SoFi Review: Conquer Your Student Loans Today

SoFi Review: Conquer Your Student Loans Today

Last updated June 28th, 2019.

7 minute read
TFF Rating:
5/5

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SoFi is a lender offering a variety of financial services. These include personal loans, savings, and investing. In this SoFi review, we’ll take a look at their student loan refinancing.

This lender gets high marks in a variety of reviews, and here at TFF, we won’t stray from that. The process is simple and straightforward and they have attractive rates.

Let’s take a closer look at what makes SoFi one of the best studet loan refinancing providers.

SoFi Student Loan Refinancing Benefits

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 you should refinance is lower payments and lower interest rates. And when I refinanced with SoFi, I got both.

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.

SoFi Student Loan Rates

SoFi has a variety of student loan rates. These rates mostly vary based on the length of repayment. In addition, they vary based on whether they are fixed or variable.

For example, the current interest for a fixed-rate SoFi student loan is 3.490% – 6.449% for a 5-year term. If you take this up to 20 years, that range shifts to 4.974% – 8.074%.

This makes sense since the longer the repayment period, the more likely it is you won’t be able to pay. Most lenders live by that philosophy.

The same logic applies to variable rates, just with a slightly wider range. For a 5-year term, the range is 2.430% – 6.139%. For 20 years, it’s 3.990% – 6.590%.

See SoFi’s site for a full list of current interest rates.

SoFi Review: 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.

Before moving to SoFi, my lender was the Higher Education Loan Authority of the State of Missouri (MOHELA).  I didn’t experience any issues when transferring the loan from MOHELA. The process was seamless and SoFi handled it all for me.

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. Just like that, I was able to refinance my loans with SoFi and save a lot of money in the process!

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.

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.

SoFi Student Loan Consolidation

If you have multiple student loans, SoFi will consolidate them. Even if you have both federal and private loans, they will consolidate both.

As a result, you will end up with a single payment you’ll need to make every month.

Not only that but you may also have a lower interest rate when you refinance with SoFi. That’s in contrast to federal loan consolidation, which will simply give you a weighted average of your existing interest rates.

This ended up being great for my Parent PLUS Loan, which had a very unfavorable interest rate.

Of course, whether your interest is lower with SoFi depends on a number of factors. If your existing loans have a very low interest rate, SoFi may not be better.

They will also run a credit check. So if your credit is poor, the resulting interest rate may be, too.

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.

Other Ways to Refinance Student Loans

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 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 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.

SoFi Review: 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.

Related:

Hey there. My name is Bob Haegele and I blog about personal finance here at The Frugal Fellow. I’m also an alternative energy and EV enthusiast and have recently become semi-vegetarian. Another thing I started doing recently? Dog walking. I’m now doing that as a side hustle and loving it! I’m now working toward financial independence making money via my own ventures. If you’d like to work together, send me an email.

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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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