Earnest Student Loans Review – A Flexible Borrowing Option
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Need to borrow more money to earn your college degree? Are federal student loans not providing enough dollars to get you through four years of university studies? Then, you might need a private student loan. And one source? Earnest.
Earnest is a lender that provides private student loans and personal loans. Borrowers can also turn to Earnest to refinance their existing student loans if they want to swap a higher interest rate with a lower rate on their student loan debt.
But is Earnest the right provider of private student loans for you? That depends on the type of loan you need, your credit score, and your college enrollment status.
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What are Earnest student loans?
There is a difference between federal student loans and private student loans. As the name suggests, the U.S. government guarantees federal student loans. Most students who need to borrow money to pay for college choose federal student loans first.
That’s because federal loans often have the lowest rates and the best loan terms. They also offer repayment plans and forbearance programs that can help students who are struggling with their loan payments.
However, there are limits to how much you can borrow with federal student loans. Most dependent undergraduate students can only borrow a total of $31,000 in federal student loans. Those who need to borrow more than that will often turn to private student loans to fund the difference.
There are plenty of lenders that offer private student loans, including Earnest. What sets Earnest apart, though? First, Earnest says on its Web site that it charges no fees. This means you won’t have to pay any upfront costs when applying for an Earnest private student loan.
Earnest also offers a nine-month grace period, three months longer than most providers of private student loans. When students graduate or drop below half-time enrollment status, they are not required to begin paying back their student loans until six months have passed. Earnest, though, extends this grace period for nine months. This means that you’ll have three months longer to find a job and build your savings before you must repay the money you’ve borrowed.
Earnest will also let you borrow enough funds to cover 100% of your university’s cost of attendance. That is one difference between federal and private student loans: There are stricter limits on how much you can borrow with federal loans.
You can also turn to Earnest if you need a student loan refinance. In the refinance process, you’ll swap your existing student loan for a new loan from Earnest. The hope is that this new loan will come with lower interest rates and, because of this, a lower monthly payment.
If you want to lower your loan’s interest rate even more, you can sign up for Earnest’s autopay discount. By signing up for automatic student loan payments, you can lower your loan’s interest rate by 0.25%.
Earnest also offers several different student loans, including those designed for undergraduate students, graduate students, MBA students, and students attending medical or law school.
Is Earnest a trustworthy company? Trustpilot gives Earnest an excellent rating of 4.7 based on 6,450 reviews. The Better Business Bureau gives Earnest an A+ grade.
5.62% - 16.85% VARIABLE rate APRs 4.39% - 16.49% FIXED rate APRs
- Check your eligibility in just 2 minutes
- Fast application and decision-making process
- Flexible repayment options
- No fees for origination, disbursement, prepayment, or late payment
- Skip a payment once per year (once repayment period restarted)
- Covers up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)
How Earnest student loans work
The application process for an Earnest student loan is simple. First, visit Earnest’s student loan site. Scroll to the black “Apply Now” button to start your loan application.
That takes you to this start page:
Here, you specify whether you are a student applying for a student loan or a parent or cosigner. Once you make your decision, click the green “Next” button. Next, Earnest will check to make sure you meet its eligibility requirements.
You’ll need to provide Earnest with your name, street address, city where you live, and your birthday. Earnest will also ask about your citizenship status, where you are attending school, and whether you are enrolled full-time or half-time. Earnest will also want to know when you plan to graduate. This helps Earnest set your repayment terms.
After you provide this information, click the “Continue Application” button at the bottom of the page.
Next, you’ll need to tell Earnest a bit about what kind of student loan you’d like:
You can apply for a cosigned loan in which someone you know, usually a parent or other family, cosigns your application. This means that if you miss your payments, your cosigner is responsible for paying. These loans are less risky for Earnest, so you’ll pay lower interest rates.
Your cosigner doesn’t have to be on the hook for your missed payments for the entirety of your loan. If you have a record of making on-time payments on your student loan, you can apply for a cosigner release. This form releases your cosigner from any obligations should you miss a payment. Your cosigner will no longer be responsible for paying Earnest if this happens. Earnest will be more likely to grant you a student loan cosigner release if you haven’t missed any student loan payments in the past.
You can also apply for an independent loan. This type of loan requires no cosigner, making it riskier for Earnest. Because of this, Earnest might charge you a higher interest rate.
Once you select a loan type, Earnest will ask about your employment status:
Once you provide this information – which will help Earnest set your repayment terms – hit the “Continue” button. If you choose a cosigned loan, Earnest will next ask about your cosigner, including that person’s name and the state where your cosigner lives.
You will also have to tell Earnest the loan amount you want to borrow and give the company permission to perform a credit check on you. Earnest will check your credit history during this credit check to determine if you are likely to make your payments on time.
To qualify for a student loan from Earnest, you must meet certain requirements. You must pursue a bachelor's or graduate degree and request a loan of at least $1,000. You must also be enrolled in school at least half-time.
To qualify for a co-signed undergraduate student loan, your cosigner must have a minimum credit score 650. The primary borrower is not required to have a minimum FICO score. Your cosigner must also have a minimum income of $35,000 a year. The cosigner and primary borrower must not have a bankruptcy filing on their credit reports.
If you are applying for an independent undergraduate student loan without a cosigner, you must have a minimum FICO credit score of 650, at least three years of credit history and an income of at least $35,000. These requirements -- especially the income part -- mean that most undergraduate students must apply with a cosigner for a loan with Earnest.
If your loan application is approved, you can choose from a private student loan with a fixed or variable interest rate. A variable-rate loan is one in which the interest rate can change over time, depending on what economic index it is tied to.
5.62% - 16.85% VARIABLE rate APRs 4.39% - 16.49% FIXED rate APRs
- Check your eligibility in just 2 minutes
- Fast application and decision-making process
- Flexible repayment options
- No fees for origination, disbursement, prepayment, or late payment
- Skip a payment once per year (once repayment period restarted)
- Covers up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)
How much does an Earnest student loan cost?
The good news? Earnest does not charge origination fees. This means that you can apply for an Earnest student loan for free. Also, if you make a payment late, you will not have to pay late fees. Earnest also does not charge a prepayment penalty if you pay off your loan early.
This doesn’t mean that Earnest student loans are free. You’ll be charged interest on your loan, which is how Earnest makes money. The interest rate you are charged will vary depending on whether you are taking out a variable- or fixed-rate loan. Your rate will also depend on your credit score.
If you take out a fixed-rate private student loan from Earnest, your interest rate will range from 4.64% to 16.74%. If you take out a variable-rate loan, this rate will range from 5.87% to 18.51%.
Features of an Earnest student loan
What features set an Earnest private student loan apart from others? Here are some key ones:
A variety of loan terms. You can apply for an Earnest student loan with terms of five, seven, 10, 12, and 15 years. The longer your term, the lower your monthly payment will be. But with a shorter-term loan, you will pay less in interest, making a shorter-term loan a less expensive choice.
Flexible repayment options. Earnest offers a variety of repayment plans. You can choose the standard repayment plan with a fixed monthly payment. This is the fastest and least expensive way to repay your loan.
You can also request an interest-only repayment plan. With this plan, you'd only pay interest for part of your loan's term. When the loan leaves its interest-only period, your payment will jump as you now make both interest and principal payments. Make sure, then, that you can afford the higher payment that comes after the interest-only period ends.
The extended-term plan lengthens the term of your loan. For instance, if your term is five years, you might request that Earnest boost it to 10 years. The goal is to give yourself more time to repay what you've borrowed.
The rate-reduction plan provides a lower interest rate, reducing your monthly payment if you struggle to make your current payment. Earnest typically provides a lower interest rate for six months.
You won’t need to worry about your credit report with a co-signer. Is your credit score damaged? If you have a cosigner on your loan, it doesn’t matter. Your cosigner must have a minimum FICO score of 650. However, your credit score does not factor into Earnest’s decision to approve you for a loan. That makes a cosigned loan a good choice for students with a limited credit history or lower credit scores.
You don’t have to pay back your loan right away. Your loan comes with a nine-month deferment. This means you don’t have to start making payments until nine months after graduation. Most student loans come with a six-month grace period.
Pros and cons
Pros
- Earnest charges no origination fees.
- You won’t have to pay late fees, even if you make your payment late.
- If you apply with a cosigner, your credit score won’t matter. (Though your cosigner needs a FICO score of at least 650.)
- You can refinance student loans with Earnest, hopefully resulting in a new loan with a lower interest rate.
- Earnest student loans come with a longer grace period after you graduate.
Cons
- If your credit score is low and you don’t have a cosigner, you will pay a higher interest rate.
- Earnest doesn’t offer a cosigner option if you want to refinance your student loan.
- Products such as interest-only student loans come with higher monthly payments later in the life of your loan.
Who are Earnest student loans right for?
Students worried about their incomes immediately after graduation. Earnest can be a good choice if you’re worried that it might take you longer to find a job after graduation or that your income will grow more slowly. That’s because of the company’s nine-month grace period. Because Earnest’s grace period is three months longer than is typical, you’ll have more time to find a job with a solid salary before you’ll have to repay your loans.
Students who have access to a co-signer. If you can find a family member who will cosign your student loan, Earnest won’t consider your credit score when evaluating your loan application. Instead, it will only look at your cosigner. If your co-signer has a higher credit score, this could result in a lower interest rate on your student loan.
Students who value flexibility. Earnest offers a range of loan lengths so that you can choose the term that best works for you. The lender also offers variable-rate and fixed-rate loans and repayment plans designed for students who might not earn a high income immediately after graduation.
Graduate students or those pursuing an advanced degree. Earnest offers student loans designed for graduate students, those in medical school, those pursuing an MBA, and those enrolled in law school. Earnest also offers student loans for parents paying for their children’s college costs.
Who should not apply for Earnest student loans?
Students with weak credit and no cosigners. If your credit score is weak and you can’t find a cosigner, an Earnest student loan might not work for you. That’s because Earnest bases its lending decisions largely on your credit score. A lower score will result in higher interest rates. If your score is too low, you might not qualify for an Earnest student loan.
Students who are not enrolled on at least a half-time basis. To qualify for an Earnest student loan, you must be registered at least on a half-time basis at your school.
Students who have not yet exhausted their federal student loan options. Federal student loans are a better choice than private loans. If you haven’t reached your borrowing limit with federal student loans, it makes more sense to take out another federal loan than it does to apply for a private student loan.
Related: Best Private Student Loan Providers
5.62% - 16.85% VARIABLE rate APRs 4.39% - 16.49% FIXED rate APRs
- Check your eligibility in just 2 minutes
- Fast application and decision-making process
- Flexible repayment options
- No fees for origination, disbursement, prepayment, or late payment
- Skip a payment once per year (once repayment period restarted)
- Covers up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)
Earnest student loans vs. the competitors
Student loan provider | Interest rates | Minimum credit score needed | Fees |
Earnest | 4.64% to 16.74% for a fixed-rate loan, not including any auto-pay discount. | 650 if applying without a cosigner. If applying with a cosigner, that cosigner must have a 650 minimum FICO score. | Earnest charges no application or origination fees. |
Sallie Mae | 3.99% to 15.70% | Sallie Mae does not disclose a minimum FICO credit score. | No application fee. |
College Ave | 4.29% to 16.85% | If applying with a cosigner, that cosigner needs a minimum credit score in the mid-600s. | No application fees. |
SoFi | 4.19% to 14.83% with autopay discount | 670 or higher | No application fees. |
Sallie Mae
Sallie Mae offers several types of loans, including private student loans. You can work with this lender to fund 100% of your education costs. Sallie Mae offers graduate and undergraduate student loans, medical school loans, dental school loans, MBA loans, and career training student loans.
For a fixed-rate Sallie Mae undergraduate student loan, interest rates range from 3.99% to 15.49%. For variable-rate undergraduate loans, rates range from 5.37% to 15.70%. Sallie Mae charges no origination or application fees for its private student loans.
Loan terms for undergraduate loans range from 10 to 15 years. Sallie Mae, like all lenders, will check your credit history and score when you apply for a student loan. The company, though, does not disclose its minimum required credit score.
College Ave
Another private lender, College Ave, also provides a wide range of student loan products, including loans for undergraduate and graduate students, medical school students, and those pursuing law degrees and MBAs. Parents can also apply for student loans to help pay for the costs of their children’s college educations.
Depending on the type of student loan for which you are applying, interest rates on College Ave loans range from 4.29% to 16.85%. If you are a student with limited or no credit history, you must apply with a cosigner. College Ave says this cosigner must have a credit score in the mid-600s.
College Ave offers loan terms of five to 15 years. This lender does not charge any origination or application fees for its loans.
SoFi
SoFi is a well-known provider of loans, including private student loans. Like other lenders, SoFi offers a variety of student loans, including those tailored for graduate students, undergrads, those pursuing healthcare careers, students attending trade schools, and those seeking an MBA.
Interest rates on SoFi student loans vary, but you can expect to pay from 4.19% to 14.83% with the company’s autopay discount. You can choose from loan terms of five, seven, 10, and 15 years.
SoFi does not charge any application fees. To qualify for a SoFi loan, you might consider enlisting the help of a cosigner. Otherwise, you’ll typically need a minimum credit score of 670.
The bottom line
Earnest is a good choice for students who want a variety of student loan types, who need extra time after graduation before they start paying off their student loan debt, and who want to avoid application or origination fees. Be sure, though, to consider a cosigner, as that makes it easier to qualify for an Earnest student loan.
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Writer
Dan Rafter is a freelance writer who has more than 20 years experience covering personal finance. He's written for the Chicago Tribune, Washington Post, Bankrate, CreditCards.com, Rocket Mortgage, NortonLifeLock and several others.
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