loans: Direct Unsubsidized Loans (6.08%) and PLUS Loans (7.08%) both carried higher rates in 2019 — and that’s before accounting for the government’s loan origination fees.

With Earnest, you may be able to score an interest rate on the lower end of their range by including a cosigner, even if you could qualify on your own.

A seamless loan application process

If you’re ready to apply with Earnest, you can carry out the entire process on your desktop or mobile device.

1. Confirm your eligibility: Input your school name, approximate credit score and other information to receive a decision within two minutes.

2. Complete a full application: After being invited (or possibly required) to include a cosigner, you would provide additional details, such as your housing costs and tax forms, to formally apply for a loan. Earnest prides itself on considering more factors than most lenders, including your (or your cosigner’s) savings and assets, as well as employment history and career trajectory.

3. Select your loan term: Once your application is approved, you’ll be offered a rate and a potential loan term. As noted above, independent borrowers could choose to repay their debt over 10, 12 or 15 years, and cosigned loans are also eligible for a five- or seven-year term. Once you receive your formal loan offer, you would have up to 30 days to accept it.

Flexible repayment options

As an enrolled student, you might like the idea of Earnest’s nine-month grace period — three months longer than the industry standard. It might allow you to put off repayment until you’ve found your footing in the real world.

Once you’re in repayment on your loans, however, you could still find yourself overwhelmed by other financial obligations, such as finding a job or dealing with medical or credit card debt. Fortunately, Earnest is also one of the lenders with payment postponement options if you need a break from your monthly bill.

Military members, for example, are eligible for a deferment while on active duty. More broadly, any Earnest borrower can skip one payment per year — though this would lengthen your loan term and increase your interest payout over the life of the loan.

To skip a payment, you need to have previously made at least six consecutive and full payments toward your debt, and you must file your request at least five days before your next payment due date.

The fine print of Earnest student loans

No Earnest student loan review would be complete without full context, including some of the downsides.

It’s wise to consider how the company might fall short of your borrowing needs, so before zeroing in on this lender as your choice, keep these three facts in mind:

You might not be eligible at all

Like other lenders, Earnest has strict eligibility requirements. Even if you (and your cosigner) have the credit score and income to qualify, you could be turned down if there’s a prior collections notice or bankruptcy proceeding.

Beyond meeting thresholds for your or your cosigner’s credit history and financial records, your eligibility with Earnest also depends on your residency status. International students will need a Social Security number and permanent resident cosigner to qualify; without a cosigner, you’ll need to be a U.S. citizen or green card-holder yourself.

Other cases where you could be deemed ineligible include:

• Attending school part-time
• Attending a two-year college or trade school
• Seeking an associate’s degree
• A parent borrowing on behalf of your child
• A resident of Alaska, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Nevada, New Hampshire, Texas or Virginia

Keep in mind that there are reputable lenders serving borrowers who fall into some of the categories above. For example, Sallie Mae, College Ave and Wells Fargo all lend to part-time students. Likewise, if you’re comparing Earnest versus SoFi, you’ll see that the latter lender offers products in all 50 states and Washington D.C.

You can confirm your eligibility — but not your rate

It’s wise to shop around with multiple lenders before sitting down to apply for a student loan, as each application could result in a hard credit check that may ding your credit score, especially if the different checks aren’t conducted around the same time.

Earnest offers on-demand confirmation of your eligibility for a loan, but it doesn’t provide specific rate quotes. You would need to complete the formal application (and submit to the hard credit check) to see what fixed or variable rate would be available to you.

Other lenders, including CommonBond, allow you to view your potential interest rate in the same amount of time it takes Earnest to deem you eligible.

That said, however, Earnest’s student loan product just debuted in April 2019, so if you’re applying later, you could check back to see if it adds a quick rate-quote option in the future.

You can’t release your cosigner until the loan is paid off

Earnest scores a point for allowing eligible borrowers to apply without a cosigner — some of its competitors do require undergraduates to tack a cosigner onto their application.

However, Earnest loses a point in our eyes for not providing a cosigner release program. Lenders like Sallie Mae offer borrowers the ability to drop their guarantor after as few as 12 full and prompt payments. If awarding your mom, dad or non-parent cosigner with an early removal is important to you, you might be better off borrowing elsewhere.

Still, you could always remove your cosigner by refinancing your student loans — either with Earnest or a competing lender — sometime down the road.

Are Earnest student loans right for you?

There are a handful of to-dos before resorting to a private student loan at Earnest or any lender for that matter: completing the Free Application for Federal Student Aid (FAFSA), seeking private scholarships and state grants, applying for work-study and tapping into savings. The FAFSA is especially important, since federal student loans provide protections that private lenders don’t.

With those items crossed off, keep Earnest in mind for your private loan needs. Thanks to its competitive interest rates and flexible repayment options, it’s among our favorite lenders.

On the other hand, it won’t serve your needs if, for example, you’re attending school part-time or as an international student. Earnest could also fall short if you prefer a lender featuring a cosigner release policy.

And regardless of how you think Earnest stacks up, be sure to compare it with some of the other best private lenders offering student loans today.

Can you consolidate student loans while in school?

To brush up on the basics, remember that student loan consolidation occurs when you group your debt into a new, single loan with a weighted, average interest rate. You could accomplish this via a federal direct consolidation loan.

To be eligible for federal loan consolidation, you must either be enjoying your six-month grace period or already be in repayment — in other words, off campus and into the real world.

Refinancing takes consolidation a step further. It, too, groups your loans into one new loan, but it also could lower your interest rate. By reducing your rate, you’d pay less interest over the life of your loan, potentially saving you significant money when kept at the same term.

Say you borrowed $20,000 on a 10-year term and with an average rate of 7%. By refinancing that amount at 5% and for the same 10-year term, for example, you’d shave off $2,410 in interest over the life of the loan.

Refinancing could also allow you to choose a new lender, but note that only private lenders offer refinancing. This means you’ll lose exclusive protections on your federal debt since only federal loans feature access to income-driven repayment plans, flexible deferment and forbearance options, as well as pathways to loan forgiveness.

For this reason, if you decide you want to refinance federal student loans rather than consolidate them, make sure the benefits outweigh the drawbacks for your particular situation. And if you do go ahead with it, try to shop around for a good refinancing rate.

Can you refinance student loans while still in school?

Unlike with federal loans, private lenders employ underwriting criteria to gauge your ability to repay your new, refinanced loan (along with your other debt, if you have any). You typically need to have a strong credit score and proof of a steady income — or a cosigner who has both.

Unfortunately, being a college graduate is also among most lenders’ requirements. Generally, lenders require that refinancing borrowers have graduated from a Title IV school. An associate degree is sometimes acceptable.

But if you don’t have a degree (yet), consider these two lenders:

1. Earnest: If you’re within one semester of graduating, you could apply and be approved for refinancing a little ahead of schedule. You could also qualify if you’re a part-time student, enrolled less than “half-time.”
2. Citizens Bank: If you take a break from school and make 12 on-time payments toward your loans, you could refinance them without having earned a degree.
3. SunTrust Bank: If you only need to refinance private student loans, not federal ones, then SunTrust has an option too, so long as you loans are current.

Making in-school payments is the next best thing

If your goal of refinancing was to lower your interest rate, you’d likely have to wait until you’re a college grad.

With that said, there are measures you can take now to save money later.

Whether you have federal or private loans, making in-school payments can stop your balance from ballooning while you’re in the classroom.

For federal loans, contact your servicer to learn about how to make in-school payments. Although subsidized direct loans won’t accrue interest until you’re six months out of school, other federal loans will, so it’s wise to begin repayment ahead of schedule if you can afford it.

With a private lender, your in-school repayment options were (hopefully) presented at the time you decided to borrow. Lenders offer a mix of choices, including:

• Deferring payment until graduation, allowing interest to pile up
• Making small fixed payments to save some money on interest while you’re enrolled
• Making interest-only payments to keep your balance from growing at all
• Making full payments to attack your debt from the start

Of course, the more money you put toward your loan balance while you’re in school, the less you’ll have to pay when you graduate.

Laying the groundwork now to refinance later

If you begin making in-school payments, you’re not just saving money. You’re also building up your credit score.

In fact, 35% of your FICO score, one of the most commonly cited credit scores, is based on your debt payment history. If you start repaying your loans while you’re in school (and repay credit card debt on time), you’re starting to build that history.

That takes care of one of refinance companies’ underwriting criteria. However, there are more ways to put yourself in a position to refinance not long after receiving your degree.

Maybe you don’t have the bandwidth for a full-time job while in college, but scoring a part-time position or internship now could lead to a good-paying gig later.

Eventually, having that consistent paycheck will not only help you repay your loans, but also prove to refinance companies that you have the income to cover your newly consolidated debt.

That’s the silver lining of it all. Yes, you might not be eligible to refinance student loans while still in school, but you can begin strengthening your application for the future.

College Ave Student Loans review: The basics

While you could qualify for College Ave private student loans with several different educational backgrounds and ambitions, you still need to be creditworthy. Having a credit score of at least 660 is a good start.

The lender doesn’t disclose its specific credit criteria, but you could gauge your (or your cosigner’s) eligibility using the lender’s pre-qualification tool. Passing that test would unlock these loan features:

• Loans for part- or full-time undergraduates, graduate students, career school students and parents
• Prequalify with a three-minute application (and without affecting your credit)
• No fees to apply
• Fixed and variable interest rates

• Borrow between $1,000 and your school’s full cost of attendance
• Choose from four in-school repayment options, including full deferment
• Select one of four repayment term options: five, eight, 10 or 15 years
• Receive your loan in as little as 10 days after applying
• Cosigners are accepted — and encouraged (note that they are required for international students who have a Social Security number)
• Release your cosigner after more than half your repayment term has elapsed
• Enjoy a federal loan-like six-month grace period after leaving school
• Net a 0.25% interest rate reduction for enrolling in autopay
• No penalty for paying off your loan early
• Forbearance — the ability to temporarily suspend payments — is awarded on a case-by-case basis
• Student loan forgiveness in the case of the borrower’s permanent disability or death

While the majority of the loan characteristics above are true no matter your status in school, there are some notable differences for graduate students, career school students and parents.

Graduate students

Whether you’re seeking a postgraduate, master’s, doctoral or professional degree, you can count College Ave private student loans as an option. Note that the ceiling on College Ave’s interest rate ranges as of early June 2019 was significantly lower for graduate students compared to undergrads.

In summer 2019, College Ave also added unique perks for postgraduate students seeking an MBA or other professional degree. The loans include longer grace periods, for example, with 12 months for dental students and 36 months for medical students.

There are also deferments available for students who enter a residency program — or, in the case of law school students, a clerkship — after receiving their degree. Additionally, students seeking these advanced credentials might be able to select a longer loan term (20 years) than their peers.

Career school students

If you’re pursuing an associate, bachelor’s or graduate degree in a career-focused program, including at some community colleges, keep this bonus in mind: College Ave offers borrowers of this loan type a $150 statement credit for completing their program.

Parents

College Ave gives parents even more repayment term flexibility. The lender said on its website that it would assist creditworthy parents in choosing one of 11 possible repayment terms, spanning between five and 15 years.

Another plus of borrowing from College Ave: The lender allows Mom or Dad to directly receive up to $2,500 of the loan funds to cover smaller, secondary expenses including books and supplies. (The balance would be sent directly to the student’s school.)

On the downside, however, the floor on College Ave’s interest rate ranges as of early June 2019 was noticeably higher for parents than for undergraduate students. Plus, parent borrowers only have three in-school repayment choices, not including full deferment. Making interest-only payments is the cheapest option available.

What we like about College Ave Student Loans

It’s rare to find a lender that’s so accessible. In College Ave’s eyes, you don’t need a high school diploma or GED, don’t need to be pursuing a four-year degree, don’t need to be enrolled full time — you don’t even need to be an American student (as long as you have a Social Security number).

Aside from flexibility on qualifying, below are a few more features of College Ave private student loans that benefit from additional context.

A bevy of in-school repayment options

Many private lenders offer fewer repayment options than College Ave. But College Ave provides four payment methods, including:

• Deferred: Postpone payments until six months after leaving school, allowing interest to pile up on your balance.
• Flat: Submit monthly dues of $25 to eat into the accruing interest on your loan.
• Interest-only: Pay only enough each month to cover accruing interest to ensure you face the same balance you borrowed upon leaving school.
• Full: Enter repayment immediately by making interest-and-principal payments, so you’ll owe less than what you borrowed once you step off campus.

For cash-strapped students, making (significant) in-school payments isn’t always possible. For other students with income or parental support, entering repayment sooner could pave the way for a faster route out of debt. That’s why it’s so nice to have options.

According to the lender, about 6 in 10 College Ave borrowers elect to submit in-school payments to whittle down interest before the reality of repayment hits upon graduation.

Pick your repayment term

Some lenders, including Sallie Mae, assign you a loan repayment term based on your creditworthiness.

One benefit of borrowing College Ave private student loans, however, is that you (and your cosigner) could independently choose your term. You might select five, eight, 10 or 15 years, depending on your budget and future income. (Unlike with federal loans, however, private lenders like College Ave don’t allow you to change terms later, extending or shortening your repayment term as you wish.)
College Ave said on its website that 84% of borrowers choose a term of 10 years or less.

Receive strong customer service

Nearly 400 College Ave borrowers had awarded a 4.8-out-of-5 rating of their lender — at least according to the lender website.

For a more objective accounting, Trustpilot lists a four-star rating for College Ave, and the Better Business Bureau gives the lender an “A+” grade.

What to keep in mind about College Ave Student Loans

If you like what you’ve learned about College Ave private student loans, keep in mind that no lender is perfect for every borrower.

Decide for yourself whether the following facts should point you in the direction of a competitor.

A long trek to cosigner release

By College Ave’s math, 96% of undergraduates have a cosigner on their loan. After all, teens and 20-somethings can make up for their thin credit files by piggybacking on a creditworthy cosigner, usually Mom or Dad.

The majority of top-rated lenders allow you to release that cosigner (from their legal obligation to repay your debt, if you can’t) after 12 to 48 months of successful payment history.

With College Ave private student loans, however, it’s a long haul. To remove your cosigner from your loan agreement, you must:

• Reach the halfway mark of your loan term
• Make 24 consecutive on-time payments
• Show twice as much income as your loan balance
• Pass a credit check

If you want to reward your cosigner by sending them on their way, you might avoid a 15-year loan term. Under that scenario, you wouldn’t be able to release them until you’ve been in repayment for seven-and-a-half years.

To make matters worse for some borrowers, international students can’t achieve cosigner release at all.

If cosigner release essential to you and your guarantor, you might consider borrowing from Sallie Mae, which offers a 12-month route to release.

A limited form of forbearance

Forbearance is a vital component of any student loan, as it allows you to press pause on your repayment in the face of hardships such as unemployment.

Unfortunately, College Ave is cagey about its forbearance policy, leaving details off its otherwise resource-heavy website.

It turns out, the lender evaluates forbearance applications on a case-by-case basis. In other words, if you find yourself out of work or under another sort of financial duress during repayment, there’s no guarantee College Ave will grant you a reprieve.

If you think you might need a more clear-cut safeguard built into your loan, you might opt to borrow from Discover, as the bank offers a variety of protections, from payment extensions to as many as 12 months of forbearance.

Third-party loan servicing

If you’re attracted to College Ave, in part, because of its modern, easy-to-use platform and strong customer service record, you might be disappointed to learn that the company outsources the servicing of its loans.

Repayment of College Ave private student loans even takes place on a different website. University Accounting Service (UAS) handles statements and payments and fields customer concerns.

When deciding whether College Ave is right for you, factor UAS into the equation, too. You might be wise to contact the latter company to get a sneak peek of its effectiveness in answering your loan management questions.

If you’re left wanting more, you might be better off walking into your local bank or credit union, where your loan will be funded and managed under the same roof.

Are College Ave Student Loans right for you?

If you’re an atypical college student — maybe you’re attending part time or seeking an associate degree — College Ave private student loans are more accessible than education financing found elsewhere.

Even if you’re attending a traditional four-year school, you could be drawn to the online lender’s assortment of in-school and postgraduate repayment options. They give you the power to customize a loan that works best for your borrowing situation. Plus, if you (or your cosigner) are especially creditworthy, you could unlock some of the lowest interest rates offered by banks, credit unions and online competitors.

College Ave won’t be as appealing, however, if you’re counting on a fast pathway to cosigner release or federal loan-like safeguards such as mandatory forbearance. To pit College Ave against the competition, find out where the lender ranked among our top-rated student loan companies.

MagnifyMoney has independently collected the above information related to this review, which is current as of June 3, 2019, unless otherwise noted. College Ave. neither provided or reviewed the information shared in this article.