Earnest Private Student Loan Review

Written by: Kimberly Burton
Updated: 7/11/24

Embarking on the journey of higher education is thrilling, but it often comes with a hefty price tag. Like many students, you might find yourself wondering how to cover the costs of tuition, books, room and board, and other essential expenses. Scholarships and savings are helpful, but they rarely cover everything. That’s where student loans come in. About 70% of college students rely on loans to fill the financial gap.

The first step for many is filling out the Free Application for Federal Student Aid (FAFSA). This form opens the door to federal financial aid, which usually offers better terms, like lower interest rates and flexible repayment plans. But sometimes, federal aid just isn’t enough, and that’s when private student loans become an option worth exploring.

Private student loans can seem like a maze with so many options, each with its own terms and conditions. Choosing which one can feel like trying to compare apples to oranges. Interest rates, repayment terms, and loan limits can differ wildly from one lender to another. It can be overwhelming to understand these differences and find the right loan for you. In this article, we’ll dive into the details of one such lender to help you navigate this complex landscape.

Earnest is one of these options.

About Earnest

Established in 2013, Earnest had the goal of providing more personalized and flexible products, the first of which was student loan refinancing.  By 2015, they expanded their offerings to include personal loans.  In 2016, the company was acquired by Navient, a major student loan servicer.  The two companies combined talents and resources to help even more students. 

Since then, Earnest has experienced steady growth and become a popular provider in the private student loan sector.

They focus on using data and technology to offer customized student loan solutions, helping borrowers manage their debt more effectively. It’s this personal approach that makes Earnest popular among customers.

Loans are facilitated through One American Bank. 

Ranking 10/10 as Earnest is a solid lender versus being merely a marketplace for student loans. 

Our Process

When considering any loan, several factors will influence your decision. These include the school you’re attending, the amount you need to borrow, your credit score (and your cosigner’s, if you have one), the loan’s interest rates, and the repayment terms.

We’re going to outline the features of Earnest and how they compare to other lenders on a scale of 1 to 10 (A few factors we gave more weight to and those will be pointed out below.) 

Overall Ranking

After looking at more than 15 factors and comparing the most popular private student loans on the market, we’ve given Earnest 4.3 out of a possible 5 ranking. Their offerings are competitive with other lenders, but a few features lowered their ranking.

Keep reading to explore the details of applying for and obtaining a loan with Earnest and to understand how we arrived at this ranking.

Who Can Apply?

To qualify for an Independent Undergraduate Student Loan with Earnest, students must be attending or enrolled to attend an eligible 4-year Title IV, not-for-profit institution at least half-time (other loans require you to be a full-time student).  

Students must live in the District of Columbia or one of 49 states (Earnest does not lend in the state of Nevada).  

If a student is not a US citizen, they must possess a 10-year (non-conditional) Permanent Resident Card, be a Deferred Action for Childhood Arrival (DACA) Recipient, or be an Asylee.

The loan must be at least $1,000 and you must be current on any past-due loan balances. 

Independent borrowers must be the age of majority in their state, have a FICO score of 650, have 3 years of credit history, have an income of at least $35,000, have no bankruptcy on their record, and have no accounts in collections.

A few other factors for approval are savings to cover at least 2 months of expenses, spending less than you earn and having increasing bank account balances, not carrying large amounts of non-student, non-mortgage debt, having a history of making payments on time, and are not regularly charged late, overdraft, or insufficient funds fees.

If you don’t meet financial, credit, or other criteria, a cosigner may be required.

Earnest offers a 2-minute eligibility check to see if a loan from Earnest is right for you. Once you submit an application, you can expect an answer in less than 72 hours.

While this did not factor into our rankings, your choice of school is a big deciding factor on whether you can apply for any loan.  If you do not follow the traditional school path, you can apply for a loan with Earnest.

What is the maximum loan amount?

A specific loan limit varies with the cost of attending the school, but Earnest private student loans may be available to cover 100% of the cost.

You are encouraged to apply for federal aid before applying for a private student loan. Use private student loans to make up the balance. 

To ensure you take out enough loans to pay for college, but not too much to have you drowning in debt, you’ll need to do some calculations.  One rule of thumb is to not borrow more than what you anticipate you will earn in your first year in the working world.  

Are there any fees to apply? 

In addition to the cost of the student loan, lenders often add other fees for setting up and maintaining the loan. These costs can accumulate, so it’s wise to find a lender that waives them. Earnest does not charge origination, application, or prepayment fees.  And if you miss a payment, you will not be charged late fees either.

This helps borrowers budget their student loan costs more effectively, ensuring that more of the loan amount goes towards actual educational expenses.

This is a definite pro.  The lower the fees, the more affordable the loan is over time.

Ranking 10/10 because less fees are always a plus!

Can I pay the loan off early?

There is no penalty for paying off your loan early. You can make extra payments or pay off the loan in full at any time without penalty. 

Once you leave school, there is a 6 months grace period before you need to start making loan payments; however, some students prefer to start paying on the loan early as making payments while still in school can lower the total cost of your loan. 

Earnest offers several repayment plans.

The first is a Standard Repayment Plan with fixed monthly payment amounts of principal and interest.  

The second is an Interest-Only Repayment Program where you can pay only the interest on the loan while still in school. There is a limit on the time you make these smaller payments so check the fine print on your loan.  Keep in mind that this will probably extend the time of the loan costs more in the long run.

The third is an Extended Term Program, which can be combined with the Interest-Only Repayment Program or Rate Reduction Program. Payment terms can be extended up to 30 years resulting in lower monthly payments, but more interest paid over the life of the loan.

A Rate Reduction Program is available for borrowers having difficulties making payments.  A period of reduced interest rate reduces the overall Monthly Payment Amount.  

Keep in mind that interest will accumulate no matter what option you choose so beginning payments as soon as possible will save money and build credit. On the other hand, not having to worry about payments until after graduation allows students to focus on their studies without immediate financial burden.

This is a pro, offering flexibility depending on your financial situation.

Ranking 10/10 because of multiple repayment options.

While not required, it is strongly encouraged that borrowers enroll in AutoPay. There are interest rate incentives.

Ranking 8/15 as Earnest stresses auto-debit in their terms, while other lenders offer multiple options. Note that we gave more weight to this category because it’s an important factor for borrowers when managing repayments.

Earnest allows a 9-month grace period before loan repayments are required. This is longer than the standard grace period offered by most lenders.

Ranking is 10/10, as the typical grace period offered by lenders is 6 months and Earnest is 9 months.

Are there payment deferment options?

Private loans typically offer fewer deferment options compared to federal loans, making them less flexible if financial difficulties arise. Private loans also lack federal protections, such as forgiveness programs and extensive deferment options, which can be crucial for some borrowers.

Earnest does give you the option of skipping one payment per year.  Keep in mind that interest still accrues during this period, but it’s a nice feature should you need it. 

Deferment options are available for students in school, military service, internships, residency, or part of a fellowship program.

These features are a con with any private loan and not a disadvantage for any private lender. 

Ranking 10 out of 10 due to several payment options and situations where a deferment may be granted.

Do I need a parent to cosign the loan?

While some students can qualify for student loans themselves, they likely will need a cosigner to qualify for a larger loan.  This person is generally a parent or a close relative with established good credit.  

The cosigner must meet the same eligibility requirements as an independent borrower.

While certain lenders allow the cosigner to be released from the loan after a certain period of time, Earnest does not offer this option. If a consignor wants to be released from the loan eventually, you’ll need to look at other options.

Ranking 5 out of 15 due to no option for a cosigner release. Note that we gave more weight to this factor with the highest lenders allowing release after 12 months of payments.

The better the credit rating of the borrowers or their cosigners will determine interest rates and loan amounts.  Good to excellent credit will qualify for the best rates. Establishing a strong credit history or finding a qualified cosigner with excellent credit is essential to accessing competitive loan terms.

This can be a con based on your credit history, but personal circumstances do not affect our ranking.

Ranking 15/15 as the minimum FICO score required for the loan is 650.  Note that we gave this more weight in the rankings as the ability to obtain the loan at a lower interest rate is very important to most borrowers.

Earnest has a Parent Student Loan option where the person taking out the loan, often a parent, leaves the student out of the process altogether. This is an option for parents to support their child’s education by taking on the financial responsibility themselves. This can protect the student’s financial future while potentially securing better loan terms through the parent’s established credit history. 

Earnest Parent Student Loans offer the same repayment options as the private student loans.

What is the application process?

Earnest’s approval process once an application is submitted is around 72 hours. As mentioned, there is a 2-minute quick application that will give you an idea if an Earnest loan is right for you.  Earnest is pretty clear about their requirements, so make sure you look at the checklist on their website to ensure the loan would be a good fit.  

Like most lenders, a Soft Pull of your credit report will be required in the pre-qualification stage. These types of inquiries will not negatively affect your credit. If you decide to continue with the process, more details will be required.

Once approved, Earnest will work with you on repayment options, and disbursing the funds to your school of choice. 

Ranking 10/10 based on a “soft pull” of the credit report, which is not reported to the credit-reporting agencies.

How competitive are the rates?

 

Earnest has a 100% rate match guarantee.  They will match any other lender’s rates and also give you a $100 Amazon gift card once your rate match is finalized.

Earnest rates include an auto-pay discount (0.25%), which means that you must set up direct payment from your bank account. Automatic payments are not required to obtain the loan, but can save you money. 

Loans can be set up with fixed or variable rates.  While variable rates can seem attractive when setting up the loan, the interest rate can fluctuate over time, potentially increasing the total cost of the loan.

At the time of this article, rates on the website show:

Fixed Rate Loans range from 4.29% – 14.83% APR

Variable Rate Loans range from 5.62% – 16.85% APR

If you can lock in a fixed-rate loan with an excellent credit score, your loan will be significantly lower than starting with a variable rate and seeing it rise to the upper percentage rates.

Ranking 10/10 based on the options of both fixed and variable rates; however, depending on credit score, these rates may not be advantageous when you are ready to sign your loan.  We encourage you to shop around for the best rates. 

Based on the competitiveness of variable and fixed rates at the time of this article, the rates on the website were not the lowest among all the lenders we ranked. As a result, it brought their overall score down. We encourage you to take advantage of the rate match guarantee.

Are there other resources available?

The Earnest website provides resources and tools to help students and their families on their college journey, including financial calculators, answers to questions related to financial aid, and other valuable information about college and career choices.  

There is also a scholarship search feature to find other options for college funds.

If you have further questions, you can call their customer service line.

Ranking 10/10 due to Special Product Features in addition to just the loan.

What else should you consider?

We investigated the rating provided by the Better Business Bureau (BBB), which gives consumers confidence in a business’s reliability and trustworthiness. The rating is based on factors like customer complaints, transparency, and adherence to BBB standards. A higher BBB rating indicates that a business resolves customer issues effectively and operates ethically. It serves as a measure of transparency and accountability, showing how well a business treats its customers and handles disputes.

Earnest received an A rating, which ranked 9 out of 10 on our scale.

Ranking 9/10 based on feedback from borrowers and an overall ranking of A.  We encourage you to look up any lender we review on their website at www.bbb.org

We also looked at other reviews for our private student loans. If the loan was reviewed on major financial sites, we considered this a plus to the visibility of the loan. While this is a small factor in whether to consider a loan, we do recommend careful research when comparing this loan to others.

Ranking 9/10 based on a 4.5 review from NerdWallet. 

Does Earnest offer other loans?

We focused on undergraduate private student loans in our analysis, but Earnest also offers graduate student loans for MBA, medical school, and law school. They also offer international student loans and DACA student loans.  

Later, if you find yourself struggling with multiple or large loans, there are options for loan consolidation and refinancing.

Summary

Here’s a summary of the pros and cons of a private student loan with Earnest:

Pros:

  • Competitive Interest Rates with Rate Match Guarantee
  • Loan Amount up to 100% of the Cost of Attendance
  • No Fees
  • Flexible Repayment Terms
  • A Rating by the BBB
  • Solid Rating from NerdWallet
  • The Ability to Skip a Payment
  • 9 Month Grace Period for Repayment

Cons:

  • Relatively High Variable Interest Rates
  • No Cosigner Release Option
  • Approval Takes 72 Hours
  • No Income-Driven Repayment Plans
  • Interest Accrual During In-School Deferment Periods
  • Lack of Federal Protection

Overall Ranking

Based on our set of criteria, we rank Earnest at 4.3 out of 5.

Next Steps

Navigating private student loans can be complex, as we’ve discussed in this review. It’s crucial to thoroughly evaluate multiple options before making a decision. Visit lender websites, speak with their representatives, and prioritize key features based on your needs.

Your loan choice will be influenced by various factors, each carrying different levels of importance depending on your situation. Taking these steps ensures you’re well-informed and can select the loan that best fits your financial and educational goals.

Explore our other reviews and resources for more information on private student loans.

Click here to Apply to Earnest Bank Private Student Loans

About the Author

Kim Burton is a versatile content and technical writer residing in the scenic mountains of Colorado. A lifelong learner, Kim enjoys crafting insightful articles on finance, technology, marketing, nutrition, real estate, and self-care. She holds a bachelor’s degree in Marketing and is a certified nutrition coach. As a mother preparing her child for college, Kim has conducted thorough research into the student loan process, equipping herself with a wealth of knowledge to navigate this complex financial landscape. When she’s not writing, Kim enjoys hiking, creating, gardening, and hanging out with her family.