Susan Ehrlich is the CEO of Earnest, a San Francisco-based lender that provides private student loans and student loan refinancing. The company was founded in 2013 and provides undergraduate and graduate student loans, co-signed loans, medical, law school and business school loans.
The company says it provides a nine-month grace period when the typical loan is only six months and there are no fees for origination, disbursement, prepayment or late payment. The company uses software to match consumers with potential loans without impacting their credit scores.
Her experience has been focused on offering loans to consumers. She was the prior CFO at Simple, one of the earliest mobile-first neobanks, and was also a consultant at LendingClub. Ehrlich also ran the credit card programs at Amazon and also led financial services at H&R Block and Sears/Kmart.
FinLedger spoke with her about her decision to join Earnest, how the system for student loans can be changed and what lies ahead for female executives in the fintech industry.
FL: Tell us about what led you to join Earnest.
Ehrlich: In joining Earnest I saw a massive opportunity to bring much needed change to an industry that has not seen meaningful innovation in 30 years. We are helping students and graduates chart a path to financial wellness and the work we are doing is so important. I’m proud to share that at Earnest we have refinanced over $11.6 billion in student loans for over 130,000 individuals across the country saving them over $2 billion in interest – a life-changing amount of money.
I’ve spent most of my career expanding access to responsible financial products for consumers across the country, working for both startups and Fortune 500 companies.
FL: Why is the current system for student loans broken and how can technology help current students and graduates?
Ehrlich: An estimated 19.7 million students attended college this fall and many of them turned to a combination of scholarships, federal financial aid and private lenders to help finance their education. This combination is not only costly, but confusing. It may attribute to the fact that one in five adults in the U.S. carries student debt, amounting to $1.7 trillion.
We launched our private student loans product at Earnest last year because we saw the system was broken. Existing student loan options on the market were incredibly outdated – they looked like Windows 95 but are being used by students who weren’t even born when Windows 95 was in use. Moreover, students often don’t understand what they’re signing up for when they sign for a loan. We drew upon our extensive experience in design, user research and data to create a student loan offering that’s in the best interest of consumers. We also introduced the Earnest Scholarship Program and awarded 50 undergrads $5,000 each for a total of $250,000.
FL: Why did you build a diverse company? What is this mindset important?
Ehrlich: Earnest believes the fundamental role of lenders is to help people realize their goals. We believe we can do this best through a team of diverse perspectives.
According to a 2019 study by McKinsey & Company, 44% of companies have three or more women in their C-suite, up from 29% of companies in 2015. Adding even one woman can make a material difference, given the critical role top executives play in shaping the business and culture of their company. Still, the overall representation of women in the C-suite is far from parity. About one in five C-suite executives is a woman—and only one in 25 C-suite executives is a woman of color.
At Earnest, I am proud that our C-suite is 33% women and overall as an organization, we are 43 percent women. Having a gender-diverse leadership team increases diverse perspectives directly correlated to the customers we serve while role modeling opportunities for other women.
We are continuously working to diversify and strengthen our workforce and recruiting initiatives. We recently became a founding member of the Parity.org ParityPledge® in Support of People of Color as part of a larger commitment to support diversity across our offices. We’re also proud to be founding members of the Betterment Fintech Coalition, working alongside other fintechs like Credit Karma and Varo, to fight against racial inequality in the financial services industry.
FL: How is your company different from other student loan companies?
Ehrlich: Over the past five years alone, education and technology have evolved tremendously. Student loans have not. That’s where we come in. Earnest is modernizing the process from start to finish to eliminate a historically laborious and time-consuming process. We’re primarily known for our student loan refinancing product and we’ve been able to help graduates save a meaningful amount of money with lower interest rates. A lot of people graduate from college or graduate school without understanding that refinancing is an option available to them. We want to help them get out of debt in a sustainable way that works for their financial situation.
Launching our private student loan product last year was a natural next step. Students need lenders to quickly address one simple question right away: can you help me pay for school or not? This shouldn’t be a mystery and it shouldn’t require hours spent researching or filling out the application and a hard credit pull. That’s where Earnest comes in. We invested over 300 hours of user research with students, cosigners and university financial aid professionals, whose feedback went into creating a product that addresses real pain points in the market. Unlike many lenders, we build education directly into the application flow (including defining what exactly APY is), enable co-signers to directly start the application process, clearly lay out the monthly payback term, and offer a nine month grace period after graduation instead of the standard six months. We also service your loan through Earnest – when you call our “client happiness team,” you’ll immediately be connected with a real human that‘s there to help you on your payback journey.
FL: Why do you have a mentorship program and why is that important to closing the gender gap? Can you provide an example of someone you mentored in the past?
Ehrlich: Mentorship is crucial to closing the gender gap and helping women rise up in their careers, but without a framework in place, many employees are put at a disadvantage. Recognizing we had the power to change this, our “people team” in conjunction with our women’s employee resource group developed the “Earnest Mentorship program” to build a formal way to request mentorship for team members looking to learn a new skill or guidance on professional development. When the mentorship round opens, we encourage employees to submit their request to participate with a clear goal and encourage senior leadership to sign up as mentors. Employees are then matched with a mentor that can help the employee reach their goal.
I have taken part in this program as a mentor and my very first mentee is now our head of operations. I supported her with her individual development plan and our interactions through the program helped give her self-confidence and guide a conversation with her manager that contributed positively to her promotion in 2019.