Article updated August 22, 2020, to include the latest interest rate information.
Two of the biggest names in student loan refinancing are SoFi and Earnest. With both companies advertising interest rates around 2%, there is a huge opportunity for savings for some borrowers. At present, the best rates available are 1.99% with SoFi and 1.99% with Earnest. As close competitors, any gap between the lenders tends to stay very small. In many ways, there are far more similarities between the two companies than there are differences. However, the few differences are significant, and they could be important considerations for many potential borrowers.
The Similarities Between SoFi and Earnest
Before we start picking at the little details that separate these two lenders, it is important first to explain why they both rank highly on our list of student loan reviews.
In addition to the low-interest rates, both companies offer similar terms that most borrowers should expect. For starters, neither company charges any origination fee. Along the same line, neither company charges any prepayment fee. Most telling is the fact that contracts with both lenders have provisions for loan discharge in the event of disability or death. This is a term that not all lenders include, but one that borrowers should demand.
The Key Differences
Perhaps the biggest difference between the two companies is the application criteria for getting approved. As we noted in our review of SoFi, the credit score and income requirements are quite high. By contract, Earnest places less value on these two financial indicators. The Earnest approach looks at more financial records to get a better idea of your responsibility with money and ability to pay. For example, if you are making large deposits each month into a retirement account, it will enhance your chances of an Earnest approval.
The downside to the Earnest approach is that they may require more records before your loan reaches final approval. Depending upon your circumstances, this could be a good thing or a bad thing.
The SoFi advantage
The thing that separates SoFi from Earnest, and all other lenders, is their job placement program. When you are applying for student loan consolidation, it usually means you are in a pretty good financial situation. Otherwise, you would have little chance of approval. What few people consider during this time is the possibility of losing your job. Most lenders are willing to provide a short deferment or forbearance, but SoFi has employees who will help you find a new job or a better job. They bet that they will spend less money helping people find a job than what they would spend trying to collect the debt for people who fall behind. Nobody plans on losing their job, but if you do, you will likely be glad you opted to get your loan through SoFi. This program is part of the reason that SoFi checks in towards the very top of our student loan rankings.
One additional advantage to SoFi is that they are offering new borrowers $150 when they consolidate. In the grand scheme of things, your interest rate and loan terms are far more important than a $150 bonus, but it is a nice little perk.
Another aspect of SoFi that borrowers should like is their transparency. Due to the federal interest rate freeze during the Covid-19 pandemic, borrowers with federal loans were much better off choosing not to refinance. This site evaluated how each lender did advising borrowers to make a smart decision. SoFi had the best guidance.
Reasons to Pick Earnest
Two big factors could make Earnest a better option for borrowers.
The first Earnest edge is the deeper dive they take into an applicant’s finances. Borrowers who keep an emergency fund and who have been saving for retirement may help their application with Earnest. Most other lenders ignore these signs of creditworthiness.
Secondly, Earnest allows borrowers to get very flexible with their repayment length. Most lenders force borrowers to pick between a 5, 7, 10, 15, or 20-year loan. At Earnest, a borrower can pick a customized repayment length between 5 and 20 years.
Sherpa Thoughts on SoFi vs. Earnest
I’ve been watching and reviewing student loan refi companies for the past seven years.
Based on what I have seen during that time, I’d give SoFi a very slight edge. Generally speaking, borrowers who apply with SoFi have slightly better odds at getting approval, but there are undoubtedly many cases where Earnest comes out ahead.
These two lenders are structured very similarly as they are both categorized as “fin-tech” companies. For borrowers, this means the rate they offer will depend upon investor interest in student loan refinancing. At times Earnest will have more available capital and be more likely to approve a borrower. Other times, SoFi will have more funding available and be more aggressive about getting new customers.
Anyone looking to find the best student loan refinance rate should certainly consider both SoFi and Earnest.