Oliver S. Berryhill Blogs: How to Refinance a Student Loan in 15 Minutes with Sofi

SoFi (short for Social Finance) is a peer-to-peer lending platform, not unlike Lending Club. Its primary focus is student loan refinancing, offering both fixed and variable rate loans of varying terms, from 5 to 20 years. It’s grown in popularity over the years, in part because it offers some of the lowest refinance rates available to college graduates.

Given the growth of student debt over the past few years, we thought a review of SoFi was in order.

Who is SoFi?

Four students from the Stanford Graduate School of Business founded SoFi in 2011. Their idea was to enable alumni, giving them a way to help recent college graduates lower the rates on education loans. Considering the limited options that are available in refinancing student loan debts, they wanted to create more affordable refinance loans and to streamline the process.

When they launched, it was as a pilot program… initially funded with $2 million from 40 alumni of the Stanford Graduate School of Business. Loans were available only to Stanford graduates, and the funds invested providing loans to 100 students.

After the success of the Stanford pilot loan program, the founders expanded to include additional colleges and more students across the country. Since its founding, SoFi has provided refinance loans exceeding $17 billion and has a community of over 270,000 members. The site minimizes loan defaults by focusing on low risk students and graduates.

How SoFi Works

In addition to mortgages, personal loans, and MBA loans (a pilot loan program for certain schools), SoFi is best known for student loan debt consolidation. The basic concept of student loan debt refinance program is to provide an exchange — one that matches students and recent graduates with both institutional and alumni investors. Together, they provide school-specific student loan refinance funds, allowing borrowers to reduce their interest rates.

SoFi offers student loan refinancing packages in 49 states and the District of Columbia (Nevada being the one exception). They offer both fixed and variable rate loans, though variable rate loans are not available for residents of Minnesota or Tennessee. SoFi will consolidate all qualified education loans, whether federal or private.

Student Loan Refinance Program

In order to qualify for a loan with SoFi you must:

Be of legal age in your state
Be a US citizen or permanent resident (that’s you and your co-signer, if applicable)
Hold a 4-year undergraduate degree or graduate degree from a Title IV accredited institution
Have a good employment history — that means you are currently employed or hold a confirmed offer of employment (which must begin within 90 days)
Be in good standing on current student loans
Demonstrate a strong monthly cash flow
Have an excellent FICO score
Be looking to refinance educational debt (bar loans and residency loans are not eligible for refinancing at this time)

If you don’t meet the above criteria, your application can be declined. The company recommends that you reapply at a later date when the deficiencies in any of the above areas have improved.

Some of the features of student loan consolidations include:

You can refinance both federal and private student loans through the platform.
There are no application, origination, or pre-payment fees.
Fixed rate loans range from 3.375% APR to 6.99% APR (with AutoPay; rates are subject to change).
Variable rate loans range from 2.565% APR to 6.115% APR (without AutoPay; rates are subject to change).
Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan.
Loan terms are from 5 years to 20 years.
The minimum loan amount is $5,000, and no maximum is indicated.

Auto Pay entitles you to a 0.25% rate reduction if you agree to make monthly payments by automatic draft from your checking or savings account.

If you qualify, you can complete the online loan application process in less than 15 minutes.

Refinance with SoFi in 15 Minutes

How SoFi Can Help You

If you have been looking for a lender that will enable you to refinance your student loan debts under a single loan with a more advantageous rate, then you are well aware that there are no more than a handful of potential lenders nationwide. SoFi claims to be the largest student loan refinance source in the country, so this may be the first place you need to check if you’re looking for such a loan.

The site advertises that the typical borrower will save an average of $19,000 when they refinance student loans through the platform. That’s just an example — how much you actually save will, of course, depend upon the size of your outstanding loan balances, as well as the interest rate and term that will apply to your new loan.

Unemployment Protection

This is in interesting feature of a SoFi loan. The company recognizes the potential for just about anyone to lose a job. If you do – through no fault of your own – you can apply for unemployment protection. Under this program, SoFi will suspend your monthly loan payments for up to 12 months (lifetime limit). They will also provide job placement assistance to help you find a new job. Interest on the loan will continue to accumulate, and will be added to your outstanding principal balance at the end of each forbearance period.

In order to qualify for the protection you must provide proof that you have applied for and are eligible for unemployment compensation, and that you will actively work with SoFi’s career services department to look for a new job. The benefit is also available if you have a cosigner who also loses a job.

Is SoFi Right for You?

If you have been wanting to refinance your student loan debts, and haven’t had much luck finding a willing lender, check out SoFi. They have an interesting lending model, one that has been growing steadily in less than four years. And best of all, there’s no need to head down to a local bank to fill out paperwork – you can do it all online in a matter of minutes.