Finance has been an issue for students for a long time, and many companies and organizations have been formed to help address the issue. However, one of the most unique approaches to addressing the problem has come from SoFi, a California based institution that has become a household name in the student loan refinancing market.
The name SoFi is derived from the words Social Finance, something that is at the core of the company’s principle. It was originally created to allow the alumni of Stanford and a few other elite tertiary education institutions to fund the students of the next generation. The idea was revolutionary when it was first conceived, and though it was meant for a small audience, it quickly gained popularity over time.
The increasing popularity of the program meant that SoFi could expand, allowing them to get funding from more sources. Now, rather than depending on alumni checks alone, they also depend on the surplus of investor money that is floating around, ensuring that this excess capital is accessible to those that need it the most.
It also means that the company can now fund students from a wider range of universities. They currently provide student loans to borrowers from over 2200 colleges and universities countrywide. In addition, they now offer services other than student loan financing, such as mortgages and personal loans, as well as loans for parents who would like to assist their children with their college fees.
SoFi Mortgages are some of the most reasonable mortgages on the market right now, and are targeted at jumbo borrowers who have high incomes but have little or no money saved up for down payments. This is a very different approach from the one used by many other lenders, who are usually nervous about providing financing options to jumbo borrowers.
So far, the company has refinanced over $5 billion in student loans, making it the student loan refinance industry’s biggest lender. One of the things that has made it so popular is its low interest rates, which can start from as low as 3.5% for fixed rate loans and 2.15% for variable rate loans.
Apart from student loans, personal loans and mortgages, SoFi also provides its customers with wealth management strategies to help them invest their money better. Thanks to an experienced team of financial advisors, they help their customers define their goals, and how much they need to invest to reach those goals.
They also help customers to find the right mix of investments and funds that is appropriate for them. This mix is usually based on the age of a customer, their income, and the assets that they own. The best part is, everything can be done online in less than 10 minutes.
SoFi is also very popular thanks to the job-related benefits that it offers, including career coaching for members, and networking events that help their members make new connections. One of the best things about SoFi is that they have a minimum loan balance requirement of only $5,000, and they do not put a limit on the maximum balance that they will refinance.
SoFi's Student Loan Refinancing Product
As was mentioned earlier, unlike many traditional loan servicers, SoFi refinancing runs more like a crowd-sourcing or peer-to-peer lending program, which enables them to offer lower interest rates and monthly payment plans. One of the goals of SoFi is to get alumni who have received help from the institution to actually become lenders themselves. This is a very big plus for the company, as it shows that unlike other student finance services where customer service dips immediately your loan is disbursed to you, SoFi customer service will remain excellent as they would like to continue interacting with you even after you complete your business with them.
Rates and Terms
SoFi is one of the most popular student loan refinancing organizations right now thanks to its very favorable rates and terms. Like many of their competitors, they offer two different primary options, fixed rate and variable rate loans. The interest rates that you will be offered are tied to the loan terms that you choose and you can pick terms that range from 5 years to 20 years, depending on various factors. It is important to note that unlike many of their competitors, SoFi does not charge application or origination fees, and has no prepayment penalties.
If you are interested in a fixed rate loan, you have 5 different options to choose from, each with its own range of interest rates. These five different options are:
· 5 years at an interest rate between 3.5% and 5.99%
· 7 years at a rate between 4% and 6.49%
· 10 years at a rate between 4.62% and 7%
· 15 years at a rate between 5.13% and 7.49%
· 20 years at a rate between 5.38% and 7.74%
If you are interested in a variable rate loan, you will have the same basic choices as far as terms are concerned, but the interest rates shall be slightly lower. These rates are outlined below:
· 5 years at an interest rate between 2.23% and 5.03%
· 7 years at an interest rate between 2.53% and 5.16%
· 10 years at an interest rate between 3.03% and 5.41%
· 15 years at an interest rate between 3.41% and 5.78%
· 20 years at an interest rate between 3.66% and 6.03%
The rates shown above are inclusive of the 0.25% autopay discount that is available to members of SoFi. In addition, it is important to note that all variable interest rate loans are tied to the one-month LIBOR (London Interbank Offered Rate). The LIBOR index will cause your monthly payments to fluctuate. This means that your monthly payments may increase or decrease depending on the level of the LIBOR index. However, there are certain protections that are in place to ensure that monthly payments do not get too high. For instance, 5, 7, and 10 year loans are all capped at 8.95%, while 15 and 20 year loans are capped at 9.95%. These rates are capped to the full extent permitted under law.
Because of this, the rates shown above may be different from the rates that you actually get when you apply for a loan. Additionally, the interest rates that you are offered will also vary depending on your financial history and your co-signer’s financial history if you apply for a loan with a co-signer. Rates may also vary depending on the state that you are in and the laws that are in place.
One of the most attractive things about SoFi loans is that almost everyone is eligible for them. This is because when evaluating customers, rather than rely on FICO scores like many of their competitors, SoFi relies on your financial behavior. The company takes into account factors such as where you work, the length of time you have been working there, whether you pay your bills on time, and how much you have to spend after you have paid your bills. Additionally, your annual income does not come into play, as all the factors that they consider are enough to show whether you will be able to repay your loan properly.
One requirement that you do have to fulfill though is you must have graduated from a reputable higher-education institution with a minimum of a degree. You also need to be:
· At least 18 years old, or the age of majority in your state
· A citizen of the US or a permanent resident (this applies to your co-signer as well, if you have one)
· You must be employed, have satisfactory income from other sources, or have an offer for employment that begins within 90 days of you applying for your loan
Your eligibility for a loan will also depend on additional factors, including your financial history (or the financial history of your co-signer), your career experience, and the difference between your monthly income and your expenses.
At the moment, SoFi loans are available to residents of 49 states and the District of Columbia. The only state that is currently not served by SoFi is the state of Nevada. If you are a parent, over and above the requirements mentioned, your child also needs to be a student in a Title IV accredited university or graduate program.
Benefits of SoFi's Student Loan Refinancing
There are very many benefits to choosing SoFi over its competitors. For starters, you will be dealing with an industry leader, meaning that you can be assured of quality service. Additionally, there are a number of perks to being a member of SoFi, including career coaching. SoFi keeps a number of staff members around that are on hand to help members practice job-hunting skills and how to negotiate for a higher salary. Members can work one-on-one with staff or attend online webinars, regardless of their employment status. There are also a number of SoFi-hosted happy hours, dinners and networking events that help members to network and widen their databases.
However, one of the best benefits of SoFi refinancing is the interest rates. SoFi interest rates are some of the lowest on the market, and include a 0.25% discount for borrowers who sign up for automatic payments from their bank accounts.
However, as with most of their competitors, the more attractive your financial profile, and the shorter a term you choose, the easier it will be for you to qualify for a loan, and the lower your interest rate will be. Additionally, it is much safer for borrowers to apply for fixed rate loans than for variable loans, as they will not fluctuate in the same way that variable rates will.
Downsides of SoFi's Student Loan Refinancing
Despite all the benefits of applying for a SoFi loan, there is one glaring disadvantage. SoFi offers various protections for people who have lost their jobs involuntarily, and they are able to put your repayments on hold for 90 day periods that can total a maximum of one year. The company says these protections are also available to borrowers who experience other types of financial hardship, but these are provided on a case-by-case basis.
However, it is important to note that there are many other lenders that offer their members longer forbearance periods, especially in the case of unemployment or economic hardships. For instance, CommonBond offers its members up to 24 months reprieve, while U-fi offers between 24 and 36 months forbearance.
If you are planning on consolidating your federal and private loans, you have to be careful, as this can both benefit you, and place you at a disadvantage. Once you consolidate your federal and private loans, you forfeit all the perks and protections you get from the federal government, including the different repayment plans and forgiveness programs.
Borrowers also need to keep in mind that once federal loans have been consolidated, the action cannot be undone. Therefore, it is important that you are clued in on all the consequences of doing so before you consolidate the loans. For these reasons, the people who are most likely to benefit from the consolidation of private and federal loans are high income earners that have high job security.
Alternatives to SoFi Loan Refinancing
There are many other refinance lenders that you can choose from if you are interested in refinancing your student loans. Financial institutions like College Ave, ELFi, Darien Rowayton Bank (DRB), Earnest, CommonBond, Citizens Bank, and LendKey are all able to consolidate and refinance federal and private loans. However, you must be careful when you are picking an alternative, as some of the interest rates and terms may not be as favorable as those you will receive from SoFi.
SoFi is one of the most popular student loan refinancing institutions for a reason. Their rates, terms and perks are hard to find anywhere else on the market. Additionally, qualifying for a SoFi loan is quite simple, regardless of whether it is a student loan, a mortgage or a personal loan. This is definitely an institution you need to investigate if you are looking for student loan refinancing.