SoFi Student Loan Consolidation Review for 2016

Michael Lux Blog, Consolidation, Student Loan Consolidation Reviews, Student Loans 0 Comments

When this site first reviewed SoFi, we described SoFi as a startup put together by a group of Stanford business students and funded by an alumni network.  SoFi started out offering loans at Stanford and quickly added other schools.  Five years later, SoFi is the biggest company in the student loan consolidation market, having consolidated over $7 Billion in student debt.

Because so much has changed with SoFi, it seems appropriate to take a look out our suggestions and revisit our analysis.

The SoFi Basics

SoFi targets low risk borrowers with ultra-low rates and unique perks.  These unique perks include an entrepreneurship program and career services for borrowers who lose their jobs.  However, the big reason behind the rapid growth of SoFi has been the low interest rates.  Today, rates with SoFi start at 2.20%.  The SoFi offerings of fixed-rate and variable-rate loans, consistently rank among the very best in the market.  SoFi also is currently offering a $150 sign up bonus for new customers.

The Concerns About SoFi

SoFi was founded in 2011 and today they are the top lender in student loan refinancing.  This rapid growth should be a source of concern for borrowers.  Any time a company grows so fast, borrowers should expect some growing pains.  Surprisingly, SoFi has managed to roll for the most part with the changes over the years.  In fact, the chief complaint we hear about is from borrowers who were denied a loan.

The SoFi selectivity is definitely a double-edged sword.  On one hand it allows for low interest rates and red carpet treatment, but the downside is that those who really need help with their student loans are not getting it.  Consolidating with SoFi can dramatically improve your finances, but SoFi is not a company that will pull you out of a financial crisis.

The other red flag that all borrowers should keep an eye out for is consolidation of federal student loans.  This move comes with a big downside.  Private consolidation of federal loans means giving up the federal benefits such as income based repayment and public service student loan forgiveness.  If you will be taking advantage of these programs, it is probably best to only consider consolidating private loans with SoFi.  If you won’t be using these federal programs, SoFi will likely be able to offer an interest rate much lower than what the government offers.

The SoFi Advantage

One thing that separates SoFi from most other lenders is their business model.  Most lenders target your student loan consolidation business and once they have it, they have little incentive to keep you happy.  All lenders obviously want to avoid bad press or negative experiences, but they have little desire to attract repeat customers.  As part of SoFi’s expansion, they started offering personal loans and mortgages.  This is significant because it means they have a huge reason to keep you happy.  Profiting off a student loan consolidation is one thing… adding mortgage or personal loan profits make you a much more valuable customer.  As a result, borrowers should be able to expect better service due to the nature of SoFi’s business model.

The Bottom Line

There are a number of X factors that make SoFi attractive, but at the end of the day, it is all about interest rates.  Because advertised interest rates and offered interest rates can be different, it is the smart move to apply with at least a few different lenders.  SoFi does rank number one on our student loan consolidation rankings list due to their advertised rates and customer perks.  These perks, like a $150 sign up bonus are nice, but the monthly savings is the number that really matters.

SoFi should win most tie-breakers, but interest rates should be the deciding factor for most borrowers.  As a result, we recommend SoFi as a starting point in your search for student loan consolidation, so long as you look around to make sure they are offering you the best deal.