Earnest® vs Discover: A Comprehensive Comparison of Private Student Loans

When it comes to private student loans, both Earnest® and Discover are prominent players offering flexible and competitive options. Each lender has its own strengths and unique offerings, making them attractive to different types of borrowers. In this guide, we’ll compare both lenders across various factors, including their history, loan options, features, and customer service, and discuss why you should always apply for FAFSA before considering private loans.

Overview of Earnest® and Discover

Earnest® – Company Overview & History

Founded: 2013
Headquarters: San Francisco, California
Acquired by: Navient (2017)

Earnest was founded in 2013 by Louis Beryl, Shane Upadhya, and Ben McKean with a vision to revolutionize the student loan industry. The company set out to offer more personalized, flexible student loan options using technology and data science. Instead of relying on traditional credit scores, Earnest uses a more holistic approach to assess borrowers’ eligibility. This unique model allows them to offer lower interest rates and customized loan terms based on factors like education, employment history, and future earning potential.

In 2017, Earnest was acquired by Navient, one of the largest student loan servicers in the U.S. Despite the acquisition, Earnest continues to operate independently, maintaining its focus on flexibility and technological innovation. Today, Earnest offers private student loans for undergraduate, graduate, and professional degree programs, including business, law, and medical schools. The company is known for its ability to customize loan options, including the repayment terms and interest rates, making it a good fit for creditworthy borrowers looking for flexibility.

Discover – Company Overview & History

Founded: 1985 (as a credit card company)
Headquarters: Riverwoods, Illinois
Parent Company: Discover Financial Services

Discover, a subsidiary of Discover Financial Services, was originally founded in 1985 as a credit card company. It quickly became a leader in consumer credit, offering rewards-based cards. Discover expanded into the student loan market in 2007, leveraging its established brand to provide private loans to students. The company has since built a solid reputation in the student loan space, focusing on simplicity and transparency, offering competitive interest rates and flexible repayment options.

In addition to traditional student loan offerings, Discover introduced a unique Cashback Rewards Program in 2009, allowing students to earn 1% cashback on their loan balance for every year they make qualifying payments while in school. This rewards program, along with 24/7 customer support and a variety of loan options, has made Discover a popular choice for students and parents alike.

Comparing Earnest® vs Discover: Key Factors

Best for Students

Earnest® is best for students who want flexible repayment options and the ability to customize their loan experience. With Earnest, borrowers can choose from a variety of repayment plans, such as interest-only payments, full deferment while in school, or standard payments. The company’s use of a data-driven approach also allows students with strong credit (or a cosigner) to qualify for lower interest rates, making it an ideal option for creditworthy borrowers.

Discover, on the other hand, is ideal for students who are looking for simplicity and added perks. The company’s Cashback Rewards Program is a standout feature, allowing students to earn 1% cashback on their loan balance for each year they make payments while still in school. Discover’s straightforward application process and ease of use also make it a great choice for students who want a no-fuss loan experience.

Best Apps for Managing Your Loan

Earnest® offers one of the best apps for student loan management. With its highly customizable and feature-rich platform, Earnest’s app allows borrowers to easily track loan balances, adjust repayment plans, and make payments. The app’s intuitive design is praised for its ease of use, making it ideal for students who want to stay organized and in control of their loan status.

Discover provides a solid mobile app with key features like loan balance tracking and account alerts. While the app is straightforward and easy to navigate, it’s not as customizable as Earnest’s. However, Discover’s app is still reliable and user-friendly, providing students with basic tools to manage their loans efficiently.

Best Customer Support

Earnest® is known for its excellent customer service, particularly when it comes to offering personalized support for borrowers who need to adjust their repayment options. The company provides support via phone, email, and live chat, with customer service agents praised for their knowledge and helpfulness. However, Earnest’s customer support is available only during business hours.

Discover excels in providing 24/7 customer support, which can be crucial for students who may need assistance outside regular business hours. Discover’s reputation for reliable and accessible support is one of its strongest selling points, and borrowers can reach out via phone, email, or live chat at any time.

Why You Should Always Apply for FAFSA First

Before considering private loans from Earnest® or Discover, it’s essential to apply for FAFSA (Free Application for Federal Student Aid). Here’s why:

• Federal Loans Are Often More Affordable: Federal student loans come with lower interest rates and more favorable repayment options compared to private loans. They also offer benefits like income-driven repayment plans and loan forgiveness programs, which private loans do not provide.
• Eligibility for Grants and Scholarships: FAFSA also determines your eligibility for need-based federal grants, like the Pell Grant, as well as state-based scholarships. These can reduce the amount you need to borrow.
• More Loan Options: After applying for FAFSA, you can better understand the amount of federal aid you are eligible for and whether you need to supplement that with private loans. Many private lenders, including Earnest® and Discover, require borrowers to exhaust federal loan options before applying for private loans.

In short, always start with FAFSA to maximize your financial aid and minimize your borrowing costs before turning to private loans.

Summary Comparison of Earnest® and Discover

Both Earnest® and Discover offer strong student loan options, but they appeal to different types of borrowers. Earnest is perfect for students looking for flexibility and a data-driven, personalized approach to borrowing, while Discover is ideal for those who prefer a simpler loan with added rewards and 24/7 support. Regardless of which lender you choose, remember to apply for FAFSA first to maximize your federal aid options and minimize borrowing costs.