college student books

SoFi In-School Private Student Loans Review

Michael Lux Blog, Student Loan Reviews 0 Comments

SoFi Undergraduate Student Loans

Interest Rates
Repayment Options
Fees
Loan Terms

Good

SoFi may be new to in-school student loans, but they have a variety of options that should appeal to borrowers.

SoFi has built their name and reputation on student loan refinancing.

Over the years they have expanded into Personal Loans, Home Loans and Investment Management.  Recently they made the step into in-school student loans for undergraduate and graduate students.

This review will take a close look at the benefits and issues with the SoFi undergraduate student loan options.  SoFi does also offer in-school loans for graduate students, but because there is no limitation on federal student loan borrowing for grad students, we think Grad PLUS loans are a better alternative over all private loans.

We see in-school private student loans for undergrads as an appropriate option for borrowers who have maxed out their federal student loan borrowing eligibility.  The lower limits for undergrad borrowing often force many students to resort to private loans.  Of the many private lenders available, SoFi is a solid choice, but does lag a bit behind some of the best lenders.

Borrowers with existing student loans looking to refinance, should read our SoFi student loan refinance review.

SoFi Student Loan Basics

SoFi Undergraduate Student Loans
Loan Types Offered:Fixed and Variable
Best Variable Rate:4.73%
Best Fixed Rate:5.73%
Repayment Length Options:5, 10, and 15 Years
Offers Loans Directly to ParentsNo

SoFi’s interest rates are solid compared to most other lenders.  SoFi also offers the industry standard 5, 10 and 15 year repayment plans.

When it comes to repayment options, SoFi has a variety.  Students can opt for any of the following:

  • Deferred – Repayment starts after completing school.
  • Partial – Students pay $25 per month, regardless of the loan balance.
  • Interest Only – Students pay a monthly bill for the interest that accrues each month.
  • Immediate – Repayment begins right away.

It is also worth noting that interest rates will vary depending upon the repayment strategy selected.  Borrowers on immediate repayment have better available rates than borrowers on interest only or partial payment.  Deferred repayment rates are the highest, and start approximately 1% higher than the immediate repayment option.

Finally, SoFi does not charge any loan application fees, origination fees or prepayment penalties.  SoFi doesn’t even charge late fees for customers who miss a payment deadline.

SoFi Advantages and Perks

SoFi scores points for their emphasis on being consumer friendly.  They seem to be trying to position themselves as the finance company for millennials.  One of the highlights of this consumer focus is the SoFi job placement program.  According to SoFi all of their borrowers are considered SoFi “members” and entitled to these perks.

We really like that SoFi admits that students would be better off maximizing federal grant and student loan options before resorting to any private loan.  Many other lenders will make the argument that their loans are better than private loans, despite the fact that Federal student loans are objectively better than private loans.  It is nice to see a private lender willing to make this admission.

Finally, we like to see that SoFi encourages payments during school in the form of lower interest rates.  Many student loan borrowers do not realize the debt burden that they have created until it is too late.  Students who make interest only payments during school are far more likely to realize the massive obligation that will be waiting for them at graduation.

The SoFi Downside

Like most other private student loan lenders, co-signers will be required for most borrowers.  In our experience, far too many co-signers sign up for a student loan without realizing the consequences of what they are doing.  Co-signing any debt can have major consequences, both from a financial perspective and from a relationship perspective.  All co-signers and borrowers should have a discussion to make sure everyone understands their responsibilities under the contract.  They should also discuss how to handle things if the primary borrower finds they are struggling to keep up with payments.

We should also note that many borrowers may be vaguely familiar with programs like student loan forgiveness and income-based repayment.  While these programs are excellent borrower protections, they do not apply to private loans such as SoFi.  This is part of the reason borrowers are advised to get federal loans before picking any private lender.  All borrowers should understand that the debt will have to be paid off in full, and they should have a plan for handling the debt, even if finding a job becomes a struggle after school.

SoFi Review: Final Thoughts

SoFi is a lender worth serious consideration for families that need a private loans.

The basic student loan terms such as interest rates and repayment terms are fairly average, but SoFi gets the edge of similar lenders for their transparency and customer focused approach.