SoFi – Student Loan Consolidation
SoFi, or Social Finance Inc, is a student loan company that offers consolidation and refinancing for both private and federal student loans. It was initially started by Stanford graduates for Stanford graduates as an alternative source of student loan debt help that offered lower rates. The company eventually expanded to the rest of the nation. SoFi is different from a typical lender because their goal is to not only offer borrowers quality loans, but to also turn borrowers into lenders and investors.
You have a choice of 5, 10, 15 or 20 year repayment terms. Shorter terms will mean bigger monthly payments but less money in interest overall while the longer repayment term means small monthly payments but more money paid in interest over time.
SoFi offers consolidation to people with credit scores as low as the medium level, while other lenders only accept people in the good to excellent range.
Unfortunately, you can only qualify for consolidation if you have already received your degree. Student loan refinancing from SoFi is available for both undergraduate and graduate school student loans.
Interest Rates at SoFi
When private lenders like SoFi consolidate student loans, they are in point of fact refinancing these loans into one loan with one payment. In turn, borrowers hope for a lower interest rate. Those with the best credit and overall financial picture will qualify for the best rates, and save big on interest with refinancing student loans.
You can look at consolidating student loans at SoFi with either a variable or fixed interest rate. Variable rates run from 1.90% APR to 5.2% APR, and are capped at 8.95 to 9.95% APR. Fixed rate loans feature rates from 3.50% APR to 7.24% APR. SoFi requires borrowers to sign up for autopay to nail down the best rates.
There are no loan origination fees or prepayment penalties. SoFi also offers unemployment protection, where loan payments are paused and they help you find a new job. Additionally, there are career coaching services for SoFi members, as well as an entrepreneur program allowing qualified applicants to receive loan deferrals and mentorship.
Loan Application Process
The online application process begins with a click of the find my rate button. The next screen prompts you to create a SoFi account, and from there you'll enter information to see if you are pre-approved. Then you can move on to filling out the actual application.
Those who are approved can compare available loans with a range of interest rates, payments and terms, allowing you to consider which loan scenario fits your needs and budget. Upon choosing a loan, you'll upload documents to verify your identity and current loan info. Screen shots and smart phone photos are acceptable for document uploads if you don't have a scanner. Add your electronic signature and you're done.
Why Consolidate with SoFi?
The federal Direct loan consolidation program can't combine government and private student loans, but SoFi can combine public and private student loans into one new loan. One advantage gained is that you'll have only one monthly payment to make rather than a variety of payments. The trick is to see if you can qualify for a better overall interest rate, and lower the overall interest paid over the life of the loan. If you can afford a higher payment, you can also take a shorter term loan and dramatically reduce the total interest payout.
As you consider consolidation of student loans, look at the interest rate you are currently paying on your federal loan. Federal student loans have rates in the 3 – 8% range. SoFi can offer better rates that the higher rate federal loans to those with the best credit. If you are looking to consolidate only federal loans, be sure to look at federal student loan consolidation programs, but not everyone can qualify for them.
How important are interest rates? SoFi claims that their members save an average of $14,000 on their overall student loan debt.
Who Should Consolidate Student Loans?
Refinancing student loans is a good option for those whose overall financial picture has improved since graduating from school.
If you are working in the public sector or are enrolled in a federal debt relief program, you may be better off sticking to these public programs as their features will not transfer to a private consolidation loan.
For example, there are federal programs like the Public Service Loan Forgiveness Program, where your Direct Loan balance may be eligible for forgiveness after 120 payments, provided you continue to work in the public sector. Also, the Teacher Loan Forgiveness Program is there for teachers working in low income schools for five years.
There are additional federal programs with very specific parameters, and they are great for qualified borrowers. But for those who don't qualify, consolidating student debt by refinancing with a private lender like SoFi is a great option.
Don't forget that SoFi stands apart in the private sector, offering perks to its members that many other private lenders do not, such as their entrepreneur program. It's up to you to carefully weigh the pros and cons of refinancing student debt with a private lender like SoFi. Bottom line, if they can save you money via lower interest rates, and you can afford the payments, it's a good idea.
Customer Service at SoFi
SoFi boasts the availability of live customer support seven days a week, via a click of the chat tab. There is also a customer service phone number and email. The Resources drop down menu at the site allows easy access to tools like the student loan calculator, and there is a student loan refinance guide PDF available for download. They have a comprehensive student loan refinance FAQ page with links to additional tools and services.
Some applicants have complained that SoFi sets the bar too high and it's tough to qualify, while SoFi themselves claim that as long as you have "good" credit you can qualify. The service is not available in the state of Nevada, and variable rate loans are not available in Ohio or Tennessee.
Verdict - Superb
SoFi is a student loan consolidation company made by graduates for graduates with the goal of turning borrows into lenders. They offer an attractive variety of loan choices and terms, along with an innovative menu of services for borrowers, who they refer to as members. This makes for a highly reputable lender that is on your side.