SoFi Student Loan Consolidation
SoFi approval can be a pain in the neck, but if you have the credit score an income to get approved, SoFi is a great option.
Article updated to reflect the latest interest rate information.
In the world of student loan consolidation and refinancing, SoFi is the company with the premium perks. These premium perks include interest rates as low as 2.795%, job placement resources, and $150 for new customers who sign up. While these perks are great, they do come with a catch. In order for SoFi to roll out the red carpet, they need to be certain that they will collect on the debt. As a result, qualifying for a SoFi loan isn’t easy.
The SoFi Advantages
SoFi offers some of the lowest interest rates on the market and flexible repayment terms, but the advantages associated with SoFi go beyond the numbers.
Perhaps the biggest advantage is job placement program. SoFi actually hired the former Assistant Dean for Career Services at a top MBA school to lead its career services division. Their thinking seems to be that they will make more money by investing in borrowers who lose their job, rather than spending the money on collections.
SoFi also runs their customer support out of a California call center. Having the customer support team here in the United States doesn’t necessarily guarantee better service, but we do like to see them spending the extra money to make sure customers get the best treatment possible.
If you have the credit score and income to qualify for SoFi, it is a great option, but there is one warning that all borrowers need to carefully consider…
SoFi offers a service that some lenders do not provide. They are willing to consolidate federal loans with private loans. Though combining federal loans with private loans is a mistake for many, in some instances it is a good idea. The classic example would be high income earners with strong job security. The important thing for borrowers to realize is that the repayment plans and forgiveness programs of federal loans are eliminated upon private loan consolidation. Because there is no way to undo a consolidation it is critical to make a smart decision when weighing the federal perks vs. the lower interest rate on the private market.
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.
How does SoFi work?
SoFi functions differently than the standard big bank approach to student loan consolidation and refinancing. 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 called 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, in addition to personal loans and mortgages. 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 goal 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 3.350% and have a maximum possible rate of 6.990%. Borrowers can sign up for 5, 7, 10, 15, and 20 year repayment plans. The variable rate loans are presently as low as 2.795% to 6.720%, and they are tied to the LIBOR rate. The interest rate is capped at 8.95% or 9.95% depending upon the loans. These rates are among the very best on the market.
SoFi, like most legit lenders, does not charge any application fee, origination fee, or prepayment penalties.
SoFi reviews from actual customers…
When this article was originally published, we could only base our opinion on the black and white terms of the SoFi loans. Since that time, dozens of customers and would-be customers have taken the time to leave their thoughts in the comment section.
What we have learned is that the SoFi customer satisfaction seems to revolve around whether or not the application was approved. Because of the tough underwriting criteria, many people have stopped by to share their disappointment with their denial. As one user summed it up, “people with high FICOs and high incomes sail right through while people with more moderate FICOs and incomes don’t seem to have the same experience.”
SoFi reviews from around the web…
Most of the SoFi reviews from other experts have reached similar conclusions. NerdWallet proclaims that SoFi shines due to their low interest rates and job placement servicers. They take issue with the fact that SoFi loans only come with a one year forbearance if you lose your job.
The Better Business Bureau gave SoFi an A+ rating, but there were a number of user complaints about SoFi. Some of the complaints dealt with SoFi’s mortgage and personal finance loans. Most of the student loan consolidation complaints were filed by consumers unhappy with a rejection. However, we were able to find one reviewer who had issue with the unemployment forbearance. Evidently, SoFi requires borrowers to register with their career services before approving an unemployment forbearance.
In short, the SoFi reviews are largely positive, but like any financial company, they are not without their warts.
Should I apply for a SoFi loan?
The big concern with SoFi is getting past their credit check. If you get approved, VIP treatment awaits you, but it will require a good credit score and debt-to-income ratio.
Your best bet is to have a backup plan or two in place. If you are going to apply for student loan consolidation, apply at several places at the same time. The credit reporting companies will consider this shopping around and it will not hurt your credit score. Our reviews of the major student loan consolidation companies should help out when it comes to putting together a backup plan.
With interest rates among the lowest we have ever seen them and the $150 new customer bonus, now may be the best time to apply.