Social Finance, commonly known as SoFi, is one of the largest private lending companies in the United States. They have funded over $10 billion in loans ranging from student loans, mortgages, and other personal loans; additionally, SoFi set the precedent for student loan refinancing by offering this service for both private and federal loans. Despite spearheading other loan services that have been rising in popularity, SoFi has taken a step back in the student loan industry. MBA student loans will no longer be provided by SoFi.
SoFi previously offered MBA loans to graduate students who attended the top MBA programs in the country. After July 15 2017, these loans will be no longer available. Federal competition is the reason for discontinuing their MBA loan program.
The current rates on federal MBA loans are varied. MBA students can borrow up to $20,500 a year with a 1.068% origination fee for an unsubsidized loan. The interest rate for this loan is fixed at 5.84%. The Federal Direct Grad PLUS Loan is offered with a 4.272% origination fee and a fixed interest rate of 6.84%.
These rates have been deemed to competitive for SoFi who intends on “refocusing lending efforts on student loan consolidation and refinancing, mortgages, and personal loans.” This change in loan services is apparently not a new precedent.
The same action was taken in 2013 by SoFi when they discontinued MBA loans for a period of time. The reasons were due to federal loans for MBA programs. The federal loan package with its protection and rates were referred to at the time which shows that private loans for these programs were not worth it.
The federal MBA loan program offers more than its private lenders in general. While some private lenders can offer lower interest rates, they do not offer the same protections. Plans such as loan forgiveness and income-driven repayment are the factors that tip the balance in the federal government’s favor. These plans simply save the borrower more money than a private loan would.
With all that being said, this surely does not mean that SoFi will never return to MBA loans. They have left and returned before, but his is most likely dependent on the federal government and their rates.