The Importance of Being Earnest

Can you hear the crinkle of cash that you didn’t have to spend on your student loans? Don’t you love that sound?!

Like a billion dollar albatross dangling from our collective necks, student loan debt for artists is a consistent and ubiquitous drag on our ability to thrive and prosper. We needed it to get to where we are, but carrying the high cost of student debt is one of the most common and twisted factors in jettisoning us from the art world in search of a ‘real job’. With tuition reaching beyond $40k per year after scholarships and grant aid, the Washington Post revealed that art schools top the list of the most expensive institutions to attend. Apparently, after factoring in financial aid, it’s more expensive to get a degree from the School of the Art Institute of Chicago than it is to get one from Harvard. So as art school graduates, we are financially behind the eight-ball, not only because our industry doesn’t always lead to straight-forward employment, but our student loan debt is likely to be disproportionately higher than graduates from other schools.

As grim a picture as I just painted, a glimmer of hope has recently pierced through the dark clouds — and its name is Earnest. Earnest is a technology-enabled lender who is focused on refinancing traditional student loans at vastly lower interest rates than the average private loan, and even federal loans, making monthly payments, as well as the total price tag for tuition debt, lower for college grads. And guess what — because of Earnest’s robust analytical capabilities, the strange and convoluted careers of artists are no longer a problem when qualifying.

How is this possible?

Earnest figured out that there’s a segment of the population who may not have the best credit score — perhaps because they are just getting out into the working world — but who do not actually reflect a credit risk. To apply for an Earnest loan, you’ll link your financial accounts and be given a data driven evaluation. That’s right! Earnest can just look into your accounts to determine if you’ve got the proper financial set-up to make you a good bet. It takes their software only moments to give you a digital sniff-test to detect the stink of unpaid bills and high credit card balances, or conversely, the fresh scent of a clean financial house in order. Unbelievable, right?! You don’t need to go hat-in-hand and make your case to a loan agent — they just know. If you can demonstrate that you’ve set up a stable financial life with an income, modest savings, and good on-time payment history, you could significantly cut down on your loan interest rate with an Earnest loan. Right now, federal student loan rates are at 4.66%, PLUS loan rates are 7.21%, and private loans go up from there. The best rate for an Earnest loan is 3.5%. If that number isn’t making you do backflips, just know that during the recent housing crisis, one of the biggest factors in turning things around was super low mortgage interest rates which bottomed out at about 3.5%.


I know what you’re thinking: sure that’s great for regular people who have regular jobs, but what about me? I have income from 6 different sources, and none of them are full time. Will Earnest consider me a good bet? Well, I was fortunate enough to get the inside scoop, and a super encouraging answer from Alan Cooper, Head of Communications at Earnest.

Sm*artly: “How likely is it that an applicant who doesn’t fall into a traditional career/job path will be able to refinance through Earnest? I am thinking of artists who generally tend to have multiple streams of income and are self-employed. If these folks demonstrate a consistent ability to earn, have savings and on-time payment history, would they be good candidates?”

Alan Cooper: “This is one of Earnest’s biggest strengths and what makes us different than other lending institutions — we use modern tools to solve the financial challenges of modern life. Can you imagine having to provide two years’ worth of paperwork for freelance work? That’s an artist’s nightmare. With us, you just connect your accounts, and if we can see consistent income flowing in, we’ll give you full credit for that.

Earnest tries to look for financial responsibility rather than just six figure salaries and employment at recognizable companies. We’re able to do this by looking at thousands more data points than a traditional credit score or lender might look at, which includes consistent income, savings, and on-time payment history, among other things.

Earnest is first and foremost a technology company, so by using our software to analyze your cashflows across all of your various banking and investment accounts, we can make a very educated determination about financial responsibility. That information is then translated to our underwriters, who dive deep into every applicant’s specific situation, including anyone without traditional 9-5 jobs.”

INCREDIBLE! If you’ve ever had to convince a bank to lend you money with an out-of-the-norm income, then you’ll know the unique chill of cold sweat that comes from explaining the viability of a chaotic career to someone who just doesn’t understand. With Earnest you don’t need to explain yourself; the numbers do it for you.

What does this translate to in terms of cold hard cash?

If you were to graduate from college with the national average of $29,400 in student loan debt, financed at 6.0% for 20 years, you’d be paying $210.63 per month for 300 months for a grand total of $50,551.20. Ack!

If you get the ‘thumbs-up’, and are able to refinance at Earnest for 3.5%, your monthly payment would be cut by $40.02 to $170.51, and you’d ultimately be spending $40,992.40 over the life of the loan – that would save you $9,628.80!

And that’s the kind of money every artist needs to help fund their retirement, emergency fund, or save for their own kid’s college. Am I right?!

What would happen if every month you put an extra $40.02 into a diversified portfolio of stock index funds increasing at an annual average of 7% for 20 years? You’d end up with $20,851.52! That means (in this example), sticking with a higher-than-necessary interest rate comes with a $30,480.32 opportunity cost (which is the difference between -$9,628.80 and +$20,851.52).

Double click on this amazing infographic to see the majesty! Yes, I made this just for you visual people!

I hope these huge numbers inspire you to take a look at your loans because this example is for the average debt graduates leave school with, and we’ve already established that art schools are above average in price. So in that case, your opportunity cost is even higher if you do nothing.

Who’s eligible?

This list describes the typical Earnest refinancer:

• Employed or has an offer letter
• Has enough savings to cover one month of normal expenses
• Has a history of on-time payments
• Carries positive bank account balances
• Has an income that supports both the loan and everyday living expenses
• Loan debt is from a Title IV accredited school [Check if yours is on the list here].

If you don’t quite fit the above profile, now is a great time to work on turning things around. Earnest is looking for people with good financial hygiene – and who doesn’t want good hygiene?

But before you pull the trigger

There are a few non-interest-rate reasons to consider holding off on refinancing with a private loan. Federal loans have benefits that private lenders can’t replicate, such as income-based repayment plans and partial loan forgiveness if you work in public service. If any of these Federal-specific benefits apply to you, staying put might be your best plan.

However, if the shoe fits

Refinancing your student loans at 3.5% is a hugely compelling reason to get your act together, and make a commitment to get rid of high-interest credit card debt, save one month’s worth of expenses in an emergency fund, and pay your bills on time. Taking these steps now and being savvy with the money that you’ll save on monthly interest payments could mean tens of thousands of dollars back in your hands. Smells good, right?!

If you want to check out Earnest’s website just click HERE.

I’d love to hear your strategies for dealing with student loan debt. Please leave a comment or send me a note directly at


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