When this site first reviewed SoFi back in 2014, readers wanted to know if SoFi was legitimate and how the student loan refinance process worked.
Over the years, refinancing has become far more common, and SoFi has grown into one of the biggest names in student loans and finance in general.
Despite all of these changes, the fundamental questions remain. Is SoFi student loan refinancing a good deal? What should consumers expect?
Meet SoFi in 2021
SoFi first started as a student loan refinance company, but they have significantly expanded.
For borrowers focused on getting a lower rate on their student loans, this evolution has some advantages.
For SoFi to grow, they had to evolve from a lender that focused only on high earners to a lender willing to accept a wide range of borrowers. The good news for borrowers is that many of the perks that SoFi used to target the doctors and lawyers of the world still remain. These premium perks include low interest rates, job placement resources, and $150 for new customers who sign up.
SoFi approved many borrowers with less than perfect credit in an attempt to expand. We have also seen borrowers with excellent credit shop around to compare rates and find that SoFi was the best option. As a result of SoFi’s ability to offer the best rate for a variety of borrowers, SoFi checks in at #5 in our student loan refinance lender rankings.
SoFi Refinance Rates and Options
SoFi offers a wide range of student loan refinancing options, as seen below:
|Loan Terms||5, 7, 10, 15, and 20 Years|
|Variable Rate Loans||2.25% - 6.64%|
|Fixed Rate Loans||2.99% - 6.64%|
|Minimum Refinance Amount||$5,000|
|New Borrower Bonus||$150|
Borrowers can refinance federal student loans, private student loans, and Parent PLUS loans. SoFi, like most legit lenders, does not charge any application fee, origination fee, or prepayment penalties.
Looking at all of the SoFi possible rates and options, borrowers should be careful to tweak loan repayment lengths to find the sweet spot between getting the lowest rate and getting the best monthly payment.
For example, one strange aspect of the current SoFi options is the close rates offered for the longer length loans. The rate on a 10-year loan may be only a fraction of a percent less than the rate on a 15 or 20-year loan. Opting for a longer loan can result in an interest rate that is only slightly higher, but provide a borrower with a great deal of flexibility.
Note: having a 20-year loan does not mean that a borrower must take 20 years to pay it off. Opting for the longer duration loan gives the borrower the flexibility of low minimum payments, but the loan can still be paid off aggressively by making extra or larger payments.
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 a job placement program. SoFi created a career services division for borrowers. 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 its customer support out of a California call center. Having the customer support team here in the United States doesn’t necessarily guarantee better service. Still, we do like to see them spending the extra money to make sure customers get the best treatment possible.
Borrower Beware – The Danger of Refinancing Federal Student Loans
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 consider carefully…
SoFi, like most other refinance lenders, is willing to consolidate federal loans with private loans. Though combining federal loans with private loans is a mistake for some, in other 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 or refinance, it is critical to make a smart decision when weighing the federal perks vs. the lower interest rate on the private market.
Outside of the traditional concerns that go with student loan refinancing, we see no additional concerns associated with SoFi.
How does SoFi work?
First, borrowers specify the loans that they want refinanced. SoFi creates a new loan and uses the funds from that loan to pays off the old loan. The borrower then pays off their debt to SoFi according to the terms of the new loan.
Borrowers typically refinance to achieve one of two goals:
- Lower Payments – Selecting a longer loan or getting a lower interest rate means a smaller monthly bill.
- Reducing Interest – Some borrowers select a short loan with an ultra-low interest rate. Going this route eliminates the loans as quickly as possible and minimizes total spending.
SoFi’s seems to have a goal of becoming the finance company for millennials, as evidenced by their aggressive expansion into areas like banking and life insurance.
Helping people pay off their student loans seems to be SoFi’s way of securing long-term customers who continue the business relationship in more profitable areas such as wealth management.
From a student loan borrower perspective, this is probably a slight advantage because it means SoFi has an incentive to keep customers happy even after they have refinanced their loans. These long-term goals would also explain why SoFi can keep its rates lower than most of the other lenders in the marketplace.
SoFi Refinance 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 SoFi customer satisfaction seems to revolve around whether or not the application was approved. Because of the originally 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 Complaints and Reviews from the BBB, Reddit, and Others
Most of the SoFi reviews from other experts have reached similar conclusions. NerdWallet proclaims that SoFi shines due to its low interest rates and job placement services. 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 several 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 an issue with the unemployment forbearance. Evidently, SoFi requires borrowers to register with their career services before approving an unemployment forbearance.
Reddit users generally have positive things to say about SoFi. However, when doing head-to-head rate checks with other lenders, SoFi at times did not offer the best interest rates.
The Consumer Financial Protection Bureau complaint database has about 50 complaints related to SoFi student loans. The issues were varied in the complaints. In terms of the volume of borrower issues, SoFi is comparable to other lenders, perhaps a bit better than average.
In short, the SoFi reviews are largely positive, but like any financial company, they are not without their warts.
SoFi Compared to Other Lenders
|Pros:||SoFi is the only lender who will help a borrower find a job, and they routinely have the lowest rates offered.||LendKey works with a large network of smaller credit unions and banks. As a result, many applicants get the best offer from LendKey.||Splash has the best new customer bonus right now, and they have excellent rates and term opitons.||Because ELFI is backed by a bank rather than investors, ELFI rates tend to stay low and fluctuate less than others.|
|Cons:||SoFi has grown into a large company offering mortgages, personal loans, and investment services. They no longer focus entirely on student loan refinancing.||Going the LendKey route does require working with a local bank or credit union. For many, this is a plus, but it is an extra step.||Splash is a newer lender and getting approval may be more difficult for some borrowers.||ELFI is one of the newest lenders in the marketplace. As a result we have limited head to head information.|
Should I apply for a SoFi loan?
SoFi is an excellent option for student loan refinancing, but SoFi is far from the only option.
Borrowers looking for the best deal would be wise to check their rate with SoFi, but checking rates with other lenders is also essential as many companies advertise rates as low or lower than SoFi. Because each lender uses different underwriting criteria, it is impossible to say which of the top student loan refinance companies will actually offer the best rate.