Earnest was founded to fix an outdated approach to lending. We knew we could use technology to bring more transparency—and savings—to indebted grads. Through the hard work of dozens of data scientists, engineers, and designers, we built a modern solution from the ground up.
A solution that finds the sweet spot between what you can afford and what you should be paying in interest, never a single basis point more. A solution that puts the power in the hands of the client, not the bank. This unprecedented flexibility is the foundation of what makes Earnest different—and we call it Precision Pricing.
Precision Pricing in practice
How custom terms mean more savings
Say Jenny has a $100,000 loan, and she can afford to pay $1000/month.
At Traditional Bank, the monthly payment for a 10-year loan is just a bit more. That means she’s given a 15-year term instead—which has a much higher rate. (Longer terms have higher rates.)
But with Earnest, a $1000 monthly payment corresponds to an ‘in-between term’ of 10.5 years that’s totally unavailable at Traditional Bank.
This shorter term saves Jenny money since it has a lower rate and there’s less time for interest to accrue. Win-win!
Explore Precision Pricing
The slider below demonstrates how different monthly payments affect your rate and term. And remember—a shorter term can save just as much money as a lower APR.
Average savings calculation is based on all Earnest clients who refinanced their student loans between 1/1/15 and 6/10/16. The savings of a particular client is calculated by subtracting the projected lifetime cost of their Earnest refinancing from the projected total cost of their original student loan, which is calculated using the original loan’s APR and monthly payment based on the same principal balance as their requested Earnest loan.
Projected Lifetime Cost of Original Student Loan – Projected Lifetime Cost of Earnest Refinancing = Projected Savings
The average savings calculation is the sum of all projected savings divided by the number of clients included in the projected savings calculation. These calculations assume that clients’ interest rates will not change over time, that clients make all payments on-time, and that no loans will be prepaid.
Here’s what our math includes:
Projected savings for clients who provided outstanding balance, APR, and current monthly payment amount for their existing student loan(s)
Both fixed and variable rate loans
And here’s what our math excludes, and why:
Savings from any client who stated that the current interest rate on their loan was greater than 12%. (Why: this is intended to filter out any cases where client error may skew the savings calculation higher.)
For any client who stated that the projected term of their loan was greater than 25 years, we do not include in our calculation any additional savings that might be realized if their existing loan were to take longer than 25 years to pay off in-full. (Why: 25 years is the maximum term allowed for a Federal student loan, or the cap on any Federal student loan under Income Based Repayment.)
Savings from any client whose indicated monthly payment was not sufficient to pay down the loan balance over time. (Why: this is intended to filter out any cases where the client misstated either their monthly payment amount, interest rate, or both.)
All refinancings by clients who chose a longer term than their existing student loan. (Why: some clients choose longer loan terms to match their monthly loan obligations to their unique life circumstances; while we encourage clients to take advantage of Earnest’s flexible term and monthly payment features, these cases are not indicative of the savings that result from lower rates through better data.)
Explanation of Rates “With Autopay”
Rates shown include 0.25% APR reduction where client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.
Explanation of Precision Pricing™ Savings
Savings calculations are based on refinancing $121,825 in student loans at an existing loan servicer’s interest rate of 7.5% fixed APR with 10 years, 6 months remaining on the loan term. The other lender’s savings and APR (light green line) represent what would happen if those loans were refinanced at the other lender’s best fixed APRs. The Earnest savings and APR (white line) represent refinancing those loans at Earnest’s best fixed APRs.
Savings is computed as the difference between the future scheduled payments on the existing loans and payments on new Earnest and “other lender” loans. The calculation assumes on-time loan payments, no change in interest rates, and no prepayment of loans.
Individuals portrayed as Earnest clients on this site are actual clients and were compensated for their time to participate.