Note that Earnest has temporarily stopped accepting employment offer letters for income verification, and for now, applicants must be currently employed to qualify. Self-employed applicants will be required to provide three years of 1040’s. For more details on how the coronavirus outbreak is impacting student loan refinancing and other issues, check out our Student Loan Hero Coronavirus Information Center.
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Earnest student loan refinance aims to streamline the refinancing process so borrowers have access to merit-based underwriting that takes into account many factors more traditional lenders don’t consider. Under this system, more borrowers could find themselves eligible to save money by refinancing their student loans.
This Earnest student loan refinance review will cover how the application and approval processes work, along with some of the pros and cons of the loan, to help you decide if Earnest refinancing is right for you.
Earnest student loan refinance review: the basics
What we like about Earnest student loan refinancing
What to keep in mind with Earnest loans
Is Earnest refinancing right for you?
Earnest student loan refinance review: the basics
Earnest (which also does personal loans) offers student loan refinancing to college graduates who have their own college debt, as well as to parents who borrowed loans to pay for their child’s education.
Here are some features you can expect with Earnest student loan refinance:
- Earnest loan rates: Variable at 3.21% – 8.72% and fixed at 3.21% – 8.77%
- Receive a rate quote in two minutes
- Autopay discount of 0.25%
- The option to choose your minimum payment
- Repayment terms of between five and 20 years
- Deferment and forbearance options for borrowers who return to school or run into financial hardship
- No set income requirements
- No origination fees or prepayment penalties
- Minimum loan amount of $5,000 and maximum of $500,000
- Earnest’s minimum credit score of 650
To refinance student loans with Earnest, you must be at least 18 years old and a U.S. citizen or permanent resident. Your debt must also be from a Title IV accredited college or university, and you must have completed your degree or be set to do so in the current semester.
What we like about Earnest student loan refinancing
There’s plenty to love about Earnest if you plan to refinance student loans. Here are some of our favorite features:
Check Earnest loan rates in two minutes
If you’re wondering how long Earnest takes to review your fit for refinancing, keep in mind that you could apply for and receive a quote in two minutes. Just by entering some basic information and yourself, you could check whether the lender could be a fit for your repayment.
Does Earnest do a hard pull on your credit at this time? No, the company will perform only a soft check on your credit report to deliver quotes. The hard check that could temporarily ding your credit would only come during the formal application process.
Flexible approval process
One of the biggest advantages of Earnest refinancing loans is the fact that approval is possible even with a short or nonexistent credit history.
If you don’t have a strong credit history, Earnest could approve you for student loan refinancing based on several other factors (a particularly negative financial history, however, could prevent you from approval).
When you apply for Earnest student loans, you link your bank accounts to your Earnest profile. The process is similar to the way budgeting tools like Mint and Personal Capital work — that’s why Earnest’s asking for bank account information. It requires your username and password to access your account information.
While the lender does look at your credit report, it doesn’t rely entirely on this traditional method of assessing your reliability. Other aspects of your personal finances — including your checking, savings and investments accounts — are considered during the process.
Earnest’s approval process is unique because it looks not just at your income and current debt, but also other aspects, like your job history. Because of this, Earnest loans might offer an alternative for borrowers who can’t get a competitive rate with a more traditional lender.
If you’re looking to refinance without a degree, Earnest also opens refinancing to current students who are within six months of graduating and hold a job offer.
Flexible repayment options
Earnest also offers flexible repayment terms that you can customize before locking in your loan. Instead of picking a repayment term and automatically receiving an interest rate and monthly payment, you’re in control. For example, you can choose your monthly payment from a broad range of options that Earnest provides. In fact, with excellent credit, you might choose from one of 180 options spanning every month between five and 20 years.
You also can choose to skip one payment a year and make it up later. Additionally, Earnest offers forbearance if you unexpectedly lose your job, as well as deferment if you’re returning to school or serving active duty in the military. These options allow you to temporarily pause your payments, making it a little easier to manage your student loan debt. Just be aware that interest will continue to accrue onto your balance while you’re away from repayment.
What to keep in mind with Earnest loans
While Earnest offers certain advantages, there are some things to consider before you move forward with your application. The company doesn’t operate, for example, in Delaware, Kentucky and Nevada. Other factors to keep in mind include:
Minimum credit score
Even though Earnest uses factors beyond your credit history to determine your eligibility, you must still meet the minimum credit score requirement. In fact, to get the best of Earnest, you’ll need a score of 650 or above.
As a result, Earnest loans might not be an option you’ve had financial problems in the past. For instance, you might not qualify to refinance your student loans through Earnest if those loans aren’t in good standing or if you have accounts recently in collection.
However, most lenders also have minimum credit score requirements, so if you do have poor credit, you’ll likely need to improve your financial situation anyway before applying elsewhere.
No cosigner option
With some lenders, such as SoFi and Citizens Bank, it’s possible to get a cosigner to help you qualify for student loan refinancing. Earnest student loans, however, don’t have a cosigner option for refinancing. So, if you don’t qualify on your own, you won’t be able to improve your chances by getting a cosigner to help you.
No changing ownership of a Parent PLUS Loan
While Earnest offers parents the ability to refinance Parent PLUS Loans borrowed from the federal government, it doesn’t enable you to refinance loans into your child’s name. If your family desires that option, check out CommonBond, which would allow you to transfer debt to your son or daughter.
Earnest app has received negative reviews
If you plan to manage your refinanced loan repayment on a mobile device, keep in mind that the Earnest app has mostly received negative reviews — “Earnest app not working” is a common complaint. With that said, the company has said that the app allows customers to view your balance and submit payments, among other features.
Earnest: Paying with credit card not possible
For all of its flexibility elsewhere, Earnest doesn’t allow customers to make their student loan payments with a credit card. You could still pay digitally from your checking or savings account.
Refinancing federal student loans turns them private
Besides issues to consider that are specific to Earnest student loan refinancing, there are some general caveats to refinancing when it comes to federal loans.
Even though refinancing can help you reduce your interest rate in some cases, it’s important to understand that you will lose certain borrower protections if you refinance federal student loans.
Once you refinance with Earnest, for example, you’ll be ineligible for federal income-driven repayment plans and federal student loan forgiveness programs. Given this, you want to make sure you don’t need any governmental programs before you turn your debt private through refinancing.
Is Earnest refinancing right for you?
Now that you know Earnest is legit and, possibly, a great option for your repayment, you might raring for the next step. Before you decide, compare lenders who refinance student loans. Generally speaking, Earnest might be a good choice if you:
- Have good financial habits, like saving money regularly
- Can show regular income and can comfortably afford the monthly payments
- Don’t plan to take advantage of income-driven repayment or student loan forgiveness for your federal student loans
- Have higher interest rates on your current student loans than what’s offered for your refinancing loan
In the end, Earnest student loan refinancing offers flexibility and options that can work well for some borrowers. Carefully consider your situation and your financial needs as you make a decision about your student loans.
Rebecca Safier, Andrew Pentis and Eric Rosenberg contributed to this article.
Student Loan Hero has independently collected the above information related to Earnest refinancing loans. Earnest has neither provided nor reviewed the information shared in this article. The information in this article is accurate as of the date of publishing.
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