This article is updated monthly to include the latest rate information.
In the world of student loan refinancing, two of the biggest names are SoFi, short for Social Finance, and Laurel Road, a product of Key Bank. Both SoFi and Laurel Road have rock-bottom interest rates, currently at just over 5% for each company. Both lenders also have perks that other lenders cannot compete with. It is part of the reason these two lenders sit at the top of our student loan refinance company rankings.
Deciding between SoFi and Laurel Road is difficult as both lenders are similar. SoFi tends to be more focused on providing perks and other services for their members, but both companies have a reputation for providing an outstanding student loan refinance experience.
Despite the many similarities, there are also a few key differences. It is these subtle differences that can tip the scales in one direction or the other for many borrowers.
The SoFi Advantages
After reviewing a wide variety of student loan consolidation companies, the thing that makes SoFi stand out above others is its job placement program. SoFi, in an industry first, has hired a team of individuals to help unemployed borrowers find new work.
For most borrowers, job placement assistance is a low-priority item. This perspective makes sense because nobody plans on getting fired or losing their job. Unfortunately, the reality is that it will happen to many borrowers. Having this program in place could help many individuals find work before they fall too far behind on their finances. After all, SoFi has a big incentive in making sure that you make enough money to pay your bills each month. The fact that their first avenue is job placement rather than collection agencies is excellent. Hopefully, employment assistance programs will one day become the standard for student loan refinancing companies.
The Laurel Road Advantages
Key Bank, the company behind Laurel Road, is a traditional bank (before 2019 Darien Rowayton Bank owned Laurel Road). As we noted in our Laurel Road Review, being a product of a conventional bank stands in stark contrast to many of the top student loan consolidation companies today. Most of the consolidation companies with ultra low-interest rates are new companies with just an internet presence.
Despite the traditional bank structure, Laurel Road is still able to offer interest rates much lower than other companies with a more physical presence, such as Citizens Bank. For many borrowers, the ability to walk inside a building and talk to a real person has considerable value.
Another advantage of Laurel Road is its specialized borrower programs. Perhaps the best example is the one for medical school graduates. Residents and Fellows can pay only $100 per month towards their student loans for the entirety of their residency or fellowship. Six months after the training has concluded, borrowers will then be expected to make standard payments according to the repayment plan. This program, specifically created for doctors, is a great perk because it recognizes the short-term financial hardships that many professionals face early after graduation, but allows for immediate refinancing to start saving money on interest long before the higher-paying work is secured.
SoFi or Laurel Road: Which student loan refinance company is the best?
When two companies are so similar on paper, the difference for most borrowers comes down to interest rates. Both companies have low interest rates, but not everyone qualifies. SoFi has the lowest rates, but Laurel Road has a very tight range, so the lender offering the best rate will vary depending on the borrower.
The key is to see who can offer you the best interest rate based on your finances. Because all lenders evaluate borrowers slightly differently, the only way to know who has the best rates for you is to apply to both.
Checking Rates with Both Lenders
Completing applications with both lenders may sound tedious, but it could save you thousands in interest. Fortunately, credit agencies recognize this activity as “shopping around,” so the multiple inquiries do not hurt your credit score.
The other significant advantage to applying to both companies is that you can personally evaluate the customer service that you receive. If one company stands head and shoulders above the other, your decision could be an easy one.
I have refinancing experience with 3 lenders: SoFi, DRB, and Citizens Bank. I have had good experiences with CB and SoFi and an awful experience with DRB (I’m not alone in this either. Look up reviews for DRB and you’ll see a lot of “I’d rather deal with Comcast” – yikes!)
Before I get into my experiences, here’s my situation. I graduated in May 2014 with a bachelors degree in Mechanical Engineering from a large state university. When I got out I had $35k across 7 Stafford loans with interest between 3.15% and 6.55%. I also had a PLUS loan around $18k at 7.65%, a Discover loan of $23k at 8% and a Citizens Bank loan at $22k at 10.25%. Ouch. I managed to get a job in September making about $65k a year and my deferment ended in November 2914.
In June 2015 I tried refinancing with DRB first as they have the straight up lowest rates. They approved me and asked for a bunch of documents and kept changing what they wanted over the next month and every time I uploaded something it took at least a week before I got a response. After a month they ended up denying me even though my documents supported my application so I called to ask why I was denied. The first time I called I got someone (Dave I think?) who’s sounded like he absolutely did not want to be talking with me even though I was calm and patient. He was no help so I hung up and called back. This time I got a woman who at least was much more pleasant to talk to.
To sum up what she told me, DRB basically makes up your financial information when you apply which led to me getting denied. I live with family and therefore pay no rent, but they added a $1000 mortgage payment anyway when they did my debt to income calculation because “that’s their policy” and they refused to remove it. Also when doing my DTI calculation, they said if I was approved for their loan I’d be paying $1500/month which was above their threshold. When I asked how in the world they got that number when all calculations I did were showing ~500/mo on their 20 year plan, they said “well we might not approve you for that so we’re putting you down for the 5 year plan.” I’ve never heard of only being approved for certain terms. Every loan I’ve ever applied for gave me all the available terms. F- for DRB, avoid like the plague.
Next I applied for Citizens Bank around late June/early July, but this time only asking to refinance my Discover and Citizens Bank loan because their rates weren’t as good so I’d end up paying more on my Stafford loans and also they also don’t refinance PLUS loans. The morning after I applied I was called and emailed by a woman (Brittany I think – I’m terrible with names) who guided me through the process and asked me to email all documents directly to her. She took care of everything immediately and within one week I was approved at 4.9% variable and had my old loans paid off. A++ for Citizens Bank.
I had some financials events come up so I waited until early September 2015 and applied at SoFi to refinance my PLUS loan. They approved me at 5% variable (just about the worst rate they offer but still better than 7.65, plus I was getting the loan out of my Dad’s name which I really wanted to do for him). Every time they asked for something it took about 6-7 business days for them to act on it but the few times I called/emailed them they were friendly and helpful. I’d give them an A-. If they could improve the speed of their application process I’d bump them up.