SoFi Review: Refinancing Student Loans and Borrowing Parent Loans

Loans, Student Loans
SoFi Review: Refinancing and Borrowing Student Loans

San Francisco-based Social Finance, known as SoFi, is the closest thing to a household name in the student loan refinancing market. It became the first company to refinance federal and private student loans together in 2011. The company offers a range of financial products, including personal loans, mortgages and loans for parents who want to borrow to help pay for their child’s college.

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SoFi student loan refinancing review

SoFi parent loan review

SoFi student loan refinancing review

SoFi has emerged as the student loan refinance industry’s biggest lender, having refinanced more than $5 billion in student loans, according to co-founder Dan Macklin. It’s on par with other student loan refinancing lenders in many respects, but it stands out for the job-related benefits it offers, including members-only career coaching and networking events.

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at a glance

  • Fixed rates: 3.35% to 7.13% APR. Variable rates: 2.82% to 6.74% APR.
  • Loan terms available: 5, 7, 10, 15 or 20 years
  • Eligible loan balances: $5,000, up to the full balance of your student loans

Do you qualify?

 Minimum qualificationAverage approved borrower
Credit score650766
IncomeNone specified$130,000
EducationBachelor’s degree or higherBachelor’s degree or higher

In addition to the requirements above, you need to be employed, have a job offer to start in the next 90 days or have sufficient income from other sources to qualify. You also need to be in good standing on your student loan payments and have a strong monthly cash flow.

» COMPARE: Student loan refinancing options

Where SoFi student loan refinancing shines

Borrowers can refinance parent PLUS loans in their name: SoFi is one of a handful of lenders that allow children to refinance their parents’ federal PLUS loans. This enables children to shoulder the responsibility for the debt instead of the parent.

Access to career perks: Borrowers who refinance with SoFi can meet one-on-one with the company’s career coaches to get resume feedback, tips for salary negotiations and advice about career transitions and personal branding. They can also apply to SoFi’s Entrepreneur Program to get a six-month student loan deferment and the opportunity to connect with mentors and potential investors.

Benefits for medical residents and fellows: During their residency or fellowship, doctors can refinance through SoFi and pay just $100 a month for up to 54 months. Interest won’t compound during that period, but it will continue to accrue. The minimum monthly $100 payment likely won’t cover all of the interest that accrues, which means the amount you pay in total for the loan will increase.

Where SoFi student loan refinancing falls short

Not available to borrowers in Nevada: Many other student loan refinance options are available to borrowers in all 50 U.S. states.

No co-signer release option: If you apply with a co-signer, the loan will be in that person’s name until the loan is paid off or the co-signer dies. To release your co-signer, you’ll have to refinance again and qualify on your own. Many other student loan refinance lenders have policies that release the co-signer from the loan if the primary borrower makes on-time payments for a certain period, typically one to three years.

Loan details

Fees: No origination or prepayment fees

Loan servicer: MOHELA

Deferment and forbearance: Up to 12 months of forbearance in three-month increments. And loan deferment for borrowers who return to graduate school half- or full-time, serve on active military duty or undergo disability rehabilitation.

Next steps

It’s a good idea to compare refinance lenders before choosing one to ensure you get the lowest rate you qualify for. Also look at the borrower protections various lenders offer, such as forbearance policies and flexible repayment options.

You can get a rate estimate from SoFi through its online preapproval process. This involves a soft credit pull, which won’t affect your credit. The lender will do a hard credit pull, which will slightly hurt your credit score, if you decide to complete the full application.

You’ll need to upload the following documents as part of the full application:

  • Income verification, such as your most recent pay stub
  • Your most recent student loan billing statements
  • Identity verification (driver’s license, government-issued photo ID, passport or green card)

» MORE: Student loan refinancing FAQs

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SoFi parent loan review

In addition to student loan refinancing, SoFi offers private student loans for parents who want to borrow to help pay for their child’s college.

Before you consider private student loan options, fill out the Free Application for Federal Student Aid with your child. Submitting the FAFSA is required for students who want to be considered for many grants, scholarships, work-study opportunities and federal student loans.


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at a glance

  • Fixed rates: 4.25% to 8.00% APR. Variable rates: 3.69% to 7.12%.
  • Loan terms available: 5 or 10 years
  • Borrowing limits: Total cost of attendance, minus other financial aid

Do you qualify?

 Minimum qualificationAverage approved borrower
Credit score650765
IncomeNone specified$175,000

» COMPARE: Private student loans

Where SoFi parent loans shine

Competitive interest rates: SoFi’s parent loan interest rates are lower than those of some major private lenders that offer parent loans and lower than the federal government’s 2016-17 parent PLUS loan rates. The weighted average interest rate for SoFi parent loans is 5.51%, SoFi spokeswoman Laurel Toney says, and there is no origination fee. Variable-rate loans, whose rates change as certain market conditions fluctuate, will be capped if they reach 9.95%.

By comparison, federal PLUS loans have a 6.31% interest rate and a 4.28% origination fee for the 2016-17 school year. However, SoFi parent loans don’t offer valuable benefits that federal PLUS loans do, including access to income-driven repayment plans and the ability to enter forbearance if you experience a financial hardship.

Career services: If you take out a parent loan through SoFi, your son or daughter can take advantage of the company’s professional development services, including one-on-one career coaching, interview tips and networking events.

Where SoFi parent loans fall short

Not available to borrowers in Nevada: Additionally, borrowers in Illinois and Ohio aren’t eligible for variable-rate loans. Many other private student loan options are available to borrowers in all 50 U.S. states.

No forbearance option: SoFi does not allow parent loan borrowers to enter forbearance, which is a way to temporarily postpone payments. Many other private lenders offer short-term forbearance if a borrower is experiencing a financial hardship.

Lack of flexible repayment choices: SoFi parent loan borrowers have to begin repaying the loan as soon as they take it out. By comparison, other lenders, including College Ave and Citizens Bank, give parent loan borrowers the option to pay interest-only for a certain amount of time before starting full payments.

Loan details

Fees: No application, origination or prepayment penalties

Loan servicer: MOHELA

Deferment and forbearance: Not available

Next steps

It’s a good idea to compare private student loans before choosing one to ensure you get the lowest rate you qualify for. Also look at the borrower protections various lenders offer, such as forbearance policies and flexible repayment options.

You can get a rate estimate from SoFi through its online preapproval process. This involves a soft credit pull, which won’t affect your credit. The lender will do a hard credit pull, which will slightly hurt your credit score, if you decide to complete the full application.

You’ll need to upload the following documents as part of the full application:

  • Income verification, such as your most recent pay stub
  • Identity verification (driver’s license, government-issued photo ID, passport or green card)
  • Financial aid award letter from your child’s school
  • Private education loan self-certification form, which you can download through SoFi during the application.

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