Earnest Student Loan Review: Innovative Solutions for Borrowers

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

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As a long-time leader in the world of student loan refinancing, Earnest recently expanded its offerings into new student loans for undergraduates and graduates. But are they a good deal? This Earnest student loan review will look at what kind of borrower is the best fit for this lender.

Among the advantages of borrowing from Earnest, now a subsidiary of student loan servicer Navient, is its streamlined online application process for students and cosigners. Through its website or mobile app, Earnest lets you easily apply for as much funding as you need to cover the costs of your degree.

But of course, there are drawbacks too. Here are our thoughts about Earnest student loans, including:

Earnest student loan review: The basics
What we like about Earnest student loans
What to keep in mind about Earnest student loans
Are Earnest student loans right for you?

Earnest student loan review: The basics

In April 2019, Earnest began offering undergraduate and graduate student loans, ranging from $1,000 (or more, depending on your state) all the way up to the full cost of school attendance.

With its online quote, Earnest lets you check your eligibility and see what rates you might qualify for. You’ll have a choice of variable or fixed rates, which start at 3.35% and 4.69%, respectively.

Not only does Earnest offer competitive rates on its student loans, but it also has flexible repayment terms (see below). Plus, it doesn’t charge any fees for loan origination, prepayment, early payments or extra payments.

Like other private lenders, Earnest has stringent underwriting criteria to qualify for a student loan. Since most students won’t be able to qualify on their own, you can add a cosigner to your application.

What we like about Earnest student loans

As a student loan borrower, you have lots of options when it comes to private lenders. Here are a few benefits that make Earnest a competitive option for funding your education.

Has a streamlined application process

As an online company, Earnest prioritizes a streamlined user experience. Whether you’re using its website or mobile app, you’ll find it easy to apply for a loan.

According to Earnest CEO Susan Ehrlich, the first applicants were able to complete the entire application process in just seven minutes. Plus, its instant rate quote means you can check your loan offers without any impact on your credit score. The lender will only run a hard inquiry (which does have a small impact on your credit) if and when you choose a loan offer and submit a full application for consideration.

Offers a nine-month grace period

Earnest offers a longer grace period than most other lenders, allowing you to defer payments while you’re in school and for nine months after you graduate. Most lenders only let you defer payments for six months after you graduate, and this extra time could be invaluable if you need a while longer to search for a job and stabilize your income.

That said, taking advantage of the full grace period isn’t always in your best interest. Private student loans start accruing interest as soon as the money you borrowed is disbursed, so you’ll face a bigger balance at the end of your grace period if you wait to begin repayment.

If you can afford small in-school payments, you can cut down on interest and make it easier on yourself after you graduate and full repayment kicks in.

Lets you skip a payment once per year

Life happens, and you might experience a layoff or run into an unexpected expense. To help you through a tough time, Earnest allows you to skip one payment on your student loan every 12 months.

To qualify, you’ll have to make the request at least five days before your payment is due. And you can only do this after you’ve already been making on-time consecutive payments for at least six months.

Although this feature isn’t a long-term solution to financial problems, it could help if you need a month without paying your student loan while you get back on your feet.

Provides flexible repayment options

Before you borrow your Earnest student loan, review your options for repayment terms. Earnest lets you choose terms of five, seven, 10, 12 or 15 years on a cosigned student loan, or 10, 12, or 15 years for an independent student loan.

Plus, it also has various options for when you start repayment. You can choose among the following:

  • Defer payments. Take full advantage of your grace period and don’t start making payments while you’re in school or for nine months after you graduate.
  • Pay $25 per month. Make small, fixed payments as a student in order to cut down on interest.
  • Pay the interest while you’re in school. Pay just the accrued interest so you won’t face a bigger balance once full repayment starts.
  • Make principal and interest payments. Begin repayment right away — if you can afford it — to get the lowest long-term costs of borrowing.

Not that you might not be able to take advantage of Earnest’s extra-long grace period if you live in certain states. Also, before choosing a repayment term, use our student loan calculator to estimate how much you’ll pay each month and how much interest it will cost, based on the term you choose.

What to keep in mind about Earnest student loans

Although Earnest student loans have a lot of perks for students, they might not be right for everybody. Before you borrow an Earnest student loan, review these potential downsides.

Doesn’t offer cosigner release

As a student, chances are you won’t be able to qualify for a private student loan on your own. To boost your chances, you may likely need to apply with a creditworthy cosigner, such as a parent.

Your cosigner becomes just as responsible for the debt as you, and their credit is on the line in the event you can’t pay. Plus, their debt-to-income ratio could increase, since their name is on your loan, and this might limit their own access to credit.

Some lenders, such as Sallie Mae and College Ave Student Loans, allow you to apply for cosigner release after a certain period of on-time payments. If approved, you could get your cosigner removed from the loan completely.

But Earnest doesn’t offer cosigner release at this time, so your cosigner will be on the hook for your debt for the entire life of your loan.

Doesn’t fund student loans in every state

Earnest doesn’t provide student loans in every state. If you or your cosigner live in any of the following places, you won’t be able to access Earnest student loans:

  • Arkansas
  • Connecticut
  • Hawaii
  • Illinois
  • New Hampshire
  • Nevada
  • Texas
  • Virginia

What’s more, borrowers in certain states won’t be able to get the full range of Earnest benefits. For example, residents of Minnesota and Tennessee can’t choose variable rates; they only have access to fixed rates on Earnest student loans.

Check the Earnest website to find out if you have any limitations around borrowing, based on your state of residence.

Might not approve you without strong credit

Finally, Earnest student loans are only available to borrowers or cosigners with strong credit and a steady income. Fortunately, Earnest makes its underwriting requirements for you or your cosigner clear:

  • A minimum credit score of 650
  • An annual income of at least $35,000
  • At least three years of credit history
  • No bankruptcy on your credit report
  • A history of on-time payments
  • No accounts in collection
  • Enough savings to cover at least two months of expenses
  • No large amounts of credit card or personal loan debt
  • A habit of spending less than you earn
  • No regularly charged banking fees, such as fees for insufficient funds

All private lenders have some sort of underwriting requirements to qualify for a loan, and if you can’t meet Earnest’s criteria, you might have to look elsewhere.

Are Earnest student loans right for you?

If you’re looking for a student loan for your undergrad or graduate program, Earnest could be the lender for you. With its easy application process and student loan benefits, Earnest offers a streamlined way to get the funding you need at competitive rates.

But Earnest isn’t the only student loan provider out there, and it’s important to shop around to find the best loan for your needs. So before choosing Earnest, make sure to compare offers from multiple lenders.

By putting in your due diligence now, you can find a student loan with the best rates and terms for you.

Need a student loan?

Check out our top picks below or learn more about other ways to pay for college.
Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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