How I saved $17,990 refinancing my student loans

How I saved $17,990 refinancing my student loans

How I saved a boat load of cash, and why I love Earnest

Student loan debt is becoming much more common – for the graduating class of 2015, the average borrower had $35,000 in student loan debt. So common, in fact, that many fear it’s the next financial bubble ready to burst.

Once college grads start making payments, they realize the impact their loans have on not only their lifestyle, but their ability to save for things like traveling or buying a home. One option borrowers have is to refinance and consolidate student loans.

This was exactly where I was at the end of 2014 – loads of debt, a large monthly payment, and variable interest rates – the most ominous kind of interest rates. My payment could go up at any time. With over 15 years left on my loans, there was no end in sight.

Worse, I knew I wanted to buy a home (at least within the next 15 years, but hopefully much sooner). My large student loan payment was affecting my debt-to-income ratio, severely limiting my ability to get a mortgage.

Little did I know, there was a company that could solve all of my problems – meet Earnest.

My Story – How I saved $17,990 with Earnest

If you want to skip straight to the review, click here. Otherwise, allow me to introduce myself. My name is Aaron. At the ripe old age of 18 I was accepted to UC Santa Barbara (Olé!). At the time, I was nearly illiterate when it came to personal finance.

I was accepted in 2008, right as the housing bubble burst and we entered the Great Recession. Despite working through high school, I had no money saved for college, and I didn’t qualify for any federal, state, or campus based student financial aid programs. I had done some work writing grants, and even managed to win a few thousand dollars, but it barely put a dent in the nearly $30,000 a year tuition and living costs I was facing.

I was young, I wanted to go to college, and definitely wanted out of my home town. I wasn’t about to let money stand in the way. So like thousands of others, I took out student loans – I really had no idea what I was signing up for.

Truthfully, it could have been a lot worse for me. I have very supportive parents who helped me out financially (and I am incredibly thankful for them!) I worked multiple jobs on and off campus throughout school. I even managed to earn my bachelor’s degree in 3 years.

Even graduating early, and cutting out a year of tuition and living expenses, I finished school with over $50,000 in student loan debt.

After Graduation

Fast forward a few years and I’m making a $500+ monthly payment. My loans had a variable interest rate, so that payment could go up at any time.

To add insult to injury, Chase Bank sold my student loans to a different servicer – some company called American Education Services (AES).

AES student loans might be the worst company I have ever done business with. Their website is clunky. It was extremely difficult to set up my auto payments. It was hard to find my statements. Their phone lines were never open, and if I did manage to get someone on the phone, it took 20 minutes to verify my identity, and then they usually couldn’t help me.

It didn’t take me long to decide I wanted to refinance my loans. I wanted a better rate, but I also didn’t want to deal with AES for the next decade.

With my new lender, I wanted a few things –

  • A fixed interest rate – I wanted to know exactly what my payments would be so I could budget for them.
  • An easy to use website – Applying for a loan can be a pain. I wanted a company that made this process simple and easy.
  • A partner for the long term – I didn’t want this company selling my loans. There was a chance that if I refinanced with a big bank, they’d just sell me right back to AES. This would literally be my nightmare scenario.

  • I wanted flexibility – I could afford my payments, but I knew that when it came time to qualify for a home loan, having a lower payment would be better. Ideally, I’d pay what I could now to help attack my debt. When the time came to buy a home, I’d lower my monthly payment.

Meet Earnest

I’m about to gush here, so prepare yourself. I’ve never loved another company like I love Earnest. They built the most seamless, stress-free lending platform I have seen. It’s simple, easy to use, and downright beautifully designed.

They integrate directly with your banks, and they make collecting documents incredibly easy. They even have some innovations that give their customers tons of flexibility when it comes to making payments (and make it easier to qualify for a mortgage – more on that in a second).

I work in the mortgage industry – specifically, I build online lending platforms. Lending someone money is hard. There’s a bunch of information you have to gather, and there is a ton of research that needs to be done in the background. It’s also highly regulated – there are hundreds of rules you have to follow, often limiting how you can interact with the customer.

Refinancing is even harder, because you have to coordinate with another company to figure out the 10 day payoff amount and make sure the check gets to the right place. I understand how hard it is to build something that manages this process. It’s truly amazing what Earnest has put together – dare I say it, the borrowing experience is delightful.

Why Earnest is the only lender you should use

For me, there are a few key reasons why Earnest is head and shoulders above the other companies doing student loans.

Checking your rate doesn’t affect your credit score – You shouldn’t be punished for shopping around. Earnest uses a soft credit pull to quote your interest rate. You won’t get a hard inquiry on your credit score just for looking. Unless you submit a full blown application, seeing if Earnest is right for you won’t hurt your credit.

Interest rates – They have competitive interest rates. And like other lenders, if you sign up for auto-payments, they knock .25% of your interest rate, which is a no-brainer. Just lowering your interest rate can save you thousands of dollars over the life of your loan. You can see this for yourself using this simple lifetime loan cost calculator from Bankrate.

Precision Pricing – Most lenders use increments of .125% when it comes to their interest rates. This means you have limited options when it comes to choosing your interest rate or setting your payment amount. Earnest lets you adjust your rate based on a slider – this flexibility can lead to over $1,000 in savings over the life of the loan.

alternative student loans

Earnest interest rates use a curve, not a step system, reducing the amount of interest you pay over time


They look past your low credit score – Their rates are great, but it’s far from their best quality. To start, Earnest focuses on merit-based qualification. They understand that young people have low credit scores – according to Credit Karma, people 18-24 have credit scores that are 65 points lower on average than those who are over 55 years old.

It’s not because we aren’t credit worthy, it’s because the credit score systems put a large focus on the age of your credit history and the total number of accounts you have.

If you are in your 20’s, don’t use credit cards because you want to avoid debt, and your only credit accounts are your 4 year old student loans, your score is going to be artificially low.

Earnest understands that. They take the time to understand your personal story during the qualification process, judging you based on your merit, not your low FICO score.

Earnest qualifies borrowers based on –

  • 4 years work history – they want to see the big picture
  • Annual income
  • Account balances – they look at savings & checking account balances to see how you manage your money
  • Investment accounts – sometimes you’re better off maxing out your 401k instead of paying off student loan debt. Earnest knows that, and they take that into account.

Because of this unique approach, qualifying for a loan with Earnest is much easier than with a traditional lender.


They’ll calculate your savings – Doing the math yourself can be a total pain. Earnest will tell you how much you can save by going with them – and if there aren’t savings to be had, they’ll tell you that too.

easy student loans


They will never sell your loan – Earnest partners with you for the entire loan term. Unlike other lenders, they won’t sell your loan. That means you work with them, and them only, to make your payments. If you have an issue, or have trouble making a payment, you talk to Earnest – not some third party company that just bought your loan as an investment. They want to keep this relationship with their customers & they’re in it for the long haul.

student loan consolidations


Why Earnest is great for home buyers

This is the hidden secret that most people don’t realize, and it makes Earnest the best place to refinance student loans. They give you flexible payment options – you can adjust your loan terms at any time without refinancing.

They can do this because they don’t sell your loan to a third party – Earnest is more interested in keeping you happy and on target instead of meeting short term investment goals.

Want to change the date you pay your loan? Or change from monthly payments to making payments every two weeks? Not a problem – just log in and make your adjustments. Earnest will also tell you how these changes affect your loan – in my case, using bi-weeky payments saves me almost $3,500 in interest over the life of the loan!


refinance student loans

Earnest makes it easy to change your payment schedule


What if you wanted to change your payment amount? Let’s say you want to buy a house, and your debt-to-income ratio is just over the limit. With Earnest, it’s easy to log in and lower your monthly payment amount. Like before, it will also tell you how this affects your lifetime loan costs. In my case, by paying $215 every two weeks instead of my minimum $196, I’m saving over $4,000 in interest and paying my loan off two years earlier!


student loan eligibility

Changing your payment amount is simple and straightforward.


Having the flexibility to change my monthly payments without having to refinance my student loan is a huge advantage. It could mean the difference between closing my mortgage and watching someone else move into my dream house.

What happens if you can’t make your payment? Say you have an unexpected car repair or large hospital bill, and your emergency fund can’t cover it. Or say you buy that house, and suddenly your water heater goes out. When you miss a payment with other lenders, they call you non-stop until you come current. But Earnest is there for you – after 6 months, you can skip a payment once a year, no questions asked.


how to get student loans


It’s this flexibility that comes after you get your loan that makes Earnest the best option for anyone who is even consider buying a home in the future.


My total savings

Originally, I had three student loans totaling $54,775. The weighted average interest rate for those loans was 7.32%. Because the rate was variable, that could go up (and it did quite a few times). My monthly payments totaled $513. I had 15 years and 9 months left to go on my loans. The lifetime costs of my loans came out to $92,436.53 – a large price to pay for an education.

With Earnest, my interest rate is fixed, and my rate went down to 5.81%. That simple change alone brought my lifetime loan costs down to $83,730 – saving me over $9,000! My monthly payment also went down by $121 every month – my new minimum payment is $392 vs. $513.

To help pay my loan off more quickly, I’ve started paying more than my monthly minimums, and I am making payments bi-weekly. These small adjustments will save me an additional $7,000 or so over the life of the loan, and will allow me to pay my loan off 2 years earlier.

By refinancing my student loan with Earnest, I saved myself $16,000 over 13 years – or over $1,200 per year! But I’m not done yet, there’s still money to be saved.

Why I used Earnest and Not Sofi

Earnest isn’t the only game in town. Other student loan refinance companies, like SoFi, also have great web platforms that are well designed and simplify the process. I actually really like SoFi – they have a great platform and great customer service. But I tried to refinance with them before Earnest launched – and when I applied, they denied my loan.

With all the innovative and progressive things SoFi has done as a company, they still couldn’t look past my low credit score. Earnest judged me based on  my potential – and they won my business.

I glad they did, too. I truly believe they care about their customers – their the only financial institution I’ve worked with that has sent me a Christmas card. It’s the small, humanizing details like this that have made me a diehard Earnest fan!

earnest student loan review

Apparently it doesn’t snow in San Francisco


One more time, with feeling!

It’s almost weird to me how much I love this company. Writing this article, I realized something – interest rates have dropped since I did my first student loan consolidation. And Earnest makes the borrowing process so easy…

So I am refinancing my student loans again. Since Earnest already has my loan, applying took me about 6 minutes. The best part – they’ll let me know within two days whether or not I can move forward.


student loan consolidation


If I get approved for this loan, this will bring my total savings to $17,990 just based on my new interest rate and my reduced loan term.

From there, if I continue to make bi-monthly payments, and pay slightly more than my minimum amount, my total savings with Earnest will be well over $20,000 – not bad for a couple minutes of work online.

Do you have a loan with Earnest? Are you a diehard SoFi fan? Have a horror story with your current lender? I’d love to hear about it – find me on Twitter @aaronlarue!


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