SoFi consolidation savings

SoFi (aka Social Finance Inc.) Student Loan Review

The Sherpa Blog, Student Loan Consolidation Reviews, Student Loans 20 Comments

If you are in the market for student loan consolidation or student loan refinancing, one company worth investigating is SoFi.

The bottom line on this company is that they are offering some of the best interest rates and most flexible terms.  Though some of SoFi’s financing options do present a little cause for concern, their innovative approach and great rates make SoFi a good option for many borrowers.

How does SoFi work?

Before you consider using SoFi, it is important to understand what makes SoFi different than traditional lenders.  SoFi was actually created by a group of Stanford business students who wanted to help other business students.  Alumni invested in the program, and the funds were used to help recent grads lower their interest rates.  The program started out just at Stanford, expanded to some other schools, included some other programs, and eventually became a nationwide program.  This approach is commonly referred to as crowd-sourcing or peer-to-peer lending.

One of SoFi’s goals is for former borrowers to go on to become lenders.  Even if you have no interest in future investments, the fact that the company seeks an ongoing relationship with its customers is a huge positive.  Most student loan borrowers know that the customer experience goes down hill quickly one the lender has your name on the dotted line.  Working with a company that has an incentive to keep you happy is a major upgrade.

What loans does SoFi offer?

SoFi presently offers student loan consolidation and refinancing services.  Borrowers specify the loans that they want consolidated or refinanced, SoFi pays them off, and then the borrower pays off their debt to SoFi.  The objective behind consolidation and refinancing is to lower your monthly payments by qualifying for a lower interest rate or by spreading out the payments over a longer period of time.  Doing both of these things can save you money over the short term and in the long run.

SoFi offers both fixed rate and variable interest rate loans.  The fixed rate loans start at 3.625% and have a maximum possible rate of 7.49%.  Borrowers can sign up for 5, 10, and 15 year repayment plans.  The variable rate loans are presently as low as 2.66% to 5.035%, and they are tied to the LIBOR rate.  The interest rate is capped at 8.95%.

SoFi, like most legit lenders, does not charge any application fee, origination fee, or prepayment penalties.

What is the cause for concern with SoFi?

SoFi offers a service that some lenders do not provide.  They are willing to consolidate federal loans with private loans.  Here at the Student Loan Sherpa, we often refer to mistake as breaking the Golden Rule of Student Loan Consolidation.

Though combining federal loans with private loans is a mistake for many, in some rare instances it is a good idea.  The classic example would be people who are certain that they will be paying off all of their federal loans, have no doubt where the money will be coming from, have no fear of losing their job, and want to get a lower interest rate.

If you are considering applying for consolidation with SoFi and want to make sure that your federal loans are not included, go to the federal student loan database.  There you will be able to pull up a full list of your federal loans.  If the loan is not on the list, you can be assured that it is a private loan.

Who is SoFi best for?

Due to the fact that SoFi offers such low interest rates, most private loan borrowers could likely benefit from their services.  For borrowers with a decent credit and a good income, SoFi could be an ideal option for student loan consolidation.

[Update 6/23/14: SoFi is presently offering a $300 bonus for new applicants.  To qualify, apply through this link]

 

The SherpaSoFi (aka Social Finance Inc.) Student Loan Review
  • mike

    hi michael, thanks for the article on sofi and your website in general. my school is not on the list of schools serviced by sofi. do you know of any similar programs like sofi that has more schools or no limitations on what schools you attended? thanks.

  • Nick

    Hi Mike, I know everyones tax situation is different, however if you went with a SoFI loan would you still be able to claim the interest on your taxes like you can with federal student loan

    • http://studentloansherpa.com/ The Student Loan Sherpa

      Great question Nick. Let me first say that the student loan tax interest deduction applies to federal AND private loans. SoFi loans do qualify for the student loan interest deduction, but like you said, it depends upon your individual situation.

      According to SoFi, “SoFi loans are considered student loans for federal and state tax consideration. Note that you may or may not be eligible for interest deduction depending on your individual tax situation. You should consult your tax advisor for more information.”

  • jaybob

    Hey Mike, I have over $68,000 in Federal Student Loans at 4.125%. I am currently paying $300.00 a month and the principal keeps growing. I can’t afford to pay any more than that so I’ll probably pay this until I die. Will my family be held responsible for this loan at that time?

    • S

      if it makes you feel any better I have loans exceeding 200K at interest rates varying from 6 to 8.25%. I think after death you don’t have to pay, but if you are bankrupt you will still be liable for student loan debt. best of luck to you.

    • Jules22

      I actually took out a life insurance policy to cover my loans. I’m 25, in good health.. and took out a 25 year term policy that covers more than enough for my loans (150K policy, I owe about 80K). I actually only pay like $200 a year for this.. Maybe you should look into that if you’re worried?

  • Cory

    I refinanced my student loans through SoFi and have to say that the
    entire process was horrible. The application process ended up taking 3
    months. Every time that they said something would take 3-4 days it took
    3-4 weeks. Each time I called them I got a different story about what
    stage my application was in. When they claimed that everything was
    finalized I found out that they never sent checks to several of my old
    loan companies and I ended up paying payments to multiple companies for
    the same loans. I called them to rectify the situation and asked to
    speak to a manager. I spoke to a VP and she told me she would figure it
    out “right away” and call me right back. It has been 4 days and I
    still have not received a call. Pretty much sums up my interactions
    with this company. I feel like you couldn’t run a company this poorly
    if you tried.

    • Lil25

      I’ve heard that SoFi is very easy compared to Darian Rowayton.

    • Enrique M. Rivera-Cortes

      It was super easy! I had initial reservations based on Cory’s response but I still decided to go through with it. I am glad I did.

    • YappysDogTreats

      About how long did it take for it to go through from the day you first applied?

    • http://studentloansherpa.com/ The Student Loan Sherpa

      I’ve heard of it taking as little as a couple weeks to as long as a month.

    • Enrique M. Rivera-Cortes

      It took about two weeks from start to finish. I checked my loans with Mohela and Wells Fargo and they were paid on 12May. I started the process on 30Apr.

  • Lil25

    What about refinancing federal graduate loans with a private company like SoFi? The interest rates on federal are insane! Yes, I know that you lose protections, but we hope to pay off our loans in less than 10 years, and the chances of us needing the federal protection is very slim.

  • Ryan

    I applied for a refi through SoFi and they declined my application based solely on my credit score, which isn’t too abysmal at 680. Seems like they’re pretty picky.

  • Mark

    I Just attempted to refi a 24,000 loan got denied. with a 722 credit score and 60,000 a year income I am 39 and been paing my Salliemae since 2011 even before it came due. They recommeded I get a co-signer HAHAHA. Nope I am an adult thank you

  • Rez

    Just got off the phone with these guys… they refused to give you a quote over the phone and forced you into applying online. I had my credit pulled 3 weeks ago and had all my scores (all three over 750) and they still refused to assist me over phone. I started the application online and when I saw the offered products, it really wasn’t that impressive. So, I decided to withdraw my application. Before applying online, I called to ensure that their credit pull was a soft pull (I am in the process of purchasing a house) – they confirmed it “was” over the phone. I had to call back (twice) to request an application withdrawal, and this time I was told that the credit check was a hard pull. It even indicates that the credit check is a soft pull on their site (and I hope that truly is the case) .. anyhow, frustrating customer service. Below is their response regarding the credit check:

    I confirmed that you did consent to a hard credit pull when
    submitting your application. We begin with a soft credit pull to
    determine the product, and finish that step with a hard credit pull to
    ensure the product matches your credit portfolio.

    Thank you for your recent interest in refinancing your education loans with SoFi.

    This email will confirm your recent request to withdraw your application for a SoFi Refinance loan.

    Thank you again for your interest in SoFi. If you have any questions
    or concerns or would like to resume your application, please don’t
    hesitate to call us at 855.456.7634 or email us at CustomerService@sofi.com.

    I don’t recall ever consenting to a hard pull. Maybe I did not read the entire thing…but be aware and good luck for those of you who chose to go SoFi.

  • Ruhiyyih

    I had a very similar experience to Rex below. They claim on the site that they only perform a soft pull of your credit and that it won’t affect your score. Well my credit monitoring was pinged and it turns out they performed a hard pull of my credit and it will be affected. Blatant false advertising, and a downright lie. I am also in the process of trying to purchase property in a very competitive market and certainly did not need this sort of aggravation. Given that others have experienced this problem I’m sure it’s making the rounds.

  • TED

    SOFI only refinances if the person refinancing graduated from a college on their approved (limited) list of colleges.
    i.e. If you have a parent plus loan for your child, and (even though they graduated from) you didn’t graduate from one of their ‘approved colleges (or graduated from a foreign college), you cannot get refinanced !!

  • TMEA

    I applied a few weeks ago and was just notified that I was approved, but I am very reluctant to accept because of how horribly this company seems to operate. I had to call multiple times before I spoke to someone, then the information I received was inaccurate. The numbers (interest rate I was offered and maximum lifetime amount I would pay) both went up from what I was given initially (after the credit pull) and today when the offer was made. Additionally, I applied for a fixed loan, it says fixed, but the interest rate listed is variable with the high end being higher than what I am currently paying. I recommend using caution when dealing with this company.