Even college students who find great jobs can wrestle with their debts after leaving school, especially if they have expensive private student loans. And for borrowers who cannot make ends meet, it is almost impossible to repay study progress in bankruptcy. The result is an endless cascade, possibly decades, of financial repercussions.
Social Finance, Inc., known as SoFi , seems to change this glumreality . Using peer-to-peer loans between members of the public and qualified student borrowers, student refinancing offers financing for graduates from more than 2,000 US universities. OConlaíangs has also studied SoFi in peer-to-peer personal loans, mortgages and markets for primary student claims.
SoFi offers the following loan products. The rates can vary depending on your current income and your credit score and history.
Student loan refinancing
SoFi offers refinancing loans that can lower the interest on your outstanding private and federal student loans. These can have fixed interest rates, ranging from 3, 63% to 6, 99%; or, variable interest rates, currently ranging from 2, 44% to 6, 36%. For comparison: the Sallie Mae Smart Option Student Loan for students currently offers fixed rates between 5, 74% and 11, 85% and variable rates between 2, 62% and 9, 69%. Although the variable rates can rise or fall with Libor fluctuations, they are capped at 8, 95% for 5-year loans and 9, 95% for 10 and 15-year loans. There are no financing limits or origination costs for refinancing loans.
SoFi offers MBA loans to students at about two dozen American business schools, and that list continues to grow. Some MBA loans come with start-up costs from 1% to 2%. Term lengths are 10 or 15 years. While you are in school and during a grace period of six months after graduation, you can choose to postpone your repayments in full, repay interest only or make full principal and interest payments. The interest on loans with variable interest rates starts at 3, 91% (Libor plus 3, 75%) for a 10-year product and varies to a maximum of 9, 95% (Libor plus 9, 75%) for 15-year loans . The interest rate with fixed interest varies from 5. 88% on loans with a term of 10 years to a limit of 9, 95% (Libor plus 9, 75%) on loans with a term of 15 years.
SoFi offers persoConlai fixed-rate loans for existing customers with a principal balance of $ 10,000 to $ 35,000 and terms of three or five years. After an introductory percentage of 12 months between 0, 99% and 3, 99%, the percentages vary from 5, 63% (Libor plus 5, 5%) to 9, 88% (Libor plus 9, 75%). Depending on your credit history, costs for origination of up to 2% may be charged. Although you do not have to place collateral for a SoFi personal loan, you need a credit score of 700 or higher to qualify.
For existing customers, SoFi only offers three types of mortgage loans to borrowers in California, although it plans to expand its geographic reach. With the 7/1 ARM you pay a fixed interest rate for seven years (currently around 3, 38% or Libor plus 3, 25%) and then accept annual adjustments to your rate. With the 5/5/20 ARM only interest you only pay interest for 10 years, whereby your interest rate for the first five is set (currently around 3, 65%, or Libor plus 3, 5%). After that, your rate adjusts annually, whereby the repayments of the principal are repaid on the last 10 years of the loan. The rates for these two adjustable options may not increase more than 2% in one year and more than 6% over the term of the loan. 30-year fixed mortgages start at 4, 25% with a 20% deposit and 4, 77% with a 10% discount. Major and interest payments are made at the same rate for the entire length of the loan. SoFi issues $ 2, 5 million mortgage loans and never charges start-up costs.
It is currently being offered as a test program for parents of Stanford students. SoFi’s parent financing helps parents to pay for undergraduate education and board and lodging, without borrowing caps or origination costs. Term lengths are 10 or 15 years. Loans are offered at fixed interest rates (currently 4, 13% to 7, 13% or Libor plus 4% to 7%) or variable rates (starting at 3, 16% to 5, 41% or Libor plus 3% to 5.25 %), with limits of 8, 95% for 10-year loans and 9, 95% for those of 15 years.
For starting entrepreneurs, SoFi can postpone student refinancing loans for up to six months. The program also includes networking opportunities with other SoFi entrepreneurs, professional mentoring services and access to accredited accredited SoFi investors, who may offer start-up financing. To prove that you are an entrepreneur, you must submit a business plan or presentation to [secure with e-mail]
SoFi offers special rates for student refinancing loans for veterans who are not eligible for full tuition under the 9/11 GI Bill. Eligible veterans include honorable dismissed persons with less than three years of active service, graduates from the military academy, ROTC members and those who attended school more than 10 years after their dismissal. Participants must meet the same eligibility criteria, including employment requirements, as regular borrowers. SoFi does not publicly disclose the borrowed rates of the veteran program, which is decided on a case by case basis. It claims, however, that they are lower than the current rates on Stafford and Grad PLUS, non-subsidized federal loans.
SoFi’s Career Services department is staffed by Robert Park, former assistant dean of Career Management at the Simon School of Business at the University of Rochester. It offers current and former borrowers assistance with job search, professional development and general career guidance. You can schedule one-on-one appointments with Mr. Park via e-mail.
With SoFi you can create a unique referral link that you can share with friends who might be interested in his products. You earn $ 100 for every successful referral. SoFi currently also offers a $ 100 bonus to new borrowers who sign up via a referral link, although this may change in the future.
If you are fired from your job, SoFi can temporarily suspend your monthly loan repayments and help you find a new job by connecting with other borrowers, investors and alumni in their network. You must re-apply for this program every three months. SoFi only suspends the loan payments for a total of 12 months during the entire term of the loan. During the suspension period, your loan continues to accrue interest, which is capitalized (added to the principal). To earn unemployment protection, you must be eligible for unemployment benefits. To stay in this program, you must actively work with SoFi’s Career Services department to find a new job. If you have obtained your loan with a co-signatory, you must both be unemployed to qualify.
Become a SoFi investor
To become a SoFi investor, you must be considered as an accredited investor. The SEC requires accredited investors to meet at least one of these criteria:
- $ 200,000 in annual individual income or $ 300,000 in combined family income over each of the past two years.
- Net house value of at least $ 1 million.
- The supervisor of a trust, a non-profit organization, a company or a partnership with assets of at least $ 5 million.
SoFi offers prospective investors a prospectus that is not available to the public and which describes the terms, duration, return and other aspects of the investments. SoFi makes no return oConlaine due to regulations, but other peer-to-peer lending promises an annual return of 4% to 8% on loans of comparable quality. You don’t have to be an alumnus of one of the affiliated schools or a previous SoFi borrower to become an investor.
1. Help for entrepreneurs and temporarily unemployed borrowers
SoFi does not only temporarily suspend loan repayments and entrepreneurial borrowers – it also allows you to use its community of investors and borrowers for development assistance, mentoring and even start-up financing. No other student lenders offer such an extensive deferment and support program for entrepreneurs. However, the student start-up plan of the Small Business Administration offers budding entrepreneurs the option of opting for an income-based repayment of their outstanding federal loans. The loans from Federal Sallie Mae run up to three years of unemployment, compared to the 12 months of SoFi, but the organization does not offer additional services such as SoFi.
2. Low or non-existent origination costs
The license costs for personal loans from SoFi vary from 0% to 2% of the principal, depending on the size of the loan and the borrower’s credit history. However, the refinancing and mortgage loans never come with start-up costs. Some MBA loans, including those for students from the University of Georgetown, the University of North Carolina-Chapel Hill and the University of Michigan, charge a fee of 1% to 2%.
Other private consultants for consolidating student loans, such as NextStudent and the student loan network, can charge a starting rate of up to 5%. Mortgage origination costs are common with traditional lenders such as Wells Fargo ($ 50 to $ 900, depending on the borrower’s credit). Other peer-to-peer lending services, such as the Lending Club, can charge much higher start-up costs (up to 5%) to personal loans.
3. Attractive fixed rates for qualified borrowers
If you are eligible for a SoFi loan with a fixed interest rate, this can result in a substantial Discount compared to other lenders. Fixed rates on the refinancing loans from SoFi range from Libor plus 3, 45% to Libor plus 7, 5%, depending on your credit score and income. For comparable Sallie Mae loans, the range is Libor plus 5, 5% for Libor plus 11, 75%. For Wells Fargo refinancing loans you pay anywhere from Libor plus 6, 75% to Libor plus 12, 25%.
Wells Fargo parent loans can be 2% to 6% higher than those of SoFi. For personal loans, SoFi’s rates are up to 2% lower than those of Wells Fargo, and they offer the added bonus of a 12-month introductory ratio, 0, 99% to 3, 99%. And while the rates for Wells Fargo personal loans range from around 7, 25% (Libor plus 7%) to around 9, 25% (Libor plus 9%) for borrowers with good credit, SoFi is starting at around 5% . The fixed-rate MBA loans from Discover start at 5, 99% and rise to 9, 74%, compared to a range of around 4% to 10% for SoFi loans.
4. Free support for professional development, networking and business financing
SoFi builds a community of talented, like-minded individuals who provide professional and financial support – including career guidance, entrepreneurship mentoring and even start-up or angel finance – for other members. While traditional lenders, such as Sallie Mae and Wells Fargo, provide college planning tools and general financial advice, their borrowers cannot use the insights and resources of an entire community. Although peer-to-peer lenders such as Lending Club follow the example of SoFi and encourage borrowers to ultimately become investors, making them a de facto community, they do not abuse that community to offer networking opportunities or professional development services.
5. Lucrative referral program
There is no limit to the number of $ 100 referral bonuses that you can earn by connecting student Refinancing candidates to SoFi. Although Sallie Mae has a referral program for lenders in its network, no other lender with a national profile offers such an attractive referral program for individual borrowers. Similar deals are limited to local institutions, such as Three-Branch Darien Rowayton Bank in Connecticut.
1. Strict financial eligibility criteria
SoFi makes loan decisions on a case-by-case basis and does not disclose the details of its methodology. However, to qualify for refinancing – which is the easiest way to get graduates to join – you must have a 700-plus credit score and enough monthly cash flow. To help determine if refinancing is right for you, SoFi shows you four ideal candidates: the lowest earnings earn $ 95,000 a year, and the most modest credit score is 733. For recent four-year graduates, this can be a high threshold for clear.
2. MBA loans and refinancing products are not available for all students and graduates
Compared to products from larger lenders such as Sallie Mae, Wells Fargo and US Bank (which are usually available to students and graduates from accredited US and US institutions of two and four years), the coverage of SoFi for MBA and refinancing loans is relatively small – approximately two dozen schools for the first, and 2000 for the last. No matter how attractive your profile as a borrower is, you may have to look elsewhere if your school is not on the list.
3. Other products are also restrictive
The other SoFi products are also severely limited. The mortgage loans are only available to borrowers in California, and the top-ranking loans – which are still being tested and may be terminated in the future – are only for parents of Stanford students.
The company’s website encourages non-Californians to apply for mortgages in the event that SoFi starts borrowing beyond the boundaries of the state, so it looks like the company has plans to expand elsewhere. Yet the attractive loan rates, conditions and support of SoFi are simply not available for large parts of the American population.
4. Investing is not realistic for many people
Although SoFi is a peer-to-peer lending service, it only accepts investments from people or organizations defined by the SEC as accredited investors. Other peer-to-peer loan platforms, such as the Lending Club, can offer comparable returns (4, 77% to 8, 24% for high-quality loans), but do not limit entry in this way.
5. Variable speed options cannot save you much
Although the fixed lending interest rates of SoFi are generally cheaper than those of other lenders, the variable rates for student loans and refinancing may not be. For example, the variable interest on Discover MBA loans is 1% to 3% cheaper than comparable SoFi loans.
Are you eligible for a SoFi loan?
To be eligible for a SoFi loan, you must meet these universal criteria:
- Status of citizen or permanent resident
- 18 years or older
- No convictions for past crime
- No bankruptcy statements in the past three years
- Currently employed or in possession of a binding offer for future employment
- Law graduates must take at least one state bar exam
You must also have graduated from one of the 2000 universities with which SoFi works. The company does not currently refinance loans for residents of Alabama, Delaware, Idaho, Mississippi, Montana, Nevada, North Dakota, South Dakota, Rhode Island or Vermont.
SoFi also uses strict acceptance criteria – the details of which are not made public – to approve or refuse applications for refinancing of student claims. To have a good chance of being approved, you must not be eligible for federal lending programs, have a credit score of at least 700, and have a modest debt / income ratio. However, SoFi does not clearly define “moderate”. You must also have a diploma of at least four years or expect this soon.
An Autopay discount of 0.25%, which applies when you sign up to have your loan repayment automatically debited from your bank account each month, is available on all loans.
Eligible for other loans
New SoFi borrowers may receive refinancing from student loans or MBA loans, but are not eligible for personal or mortgage loans. To be eligible for this, you must meet the universal admission criteria and be an existing SoFi investor or a refinancing or MBA loan customer.
Student Refinancing Loan
The refinancing application process is simple. After registering with the company and filling out a questionnaire for approval that determines whether you meet the general selection criteria, you will be immediately approved or refused, with an explanation of why. If approved in advance, you can select a plan that suits you and upload or fax documentation to verify your identity and the status of your outstanding loans.
After you have been officially approved, which usually happens within a few minutes, you complete the process by signing your refinancing agreement electronically. You also have the option to set up autopay. It is best to do this when you first submit an application, but you can always sign up for it later and get a discount of 0.25%. The SoFi MBA application process is similar, but you do not have to prove your current work status or cash flow.
SoFi uses peer-to-peer loans to refinance student loans and to issue mortgage loans, personal loans and certain student loans. Although your exact credit costs depend on your credit history and the amount you borrow, the rates are lower than those of many competitors. In addition, customers receive valuable benefits, including networking opportunities and job search assistance, that are not available through traditional lenders. It is just like a career coach, personal finance expert and lender, all in one package.
SoFi is a versatile lender with a steadily expanding product line. But it is suitable for well-to-do, highly qualified borrowers, especially when compared to other peer-to-peer lenders such as Prosper and Lending Club. And many of its other products are only available to current customers or an exclusive group of California residents. If you get access to this somewhat exclusive club for borrowing and lending money, you may like it, but that’s a big ‘if’.
3, 5 stars out of 5: ideal for those who qualify, but limiting qualification requirements and limited geographical coverage count. On the positive side, networking and career support can be huge for entrepreneurs.
Did you use SoFi to refinance your student loans?
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