SoFi: Is Student Loan Refinancing Right For You?

SoFi: Is Student Loan Refinancing Right For You?

I have written about student loans in the past. On numerous occasions, actually. With good reason, too, since student loans were my single biggest reason for starting this blog. And as it turns out, SoFi helped me get to where I am today.

SoFi can help make your payments - and interest rate - lower.

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Sure, I have read posts from some of my “Fellow” bloggers about how repaying your student loans won’t make you happy. Truthfully, I do believe Steph is onto something here. Long story short, if you aren’t happy while in debt, you won’t necessarily be happy while out of debt.

What is particularly interesting about this post is that I made similar points in my post about moving to different places.

Thus, my takeaway is that solving a single problem in your life, no matter how big that problem may seem, is not guaranteed to magically “fix” your life. If you are unhappy, there’s a pretty good chance it is a complex issue caused by a lot of little factors.

Because hey, that’s adult life. It’s messy and nothing is ever completely, 100% perfect.

All that said, kicking your debt to the curb is still very important. It allows you to not only save more but also to reduce your taxable income more. Thus allowing you to invest more, thus more compounding interest and…you get the idea. It’s important whether or not it will solve all of your problems.

Why Refinance with SoFi?

Of course, that is the main question here. And I will admit: although one of my friends had used them, I was a little hesitant at first. The reason for that is SoFi advertises lower payments and lower interest rates. It sounded on the fringe of being too good to be true. But I decided to go for it, and I honestly couldn’t be happier I did.

So, the reason to consider refinancing is lower payments and lower interest rates. And when I refinanced with SoFi, I got both!

Related: 7 Things I Did to Totally Crush My Student Loans

Just keep in mind that I have generally have excellent credit. My scores tend to be in the 780-810 range depending on the reporting agency. While I certainly do not know exactly what criteria SoFi uses to determine their rates, I would imagine that not everyone would get as favorable a deal as I did.

Nevertheless, it is certainly worth looking into it. The worst is that you find out the deal isn’t as good for you. No big loss.

The Process

For me, at least, there was not much of a process. And that’s a good thing.

I say that because it was so incredibly simple. I applied for the loan, was approved almost immediately, and within a few business days, they took over the remainder of my loan balance.

Then, I set up autopay for the minimum balance to ensure I had that covered. That was more or less the whole process. Yes, it was honestly that simple.

Here’s a funny tidbit – or at least I thought it was: they sent me an email saying that I just passed the one year mark as a SoFi member! Woohoo! Well, a few days later, I paid the remaining loan balance in full.

SoFi can help college grads save on payments.

So although they were celebrating my membership, I already knew I would not be a revenue stream with them for much longer. I had no issues paying the remainder of the loan in full, though. That part was seamless, just like the rest of the process.

Overall, I had a very positive experience, and I would recommend anyone interested in refinancing to check them out. As I said, it’s always worth looking into it, even if you don’t end up going that route.

Are There Other Options?

Another thing to keep in mind is that you may have other options. I felt SoFi was great, but you may have other options as well. And, as mentioned, if your credit is not the best, that may be a better route for you anyway. As per usual, it really depends upon your unique situation.

The biggest thing to keep in mind is that federal loans often have more flexibility than private loans.

The largest loan for which I was responsible was a Parent PLUS loan. Though technically this was in my parents’ name, I took over the loan after graduation. After all, the loan paid for my education.

In addition, SoFi is not the only private lender that offers student loan refinancing. Despite my positive experience, maybe you won’t get approved or not get the best deal from them. If you want to explore other options, Student Loan Hero has a good list.

Income-Based Repayment

The biggest problem with PLUS loans is that while they are eligible for interest-accruing deferment, they are not eligible for income-based repayment (IBR).

What does that mean? Basically, what you can get is an “IOU” on your debt while at the same time, interest on your debt continues to build. Not so great.

To make matters worse, you won’t be eligible to have your payments restructured to fit your income. This is because, essentially, the loan is technically in your parents’ name, so your own income is irrelevant in the eyes of the lender.

In my case, I wanted to repay the loans myself because it was my degree they were paying for. Besides, my parents obviously weren’t wealthy enough to pay for my education – hence the loans. Knowing that I decided to take matters into my own hands.

But as mentioned, IBR is one of the better options out there since it considers your income when determining payments. Since I didn’t have that as an option, and since my monthly payments were quite frankly insane ($975!), I decided to refinance with SoFi.

SoFi can help college grads save on payments.

SoFi lowered my monthly payments from $975 to under $300. In addition, they reduced my interest from 7.9% to a little over 5%. For me, the switch was clearly a no-brainer. As always, YMMV, but refinancing proved to be hugely beneficial for me.

In Closing

Whether you should refinance through SoFi primarily comes down to the type of financing you undertook before starting school. For example, if most of your financing came from Stafford and/or Perkins loans, your loan provider may be able to offer you more favorable refinancing than SoFi can.

If you were like me, however, and took over Parent PLUS loans, you may find that refinancing through SoFi is the better option. Additionally, if your loans were primarily financed through a private lender, they may not have the same protections that federal loans have. As a result, refinancing through SoFi could be a good option in that case as well.

Bottom line: if you are unhappy with your current loans and have already exhausted other options, this one may be worth considering.

If you are interested in learning more, head over to SoFi to check it out.

Have you refinanced through SoFi or by other means? Let me know in the comments!

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This Post Has 4 Comments

  1. Great post! I have been debating using them myself and was unsure of what I had to expect from them. I am definitely more likely to check into it knowing that you actually had success with them. Thank you for you honesty in sharing this review.

    1. No problem! It was such a seamless process and the only negative is that I didn’t refinance sooner. 🙂

  2. I’ve seen SoFi commercials but never knew anyone who had used them until reading this post. I’m glad to hear they worked well for you and provide a good service. As you said, SoFi may not be the best option for everyone but every student should look into other options upon graduation to see if they can save themselves some interest.

    1. Indeed – it just happened to be perfect for me, but everyone has a different situation. Still, if they can help someone else as they did me, that would be great!

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