Article updated 7/12/17 to include the latest interest rate information.
SoFi is probably the best known student loan refinancing company due to their size and ubiquitous advertising. A newer lender, College Ave is starting to generate a lot of attention and offers a student loan consolidation service that is definitely worth considering. Today we will look at how these lenders stack up and the key differences between the two services.
SoFi and College Ave both offer pretty competitive interest rates. Variable rate loans currently start at 2.795% with SoFi and 4.01% with College Ave. On the fixed rate loan side of things, SoFi starts at 3.375% and College Ave starts at 4.65%. In this category, SoFi offers significantly lower fixed-rate loans and variable-rate loans.
As far as repayment length, the companies have some key differences. SoFi has repayment lengths of 5, 7, 10, 15 and 20 years. College Ave does not offer a 20 year repayment plan, but they do have a total of 11 different repayment lengths between 5 and 15 years. Additionally, College Ave will allow for interest only payments for the first two years of a new loan. College Ave probably has more flexibility, but SoFi offers the longest repayment plan (which can mean much lower payments).
If you look out our student loan consolidation rankings, right now SoFi checks in at number one while College Ave is in eighth place.
The interest rate and repayment differences only partially explain the differences in the rankings for these two companies. One of the factors that led to College Ave showing up lower in the rankings, would be its relationship with Sallie Mae/Navient. The company was founded by a group of former Sallie Mae employees and many of the College Ave loans are serviced by Navient. While Sallie Mae and Navient are hardly the only bad actors in the student loan world, if the recent lawsuit brought by the Consumer Financial Protection Bureau is any indication, their bad reputations are well deserved.
SoFi gets a boost in our rankings because they actually have a career services department dedicated to helping SoFi borrowers who are underemployed or unemployed. The calculation here seems to be that SoFi thinks they will be better off financially if they help their borrowers get a good job instead of spending money on debt collection. We see this consumer friendly approach as a big plus.
Finally, SoFi is also currently offering $150 to new customers who sign up for their services. The extra money probably shouldn’t sway you in one direction nor another because interest rates are a much more important consideration. However, it is a nice little perk for new customers.
In order to get a bonus for refinancing with College Ave, borrowers would have to apply through the Credible platform, where they currently offer $200 as a refinance bonus.
There are a few reasons that SoFi gets an edge over College Ave in this comparison. However, the true test for most consumers will be the interest rates. Because the rate ranges of these two companies overlap, it is entirely possible that College Ave offers a rate better than SoFi. It is for this reason that both companies should be considered. In fact, the more student loan consolidation companies you apply to, the better you can feel about the rate that you eventually find. A full list of the major lenders is available here.