CollegeFinance Score: ★★★★☆
If you’re looking for low interest rates and can meet SoFi’s strict student loan eligibility requirements, this lender is well worth considering. Although SoFi is well known for student loan refinancing, this lender began offering private student loans for current students in 2019. This lender is a good option if flexible repayment terms are important to you.
Pros:
- Competitive new and refinanced student loan rates
- Flexible repayment options
- No prepayment, application, or origination fees
- Customized loan rates that won’t impact credit scores
- Members receive career coaching and free investing services
Cons:
- Low rates are geared toward higher-income applicants.
- The minimum loan size is higher than most competitors.
- SoFi is currently in a legal battle with the government over misrepresented loan savings.
SoFi: What You Need to Know
Founded in 2011, SoFi began as a student loan refinancing lender, operating as an online-only private company. In fact, they were the first lender to refinance both federal and private student loans. In 2019, SoFi began offering private student loans to those currently in school, boasting low, competitive rates.
SoFi began with a mission to help individuals achieve financial freedom and independence to meet their life goals, such as completing school or pursuing a postgraduate degree. To date, they’ve funded over $50 billion in new and refinanced student loans and have over 1 million borrowers (called members).
One of the key differences between SoFi and other private lenders is the company’s flexible repayment options, which allow borrowers to better manage their loan repayment terms and create a schedule that works for their budgets.
SoFi also offers a variety of member resources, tips, and tools to help their borrowers take control of their finances and make smarter decisions when it comes to student loans and refinancing.
SoFi’s BBB Rating: A
SoFi claims to be one of the top choices in private loan funding for students across the country, but how well do those claims hold up? We’ve looked at some trusted company reviews to help you understand how SoFi stacks up against the competition.
The Better Business Bureau (BBB) is a nonprofit company formed in 1912 to bring honest evaluations of businesses to consumers. This platform allows businesses to respond publicly to customer complaints and offers transparent ratings and reviews.
SoFi has a fairly high rating on the BBB: they’ve received an A. The reason SoFi does not have a higher score is that there is active government action taken against this lender. SoFi has been accused of misrepresenting how much borrowers have saved through their student loan refinancing services, offering inflated figures and data.
One of the top review websites, Trustpilot, also offers mixed reviews on SoFi. While there are many positive customer reviews, the site gives the service 3.6 out of 5 stars, mostly due to SoFi only responding to 3% of the negative reviews on the Trustpilot website.
SoFi: Potential Benefits for Borrowers
SoFi’s main benefit over other private student loan providers is the flexibility and customized rates that the company can offer borrowers. SoFi allows you full control over selecting your loan terms, setting repayment schedules, and even combining federal and private loans when refinancing. The application process is also easy and fast, and SoFi will offer you rates without running a hard credit check — so you can decide if SoFi is right for you without impacting your credit score.
Here are some additional benefits to consider:
- SoFi offers flexible repayment plans. This lender has many helpful repayment plans and customizable options when it comes to paying back your loans. You can repay over five-, 10-, or 15-year terms, enjoy a six-month grace period on undergraduate loans, and take advantage of programs such as unemployment protection to defer your loans for three-month increments up to 12 months if you lose your job.
- SoFi has a variety of discounts members can enjoy. You can enjoy multiple rate discounts on your private student loans through SoFi. You’ll save 0.25% on your loan rate when signing up for autopay and up to 0.125% more if you’re an existing SoFi loan member.
- SoFi does not charge hidden processing fees. While many private student loan lenders charge multiple fees throughout your loan process, SoFi eliminates these fees, so you never have to worry about hidden charges creeping up on you. SoFi does not have origination, application, prepayment, or late fees to worry about.
- SoFi’s application process is easy and will not impact your credit. If you’re rate shopping or not sure whether you need a private student loan or should refinance, you can quickly fill out an application with SoFi to view your options. Best of all, SoFi will not run a hard credit check, meaning your credit score will remain untouched when getting your rate and loan offers.
- SoFi offers co-signer release options. If you need a co-signer for your private student loan, you might find a more willing participant if you sign up through SoFi. That’s because SoFi offers a co-signer release option if you pay your loan on time and in full for 12 to 24 months. That’s a unique benefit that many private student loan lenders do not offer.
- SoFi provides robust benefits for members. When you become a SoFi member (borrower), you gain access to a wide variety of tools, such as SoFi’s online member database and library, career coaching services, and free investing tools.
SoFi: Potential Drawbacks for Borrowers
All student loan borrowers have different needs, so there’s no one-size-fits-all lender when it comes to taking out new student loans or refinancing. Let’s look at some of the disadvantages of borrowing through SoFi, so you can make the smartest student loan decision for your financial situation.
- SoFi requires good to excellent credit to get approved for low rates. One major drawback to SoFi is that you often need good credit to get approved and really high credit to receive low loan rates. SoFi members often need a 680 credit score or higher to get approved for loans, even at the highest rates.
- SoFi has higher-than-average minimum loans. If you need a few thousand dollars to bridge the gap between college finances, SoFi might not be the right choice for you. Their minimum loan amount is $5,000, which may be too high for many student loan applicants.
- SoFi is not available internationally. SoFi does not provide private loan funds to international students unless they have a U.S. visa.
SoFi: The Details
Loan Amounts and Term Lengths
Minimum loan amount: $5,000
Loan term options: Most options fall between five and 15 years, although 20-year terms are now available for qualifying applicants.
Multi-year approval available: Not disclosed
Interest Rate Ranges
Fixed and variable rates available: Yes
Fixed low APR: 4.23%
Fixed high APR: 11.76%
Variable low APR: 1.90%
Variable high APR: 11.66%
Repayment Options
In-school payment options: SoFi offers a variety of in-school repayment options, such as full payment, interest-only repayment, $25 flat payments, and no payment (deferred) options.
Grace period: Six-month grace period for undergraduate students only
Co-signer release available: Yes, SoFi offers co-signer release options if you make 12 to 24 months of on-time payments in full (specific terms vary by loan).
Loan servicer: MOHELA
Other Perks and Options
Interest rate discounts: Save 0.25% for autopay and 0.125% if you or your co-signer is an existing member.
Other rewards or services: Gain access to member resources, career coaching, and free investing services.
SoFi: Eligibility and Application Requirements
Eligibility Details
Income requirements: Not disclosed
Credit score requirements: Not disclosed, although average scores are 680 and higher; applicants with lower credit scores are still encouraged to apply.
Eligibility for international borrowers: SoFi does not offer loans to international borrowers.
Application Details
Application or origination fees: None
Soft pull rate check availability: Yes, SoFi uses a soft check so as not to impact your credit score when viewing your rate and loan options.
Private Student Loans: Understanding Your Options
SoFi offers many benefits to student loan borrowers and those looking to refinance — but before jumping the gun and taking out a loan with SoFi or any other private student loan lender, we encourage you first to explore your federal student loan options.
Federal student loans are financed through the U.S. government and managed by the U.S. Department of Education. Federal student loans offer subsidized (the government pays your interest while you’re in school) and unsubsidized loan options and typically offer fixed interest rates that won’t rise over time.
Federal student loans don’t usually require borrowers to have a credit history, high income, or co-signer to apply for funding. Instead, aid is determined by student need when you fill out the Free Application for Federal Student Aid (FAFSA). In general, federal student loans offer more attractive rates that private lenders simply can’t match.
Even if you think you won’t qualify, it can’t hurt to apply for federal student loans. These loans are also more secure than private student loans since they’re backed by the U.S. government. There are other benefits to consider when looking at federal student loans, such as:
- Deferment periods. While SoFi and other private student loan lenders may offer deferment periods for undergraduate degrees, federal student loans provide deferment options for graduate and postgraduate students, as well. Some private student loan lenders require payment while you’re in school, but federal student loans usually never require in-school repayment.
- Income-based repayment terms. Although private student loan lenders may offer flexible repayment terms, federal student loans have even more flexible repayment options, with the ability to match your payment to your income, so you can comfortably afford your student loan payments. You can also increase your repayment terms to 20 years or longer to make monthly payments more affordable.
- Student loan forgiveness programs. If you are going to school to become a teacher, nurse, or public service figure, you may be eligible for full or partial student loan forgiveness of your federal student loans.
For these reasons, we recommend applying for federal student loans before turning to private lenders. Federal student loans offer benefits and protections that private lenders can’t and should be used as your primary loan funding, after extinguishing any financial aid.
However, federal student loans and aid may not be enough to cover your college expenses. When this happens, we recommend turning to trusted private student loan lenders, such as SoFi, for supplemental student loans.
Is SoFi Right for You?
If you’re not eligible for federal student loans or need additional assistance paying for your education, SoFi could be the right supplemental lender for you. What we like most about SoFi is that you’re able to apply and see your loan rates, limits, and term options without impacting your credit score.
SoFi Could Be a Good Option for You If:
- You need a co-signer and are struggling to find one. We like that SoFi allows co-signers to be released from loans after 12 to 24 months of repayment. This can make it easier to find a co-signer willing to help you fund your education.
- You are an existing SoFi member. If you have additional student loans or personal loans through SoFi, you might want to take advantage of their member discounts with a supplemental student loan.
- You need over $5,000 in financing. If you only need a couple of thousand dollars in student loans, SoFi might not be the right choice. However, if your need is for $5,000 or more, SoFi can help you get the financing you need.
SoFi has helped hundreds of thousands of students afford college. While SoFi can be a great option, we recommend first exploring your federal student loan options, scholarships and grants, and other alternatives for paying for college.
CollegeFinance.com can help connect you to the tools you need to make school more affordable. We’ll educate you on repaying and refinancing your student loans and help you better understand all of the options available to you.
We recommend conducting additional research on private student loans before choosing a lender and consulting our guide on the best private student loans before committing to a lender.
