Article updated March 15, 2019 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 2.5%, there is a huge opportunity for savings for some borrowers. At present the best rates available are 2.54% with SoFi and 2.55% with Earnest. As close competitors, this gap between lenders tends to stay very close. 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.
Before we start picking at the little details that separate these two lenders, it is important to first 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 expect.
The Key Difference
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 you 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 actually has employees who will help you find a new job or a better job. Their bet is 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 trough SoFi. This program is the reason that SoFi checks in a number one in 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 is is a nice little perk.
Deciding between the two
Despite their differences, these companies have far more in common than what separates them. Potential consolidators would be wise to apply to both (and perhaps even a couple more companies) in order to see who offers the best interest rate. If the rates are close, SoFi probably gets the edge, but a difference in interest rate alone is enough to tip the scales in one direction or the other.