Being able to skip a monthly student loan payment when you need to might sound like pie in the sky, but one student loan company serves up the special to its customers.
Earnest has long been known for refinancing education debt but, as of April 2019, it’s also lending it to current students.
Aside from the ability for borrowers to forgo one payment per year, the online-only lender offers other perks, including competitive rates and an easy application process. Here’s our full Earnest student loan review.
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 3.21% and fixed rates beginning at 3.21%, 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.