Earnest is one of the most significant student loans and refinancing service providers. Headquartered in San Francisco, the company uses special technology- software and algorithms- to detect individuals’ creditworthiness. While many companies use traditional methods like income and FICO scores as indicators, Earnest chooses applicants by considering more details, such as spending and saving patterns. Earnest provides personal and private loans, besides student loan refinancing services. This guide will present these service types and explain their eligibility conditions for Earnest student loans in detail.
Private Earnest Student Loans
When it comes to private student loans, Earnest provides multiple options. Different loans exist depending on the education type, such as graduate, undergraduate, medical, law, etc. In the following section, we will present these loans and discuss their features.
However, before presenting loans, there are some terms that borrowers need to be aware of. These terms might appear in the loan type you are looking for. Hence, it is advisable to get familiar with them.
1. Skipping Payments
Some Earnest student loans deliver a benefit by giving the borrowers a right to skip a payment once a year. Yet, this simple benefit needs further clarification.
If you get private student loans or enjoy refinancing services, this benefit can be accessible. However, it is not guaranteed and is at the lender’s discretion. Personal loans do not provide this opportunity.
“Skip-a-payment” features allow borrowers not to pay once a year in case of emergencies and unexpected financial challenges. It is a part of the student loan forbearance limitations mentioned in the loan agreement. When a payment month is skipped, the repayment period extends by this duration. Additionally, keep in mind that the interest will accrue due to the skip, and it might increase the standard payments slightly.
Eligibility and Application
The feature also has eligibility requirements. For example, borrowers can enjoy this feature only after making payments for six consecutive months. These payments should be in good standing- on time, in full amount. If you have a deferred student loan or utilize $25 fixed or interest-only repayment plans, you will not qualify for this benefit. A borrower who refinances the loan again should start a 6-month payment requirement all over, from refinancing for the additional time.
Borrowers in need of this benefit should fill a form and upload it to their Earnest Profile. The lender must receive this request a minimum of 5 business days before the payment date.
2. AutoPay
The auto-pay function allows interest rate deduction if the borrower makes automatic payments. It can be possible if the borrower permits Automated Clearing House (ACH) withdrawal from the bank account. Auto-pay might not be accessible when the loan already provides some kind of interest rate reduction benefit. Besides, only one of them can utilize this feature for multi-party loans.
In case a borrower does not want to Auto-pay the loans, he/she should contact the loan servicer. It is also possible to use the Earnest account to cancel this feature. Remember that this change can take around five business days to be reflected on the online dashboard.
Undergraduate Student Loans
Earnest provides more accessible and affordable loans to students to pay for their college tuition. It is possible to cover the whole education with the Earnest student loans, which start from 1.05% variable and 3.49% fixed APR at the time of writing.
The loan provides many benefits. For example, skipping the payment is possible as it is a private loan. We explained this feature in detail in the above sections. Additionally, the mentioned Auto-Pay feature also applies to this loan and grants a 0.25% discount if used.
Besides the mentioned benefits, these Earnest student loans can grant a 9-month grace period. The grace period allows borrowers not to start repayment immediately after graduation. It is usually around six months. This period can be extended to 9 months with Earnest undergraduate student loan. However, the borrowers who utilize Principal and Interest repayment plans will not enjoy this benefit during studying.
Speaking of studying, it is possible to choose an in-school repayment plan.
What about Co-signer?
For private undergraduate student loans, having a co-signer is not a requirement. However, co-signer can bring multiple benefits. As the borrower’s claims will be supported with a co-signer, the student can become eligible for the approval fast. Besides, it may lower the cost of the loan.
Eligibility Criteria
There exist different conditions that borrowers and co-signers, if involved, must meet. Earnest student loans for undergraduates require the borrower to be a U.S citizen or have a 10-year permanent residency card.
The borrower, sure, should meet the age of majority definition. This definition changes depending on the geographical location. Although it is usually 18, the majority’s age can change in some states. For example, Mississippi and Nebraska have different requirements, ages 21 and 19.
However, this condition is for borrowers who independently apply for Earnest student loans. In the case of getting support from a co-signer, the borrower might be younger than the age of majority. In such an application, the co-signer should meet this age limiting requirement.
Besides, not surprisingly, the borrower should live in an area where the Earned operates.
Loan-related Eligibility
As its name suggests, to get eligible for undergraduate loans, borrowers should pursue a Bachelor’s degree in a Title IV institution- a non-profit educational organization with a four year study period.
If you are in the 1st, 2nd,3rd year of education, your study should be full-time. However, senior students can enroll half-time. The loan amount should be a minimum of $1,000. Lastly, the borrower should not have a past-due balance up to a year-long period.
What about Financial Standing?
It should not be surprising that the borrower should have a good financial standing to get a private loan. This requirement involves having a FICO score (related to credit performance) of a minimum of 650.
The borrower also needs to have a 3-year long credit history with a $35,000 minimum yearly income. Having accounts in collections or bankruptcy history might make the applicants ineligible.
Graduate Student Loans
Graduate student loans provide almost the same benefits mentioned in undergraduate loans. Auto-pay, payment skipping, nine month grace period, in-school payments, etc., are also available for such Earnest student loans.
Additionally, we need to highlight that these loans do not involve fees for originating, late payments, and prepayment. Only in specific cases fees can be involved. For example, Florida stamp tax is mandatory, around 35 cents per $100 principal loan amount.
The personal, loan-related, and financial requirements are the same as undergraduate loans with slight differences. For example, graduate students do not need to be enrolled full-time; half-time enrollment is enough for eligibility. The co-signer is not mandatory, but having a co-signer can increase the probability of getting approval.
Keep in mind that if you are not sure about the qualifications, you can utilize the online and fast eligibility check function on Earnest’s official website.
Co-signer Requirements
Earnest claims that having a co-signer can increase the approval chance six times. We previously mentioned that both graduate and undergraduate loans do not require a co-signer, but it is possible to have one. This section will give more information about co-signers and the eligibility requirements they have to meet.
A co-signer is a third party who shares the borrower’s responsibilities for loan repayment. Sure, if the loan is paid on time, both the co-signer and the borrower will positively affect their credit histories. Similarly, both parties’ credit performance will be affected negatively in case of late payments and other issues.
Eligibility for Co-signer
When a borrower gets help from a co-signer, he/she should ensure that the co-signer also meets the eligibility criteria. As the borrower, the co-signer must be a U.S resident or possess a ten-year permanent residency. Besides, in this case, not the borrower, but the co-signer should satisfy the age of majority rule.
Again, the loan and education-related requirements stay for the borrowers. However, the financial requirements, such as FICO score of 650, $35,000 income, etc., become applicable to co-signer, not the borrowers.
Therefore, if you think that you do not qualify for private Earnest student loans due to financial performance, you can get a co-signer to maximize your chance. Understandably, young students might not have the required income or lack credit performance to qualify for a student loan. Having a reliable co-signer can speed up the process and grant approval easily.
Co-signer Release- Not Possible
Some student loan companies provide “co-signer release” benefits. Based on this feature, when the borrower makes a certain number of payments, the co-signer can be released from responsibility.
However, unfortunately, private Earnest student loans do not provide this benefit.
Instead of releasing the co-signer, the borrowers can utilize student loan refinancing. We will talk more about refinancing in the following sections.
For now, keep in mind that refinancing involves getting a new loan to cover all existing loans. In this way, it is possible to remove the co-signer from the new loan if the borrower meets requirements independently.
Earnest Repayment Options for Private Loans
If you decide to get Earnest student loans to finance education, you need to get familiar with repayment options, too. The below-mentioned repayment alternatives are accessible when approved. It means there exist conditions that make borrowers qualified for certain student loan repayment plans. For example, state limitations and credit profile can be barriers to your desired repayment option.
1. Fixed
As its name suggests, a fixed plan requires a fixed amount- $25 while the borrower studies or during the 9-month grace period. After this period, the borrower will be obliged to make at least the bill’s minimum required amount.
2. Interest-only
Only Earnest student loans with a co-signer can qualify for an Interest-only repayment plan. This plan allows borrowers to pay only interests, not principal, during studies and a 9-month grace period after graduation. Once the grace period ends, the bill’s full minimum amounts will appear.
3. Full Amount
Another repayment option only available to loans with a co-signer is full payment. Through this repayment plan, the borrower pays the full minimum amount while studying and after graduation. The option is particularly beneficial as it helps to meet the minimum amount of interest during the loan payback period.
4. Deferred
The opposite of full-repayment, which brings the lowest interest paid, the deferred repayment plan results in the highest accrued interest. Hence, the total cost of Earnest student loans with this repayment plan is also the highest. However, different from other programs, the borrowers do not need to make any payments- $0- while studying or a 9-month grace period after graduation. Once the repayment starts, the borrower will make full minimum monthly payments.
Student Loan Refinancing Service
Refinancing is one of the most popular services of Earnest. The company served more than 130,000 borrowers to refinance $11.6 billion worth of student loans.
What is Loan Refinancing?
Student loan refinancing involves getting a new loan from Earnest to pay out other existing loans. In this way, the borrower deals with a single loan, making the repayment process easier. The new loan can also provide better terms like reduced interest rates or move to a fixed rate from variable one. Therefore, if you want to save money, you can refinance student loans.
Not all borrowers qualify for student loan refinancing. As private lenders provide this opportunity, including Earnest, their eligibility requirements can be tough. The borrowers usually need to have a good credit score - around 600 and more. Besides, a stable income source and co-signer might be required.
Another advantage of refinancing is that it is a debt management strategy with almost no origination costs and similar fees.
Student Loan Consolidation vs. Refinancing
Having loans from different servicers and lenders can be frustrating. Sometimes, the loans can be sold to other owners, making the repayment process challenging. Borrowers can lose track of their payments and miss important actions.
Two debt management strategies can solve this problem. One of them is student loan refinancing, which we discussed above. Another solution is loan consolidation. Consolidation is similar to refinancing in structure. It also involves combining different loans into one. Therefore, the loan repayment becomes simple.
However, consolidation does not provide the money-saving benefits of refinancing. When combining loans with consolidation, the new interest rate is the weighted average of existing loans. Hence, it does not reduce the interest that borrowers pay.
Yet, when refinancing, the borrowers can lose their qualifications for forgiveness programs, like Public Service Loan Forgiveness or the benefits of Income-driven plans. On the contrary, it is still possible to qualify for these programs after consolidation.
What Earnest Offers
Earnest claims to provide low-interest rate student loan refinancing services. At the time of writing, the APR for variable and fixed interest rates are starting from 1.99% and 2.98%, respectively.
The application process for Earnest refinancing is simple. It provides a rate calculator that helps borrowers to determine what rate they can qualify. In the next step, the borrowers fill the application form. Earnest refinancing allows “co-signer release” mentioned in the above section. It also permits customers to customize their loans and choose the loan term.
Additionally, be-weekly payments and “Skip-a-payment” features are accessible.
Eligibility Criteria
Being a U.S resident ( or having a ten-year permanent resident card) is one of the eligibility conditions. Besides, borrowers need to be older than 18 and reside in locations where Earnest operates. Lastly, the student should either enroll less than half-time and be in the repayment period or graduate at the end of the semester.
Additionally, there exist loan-related requirements. Firstly, only the primary borrowers can apply to refinance their own loans, and they should not request new loans for further education. The educational institution should be following Title IV-accredited institutions.
The minimum amount for refinancing is $5,000, but this amount is $10,000 for California residents. If you have Earnest student loans, you need to make at least four consecutive and full payments before requesting refinancing. Lastly, your debt should be owned by an institution within the U.S borders.
From a financial perspective, sure, it has utmost importance to have food financial performance. It includes good standing in student loan accounts, a credit score of at least 650, stable income, no loan bankruptcy or collection accounts.
If you want to refinance your dependent child’s debt, you can realize the goal through Earnest. In this case, the parent must meet the financial requirements and personal conditions.
Application and Its Effect on Credit Performance
Whether you want to get Earnest student loans or utilize refinancing services, you can apply only in a short time. The application process will require personal information as well as supporting documents. If the borrower utilizes the platform for “soft inquiry” to check the rate, the action will have no effect on credit performance.
However, when the borrower decides to apply, in other words, “hard inquiry” is utilized, it will be recorded on the credit performance.
What Are My Options if I Face Financial Difficulties?
Understandably, debtors can face financial difficulties from time to time and not meet the following loan payment due. It is advisable to contact the lenders immediately and inform them about the situation in such cases. Luckily, some loan companies such as Earnest provide conveniences for borrowers in financial hardship.
For example, borrowers can utilize the “skip-a-payment” option on their Earnest student loans. We discussed the details of this feature in the above sections. Shortly, it allows skipping one payment in a year if the borrower made six months’ worth of consecutive payments. In return, the loan’s payback period is extended by the number of months you skipped the payments.
Another option can be forbearance. If a borrower loses the job, income decreases, or gets maternity/paternity leaves, he/she can qualify for this benefit. Such borrowers can get a maximum 12-month forbearance - non-payment- period including “skip-a-payment” benefit of one month. However, the borrower should make at least three months of consecutive payments. Also, note that the daily interest will still continue to accrue on your loans even if forbearance is granted.
Additionally, loan deferment options for graduate students and military deferment benefits exist.
What if I am an International Student?
International students can apply to Earnest student loans only with the help of a co-signer who is a U.S citizen or permanent resident. Besides, the student’s address should be in the U.S, and he/she should have a social security number. Keep in mind that it is not possible to use ITIN as a substitute for the social security number.
What is Rate Check?
Earnest provides a rate check tool in its online platform. This tool can estimate the rate that borrowers can qualify. The debtor needs to fill in the required information and submit documents to get the rate offered. However, this rate is only for informative/estimation purposes. There is no guarantee that the actual rate will be exactly the same when the borrower decides to apply.
How Earnest Helps Borrowers during the COVID-19 Pandemic?
Earnest helped its borrowers facing financial difficulties through some benefits. First, in July 2020, it offered a forbearance opportunity. The forbearance due to COVID-19 was not a part of one year forbearance period available to borrowers. While the interest continues to accrue in this period, it is not capitalized- added to the principal balance.
Another benefit provided was a short-term interest-only program. We already explained the interest-only program in the above section. During the COVID-19 pandemic, this opportunity allowed borrowers to lower monthly payments for around three month period. Instead of raising the monthly payments after the program ends, Earnest kept the same payments as before by extending the loan payback period.
Sure, compared to forbearance, such an option is more beneficial because, during forbearance, interest accrues. Only making interest payments can save some money for borrowers in the long term.
What Earnest Recommends
In all offerings, whether it is refinancing or Earnest student loans, the company highlights the importance of checking all other federal options. Federal borrowers can access multiple debt management strategies, like forgiveness programs, discharge, various repayment plans, etc. Unfortunately, only federal loans qualify for these benefits. Hence, Earnest suggests checking federal loans and debt management tactics before applying for private loans or refinancing. In accordance with this recommendation, you can check the debt resolution strategies in our blogs. Alternatively, you can call us to discuss your options with Student Loans Resolved experts.
