Earnest is a private lender and will not be eligible for federal loan forgiveness through the Department of Education(1). We are committed to helping our clients and future students make sound financial decisions and repay their student loans as quickly as possible. We encourage potential clients to explore all options before applying for a new student loan or refinancing their existing federal student loans.
Refinancing(2) a federal student loan with a private lender means you will no longer have access to the following benefits offered through the Department of Education(3):
- Temporary 0% interest rate on federally held loans
- Suspension of payments (which will last until December 31st, 2022)
- Federal loan debt cancellation
- Any relief measures implemented to address the COVID-19 crisis
- Income-based repayment (IBR) (such as PAYE - Pay As You Earn)
- General forgiveness programs (such as Teacher Loan Forgiveness program, Public Service Loan Forgiveness program, or Perkins Loan Cancellation and Discharge)
We do have options available for clients who are unable to make payments towards their loans. For more information, please check out this article for student loan refinancing and this article for private student loans.
Frequently Asked Questions
How can I learn more about the Biden-Harris Administrative Student Debt Relief Plan?
You can learn more about the President’s announcement made on August 24, 2022, here.
What if I have federal loans but have not received federal forgiveness?
At this time, you will not be able to apply for loan forgiveness through the Federal Student Aid (FSA) website. This is because courts have issued orders blocking the student debt relief program. As a result, they are unable to accept applications. They are working to overturn those orders.
If you've already applied, the FSA will hold your application. You can subscribe and check for updates here. The Federal Student Aid office will post information as soon as further updates are available here.
What if my loans were federal loans before they were refinanced?
Loans that were previously denoted as federal loans before they were refinanced with Earnest will not be eligible for loan forgiveness. This is because once a loan is refinanced and funds have been sent to pay off your loan, the new loan originated is considered a private loan.
Can I reverse/refund my Earnest loan to reinstate it with a federal servicer?
At this time, we are not aware of any options or programs that would reinstate your loan with a federal loan servicer. Once a loan has been transferred to a private lender, there is not a way to refund the loan(s) back to their original federal lender. If a program does exist, we advise that you reach out to your previous federal lender for additional information and steps.
If we do receive a refund from a federal lender, the payment will be subject to regular payment processing policies. This means the refund will first be applied to any interest that has accrued and then to the principal balance. Any payment resulting in a negative balance will be sent to the party that scheduled the final payment.
Refunds typically take 2-5 business days to process, but please allow up to 2 weeks to reflect on the account. It’s important to note, holidays and weekends may impact this timeline, and mailed payments are only processed on business days but will have an effective date for the day the payment was received.
What are Earnest's plans in light of this announcement? (i.e., any plans to offer any type of forgiveness, interest pause, etc.)
Private education loans are not federally owned or guaranteed. Student loan forgiveness is backed by the Department of Education and funded by taxpayers. As a private lender, we are beholden to our clients and shareholders and are unable to provide the same benefits that the government can offer. As much as we would like to, it’s not feasible as a business strategy or for the longevity of our company. While we’re not part of these policy changes, we’ve created options for those experiencing financial hardship. For more information, please check out this article for student loan refinancing and this article for private student loans.
How can I lower my monthly payments/interest rate?
We completely understand your desire to take advantage of lower rates or a lower monthly payment. If you would like to see if you could qualify for a lower interest rate or make adjustments to your monthly payment2, feel free to check out this article for further information.
How will I know if my other loans will qualify for loan forgiveness?
Many of our clients have federally-owned loans in addition to private student loans, so other options may be available for those loans. For more information, we advise that you reach out to your federal servicer.
Should I refinance my student loans during the COVID-19 crisis?
Depending on the type of loans you have, it may or may not make sense for you to refinance.
Interest accrual is set at 0% on federally owned student loans through December 31, 2022. If you have federal student loans, it may be best to wait until the freeze is over before considering a refinance of your student loan debt. If you do decide to refinance your federal student loan debt, you will permanently lose access to all federal student loan protections.
For private student loans, refinancing is always worth considering. Since your loans are already private, you won’t be sacrificing any CARES Act provisions and may qualify for a lower interest rate or a lower monthly payment.
(1) AN UPDATED NOTICE FOR BORROWERS WITH FEDERAL STUDENT LOANS: On November 22, 2022, the U.S. Department of Education (ED) announced an extension of the federal student loan payment pause until ED is permitted to implement the debt cancellation program it announced on August 24, 2022, or the litigation is resolved. Payments will restart 60 days later. If the debt cancellation program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that. We want Earnest customers to explore all their options before applying to refinance their federal student loans. Refinancing a federal student loan with a private lender means you will no longer have access to the benefits of your federal loans, including the temporary 0% interest rate and suspension of payments effective through June 30, 2023, on federally held loans, the debt cancellation announced by ED on August 24, 2022, the Public Service Loan Forgiveness Limited Waiver Option available through October 31, 2022, or any other relief measures implemented for federal loans to address the COVID-19 crisis.
Please carefully review your current and potential benefits with your federal loan servicer, including loan forgiveness options such as Public Service Loan Forgiveness and Income-Driven Repayment, before refinancing. See the Department of Education for more info on COVID-19 relief.
(2) Choosing to refinance to a longer-term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.
(3) You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit www.earnest.com/licenses for a full list of licensed states. For California residents: Loans will be arranged or made pursuant to a California Financing Law License. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.
Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.
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