SoFi, formerly known as Social Finance, was created in 2011 by four former students of Stanford’s Business School. These four individuals wanted to find a way to make obtaining an education more affordable as well as ensuring that graduates would be success in their career and in repaying their loans. The company received its initial funding from approximately 40 Stanford alumni and the Stanford Business School.
SoFi provides a number of financial services including student loan refinancing, mortgages, and various other types of individual loans. The majority of SoFi’s customers are in the beginning stages of their careers. Over the past couple years, SoFi has helped more than $7 billion in loans. SoFi also partners with banking giants Morgan Stanley and Barclays to support peer-to-peer student loans.
SoFi uses an innovative model which relies on funding from alumni and uses it to lend money to students at that specific institution. As a result, both investors and borrowers benefit. Investors receive a financial return on the money they lent and borrowers receive a lower interest rate than they would if they took out a loan through another provider. The company also provides career mentoring and additional resources to their customers to ensure that they have a successful launch into their career.
What Is SoFi Refinancing?
SoFi provides loans to students who are interested in refinancing their current loans. As is the case for most private lenders, not everyone qualifies for a loan as they want to be sure that the loan will be repaid. Thus, SoFi is less likely to accept applicants who have red flags on their credit checks. In addition, SoFi allows lenders to combine their federal and private loans together during refinancing. Borrowers should be sure that they understand the risks of doing this, which include forgoing the various forgiveness and repayment programs that the government permits for federal student loan borrowers. Yet, for graduates who earn a high income and hold a stable job, this may be an ideal option, that can help borrowers pay off their student loans.
SoFi offers the option for students to choose from a fixed or variable loan when they refinance. Variable rate loans currently range from 2.345% – 6.270% APR for students who opt to pay using the AutoPay function. Fixed rate loans range from 3.375% – 6.740% APR for students who opt to use AutoPay.
SoFi offers loans with no hidden costs. Thus, there is no fee to apply and no fee at time of loan origination. Additionally, no penalty is assessed for prepaying loans. Borrowers are eligible to receive a discount of up to 0.25% when they pay their monthly bill using AutoPay. This feature allows payments to be made towards the loan automatically, directly from either a checking or savings account. Flexible repayment terms are also available. Borrowers may choose either a 5 year, 7 year, or 10 year refinance term.
How Do I Apply for Refinancing through SoFI?
Applicants will be pleased to know that the process to apply for a loan through SoFi is very easy. In fact, the company says that applicants can find their rate in only two minutes, without any commitment. Thus, you can simply check to see whether you are eligible for a lower rate without agreeing to any of their services. On average, members save around $14,000 when they refinance their loans. Thus, it is definitely worth spending a couple of minutes to see what your rate might be.
To get started, simply access the SoFi website from any mobile device or computer. Simply complete a fast pre-approval process to determine whether you are eligible for refinancing. This will save you the time of completing the full application if you are not eligible. Next, if you are eligible, you will need to complete the full application. At this point, you will select a loan based on your preferred payment plan, terms, and interest rate. Lastly, borrowers will be asked to upload documents regarding their current loans and their proof of identity. At that time, they will also have to accept the loan. All paperwork for the refinancing can be done online.
If order to be eligible to apply, students must be at least 18 years of age and a resident of the United States. Borrowers may apply with a cosigner or by themselves. Borrowers must be employed or be planning to start a job within 90 days (in which case a letter proving an employment offer has been received will be necessary). Only students who have graduated from an accredited program will be considered. Students from almost all states are eligible to apply. Unfortunately, students from Nevada are not able to refinance with this company and students in Ohio are not able to borrow under the variable rate loan terms. Students must borrow at least $10,000. In addition, students must qualify for SoFi’s underwriting criteria, which takes into account an applicant’s career experience, financial history, and debt-to-income ratio.
Benefits of using SoFi Refinancing
- Lowest interest rates in the industry
- Flexible repayment terms
- Unemployment protection that allows borrowers to pause their payments
- Job placement program to assist customers who lose their job
- U.S. based customer service team
- Excellent and friendly customer support that is open 24/7
- Allow for users to refinance both federal and private student loans
- Quick and easy online application
- 0.25% interest rate reduction for using automatic payments
- No origination, application, or prepayment fees
- Student loan calculator for calculating repayments
FAQ about SoFi
Does SoFi offer consolidation of loans?
Yes, the company offers both loan refinancing and loan consolidation. There is the option to refinance both federal and private loans together. The company offers resources online to help borrowers determine which option is right for their circumstances.
What is SoFi’s customer service like?
Since SoFi aims to keep customers happy and according to reviews, they seem to provide better customer support than many other large lending companies. This may be in part because their model aspires to have current borrowers become future investors.
How hard is it to get a loan with SoFi?
Like every other private student loan lender, SoFi judges you based on your financial history and credit worthiness. If you are unsure of whether you will qualify for a loan with SoFi, you may want to apply to a few different places in order to determine the best rate. This will be less likely to hurt your credit score, as it is considered shopping around for a rate, than receiving a denial from one company.