If there is anyone who understands what it is really like to pay off student loan debt , it’s someone who has a lot of their own.
From that perspective, then there is no one better than other members of the millennial generation to start getting into the student loan refinancing game, especially as student loan debt looks to top $1.3 trillion.
That’s the idea behind 34-year-old Louis Beryl’s latest venture Earnest, Forbes reported.
“Student loan debt is the home loan of my generation. It’s nearly a universal problem for my age demographic. I am still repaying nearly $100,000 of student loan debt myself,” Beryl, Earnest’s cofounder and CEO, said.
Because a lot of millennials don’t have the kind of credit history built up that is needed to refinance loans at a cheaper rate, Earnest seeks to use big data to target them.
The credit score is left out of the decision, according to Forbes, and worthiness is instead dependent on an algorithm of banking and credit card details like deposits, withdrawals and payments, and all savings including retirement accounts. This process can even include your LinkedIn profile.
“The data-driven nature of all our products allows us to really lower the cost of processing these loans while continuing to make better and better decisions, which straight-up translates into better rates for borrowers,” Beryl said.
The refinanced loans will be at rates ranging from 1.92 percent to 7.5 percent.
Earnest also offers a more flexible payment schedule that Beryl sees as more conducive to the millennial lifestyle.
Borrowers can switch between fixed and variable rates, Forbes reported. They can also opt to pay once or twice a month depending on their pay cycle and can customize the length of the loan down to the month.
For example, a borrower could sign up for a 13-year-and-11-month loan, Beryl said.
Plus, the company offers the typical perks of a federal loan like unemployment protection and deferrals for enrolling in graduate school up to three years.
Forbes notes that the company hasn’t been around long enough to really see how it would handle dealing with defaults on student loans, but it’s an interesting option beyond the federal government’s system.
