Odds are you have heard of SoFi, as they’ve spent millions of dollars on TV and other advertising.
SoFi is short for Social Finance, Inc. It was founded in 2011 by four Stanford students with the specific purpose of providing more affordable options for student loans.
Since it’s founding SoFi has raised over $2.5B and has expanded to offer a wide range of banking products beyond their core student loan refinancing option. For example, they launched a high-interest no-fee bank account called SoFi Money. They also offer mortgages, personal loans, and investment services.
SoFi has (smartly) diversified their offerings, but most people likely still associate them with student loan refinance. It’s the company that most people think of first when they hear “student loan refinance.”
I recently refinanced my student loans with SoFi to see what the process was like. In this post I’ll share my experience refinancing with SoFi as well as a full review of their student loan refinance product.
Get a $300 Welcome Bonus when you use our link to refinance your student loans through SoFi.
SoFi Student Loan Refinancing: How Easy was the Process?
A few years back I opened a bank account for one of my businesses. I did this through Wells Fargo and it was an extremely frustrating process. Ultimately I ended up having to go to a physical branch during my lunch break and talk to a banker. I ended up being there for almost a full hour.
It blew my mind how outdated the process was, as most of the time was spent answering questions that the banker typed into fields on a screen. It made no sense to me why this couldn’t be done 100% online.
Comparing the SoFi student loan refinancing process to that was like night and day. Some key takeaways:
- 100% online.
- No phone calls were required at any step in the process.
- The process of gathering information such as income, student loan debt, and other pertinent information was easy. The whole process took less than ten minutes.
After being approved for my loan the next step was to approve the final disclosure. Then, after about a week the loan was funded. SoFi took care of paying off the existing loans that were being refinanced.
The process was easy and completely entirely online. This is exactly how it should be, since the service they are offering is relatively straight forward.
A few other things worth mentioning include:
Fees: SoFi does not charge application fees, origination fees, or prepayment penalties for student loan refinance.
Servicer of Loans: SoFi private student loans are currently serviced by MOHELA. MOHELA stands for Missouri Higher Education Loan Authority, which is a company whose primary business is servicing federal student loans.
Does it matter that MOHELA is the company servicing SoFi private student loans? What matters more, in my opinion, is the fact the customer-facing company is SoFi. If MOHELA does a poor job of managing SoFi student loans, SoFi is going to hear about it. If they perform poorly for any extended period of time SoFi likely will drop them for another servicer.
Minimum Amount Refinanced: $5,000 except in California where the limit is $10,000
SoFi Student Loan Refinance Rates
At the time of publication the fixed rates for SoFi student loan refinance were 3.20% APR to 6.48% APR with AutoPay and 2.16% APR to 6.33% APR with AutoPay. The AutoPay discount is 0.25%. The interest rate on variable rate loans are capped at either 8.95% or 9.95% depending on the terms of the loan. For the latest rates, and your specific rate, go to SoFi.
Income and credit history are two things that will impact your interest rate. The term of your loan will impact your rate as well; a 5-year loan is going to have a more favorable interest rate than a 15-year loan.
Because you can get a more favorable interest rate depending on the term of your loan, some people will refinance at regular intervals. For example, they may start with a 15-year loan and then when they are down to ten years left of payment will refinance with a 10-year loan, then again when they get to five years remaining on their loan. We’ll discuss rate-shopping in more detail shortly.
Other Benefits of Refinancing your Student Loans with SoFi
One of my biggest criticisms of banking products is that they are simple and interchangeable. Student loan refinancing isn’t a unique product. The reason Apple is able to charge a premium is because their products are unique. Loans aren’t unique.
SoFi has sought to address this issue in a couple of ways. First, their original value proposition was ease of use and offering low rates. They still have both, but other competitors are now close to matching them on these fronts, and arguably beating them at times.
SoFi has been offering unique “extras” for years now. They include:
- Rate Discounts on Additional Loans – Once you have one loan with SoFi, they offer a 0.125% rate discount on any additional SoFi loans.
- $300 Bonus – If you use our link and end up having a loan funded through SoFi, you get a $300 bonus Keep in mind that this must be with a new email account that hasn’t received a quote from SoFi before.
- Events – SoFi historically has had a lot of free events for their members, including happy hours, wine tastings, panel sessions, and dinners to name a few. Unfortunately I currently only see one event in one city listed on their website. My sister refinanced a loan through SoFi a few years back and has been to multiple events in Minneapolis that she spoke highly of, so I hope these events continue.
- Career Coaches – When you have a loan with SoFi you unlock free access to SoFi Career Coaches. This makes a lot of sense, as the more money their members make and the quicker a laid off member finds another job, the more likely they are to continue to make payments on their loans.
These are nice extras, especially the referral bonus, but ultimately a low interest rate is the benefit of refinancing student loans.
Should you Refinance your Student Loans with SoFi?
The answer to whether you should refinance your student loans with SoFi should be approached two-fold. First, should you refinance your specific student loans in the first place, whether it is with SoFi or anyone else? If the answer is yes, then the second question is should SoFi be the company you refinance your student loans with?
Let’s tackle these two questions one-by-one.
Should you refinance your loans in the first place?
If you decide to refinance your student loans there would have to be some sort of savings. Interest rates with most private and federal student loans are relatively high compared to what you will get through refinancing, so that hurdle is cleared easily. My wife and I had private loans from Wells Fargo that were 10.0%+, but even federal student loans can be 6.0%+.
First, if you have private student loans and you can get a better deal through refinancing it virtually always makes sense to refinance. If SoFi offers you 4.50% fixed interest rate and another private lender has your private student loans at 7.5%, clearly SoFi is a better deal.
But what about federal student loans? This is a bit more complicated. Federal student loans come with options for deferment, forbearance, income-driven repayment plans, and opportunities for loan forgiveness. When you refinance a federal student loan into a private student loan you lose all those benefits and protections. And there’s no going back.
That means before you refinance a federal student loan you need to be certain that you are comfortable giving up the benefits of those loans. Read when you should and shouldn’t refinance student loans for more on this.
If Yes, You are Refinancing – Should You Refinance with SoFi?
My experience with SoFi has been a positive one. From a process standpoint they have it down. They also offer additional perks such as SoFi Career Counselors and their loans have no fees.
More important than that is interest rate. I shopped over five lenders and SoFi offered the lowest interest rate.
If you have private student loans you should shop around for student loan refinancing at least once a year. You should get quotes from at least three different lenders. I used Credible to get rate quotes from a variety of lenders and compared those rates to SoFi. SoFi won out.
Click the button below if you want to get a free rate quote for student loan refinance with SoFi.
Remember, if you use any link within this post, including the button below, you will get a $300 bonus if you refinance with SoFi.
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
Any advice for someone that is self-employed and wants to refinance their private loans? I have been trying for some time, but all of the banks think I am a risk because of my write-offs even though I make over 50k and have a great credit score. It’s furstrating.
That’s a tough situation. It’s similar to getting a mortgage, they are going to want to see a longer history of consistent income from a self-employed job (usually two years or more). Because you mentioned your write-offs, are saying you make $50k before or after write-offs? And how long have you been self-employed?
Most people don’t have this option but it’s worth mentioning: having a cosigner makes it much easier to get approved for student loan refi and you will get better rates.
SoFi sounds like a very good product.
It’s my first time coming across this type of product so I cannot say much, I can only try to understand more about it.
I am looking forward to more posts along the lines of Student Loan Refinancing.
The affiliate program looks interesting as well. I will look into that thanks.