SoFi Review – Refinance Your Student Loans Peer-to-Peer


Rating: 3

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Even college graduates who find great jobs can struggle with debt for years after leaving school, especially if they have expensive private student loans. And, for borrowers who can’t make ends meet, it’s nearly impossible to discharge student debts in bankruptcy. The result is an unending cascade, possibly decades long, of financial repercussions.

Social Finance, Inc., known as SoFi, looks to change this glum reality. Using peer-to-peer lending between members of the public and qualified student borrowers, it provides student loan refinancing for graduates of more than 2,000 U.S universities. Recently, SoFi has also delved into peer-to-peer personal loans, mortgages, and primary student loan markets.

Key Products

SoFi offers the following loan products. Its rates may vary according to your current income and your credit score and history.

Student Loan Refinancing

SoFi offers refinancing loans that may lower the interest rates on your outstanding private and federal student loans. These may have fixed interest rates, which range from 3.63% to 6.99%; or, variable interest rates, which currently range from 2.44% to 6.36%. For comparison, the Sallie Mae Smart Option Student Loan for Undergraduates currently offers fixed rates between 5.74% and 11.85%, and variable rates between 2.62% and 9.69%. Though variable rates can increase or decrease with Libor fluctuations, they’re capped at 8.95% for 5-year loans and 9.95% for 10- and 15-year loans. There are no borrowing limits or origination fees for refinancing loans.

MBA Loans

SoFi offers MBA loans for students at about two dozen U.S. business schools, and that list continues to grow. Some MBA loans come with origination fees of 1% to 2%. Term lengths are either 10 or 15 years. While you’re in school, and for a six-month grace period after graduation, you can choose to defer your repayments entirely, pay back interest only, or make full principal and interest payments. Interest on variable rate loans starts at 3.91% (Libor plus 3.75%) for a 10-year product and ranges up to a 9.95% (Libor plus 9.75%) maximum on 15-year loans. Fixed-rate interest ranges from 5.88% on 10-year loans to the 9.95% cap (Libor plus 9.75%) on 15-year loans.

Personal Loans

For existing customers, SoFi offers fixed-rate personal loans with principal balances of $10,000 to $35,000 and terms of three or five years. After a 12-month introductory rate of between 0.99% and 3.99%, rates range from 5.63% (Libor plus 5.5%) to 9.88% (Libor plus 9.75%). Depending on your credit history, you may be charged an origination fee of up to 2%. Though you don’t need to put up collateral for a SoFi personal loan, you do need a credit score of 700 or higher to qualify.

Mortgage Loans

For existing customers, SoFi offers three types of mortgage loans to borrowers in California only, though it plans on expanding its geographical reach. With the 7/1 ARM, you pay a fixed rate (currently about 3.38%, or Libor plus 3.25%) for seven years, then accept yearly adjustments to your rate. With the 5/5/20 interest-only ARM, you pay interest only for 10 years, with your rate fixed for the first five (currently about 3.65%, or Libor plus 3.5%). Thereafter, your rate adjusts annually, with principal repayments back-loaded onto the loan’s last 10 years. Rates on these two adjustable options can’t rise by more than 2% in one year and more than 6% over the life of the loan. 30-year fixed mortgages start at 4.25% with a 20% down payment and 4.77% with 10% down. Principal and interest payments are made at the same rate for the entire length of the loan. SoFi issues mortgage loans as large as $2.5 million and never charges origination fees.

Parent Loans

Currently offered as a pilot program for parents of Stanford students, SoFi’s parent loans help parents pay for undergraduate tuition and room and board costs, with no borrowing caps or origination fees. Term lengths are either 10 or 15 years. Loans are offered at fixed 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 caps of 8.95% for 10-year loans and 9.95% for those of 15 years.

Additional Features

Entrepreneur Program

For budding entrepreneurs, SoFi may defer student refinancing loan repayments for up to six months. The program also includes networking opportunities with other SoFi entrepreneurs, professional mentoring services, and access to SoFi’s accredited investors, who may be able to provide startup funding. To prove that you’re an entrepreneur, you need to submit a business plan or presentation to [email protected]

Veterans Program

SoFi offers special rates on student refinance loans for veterans who don’t qualify for full tuition coverage under the 9/11 GI Bill. Eligible veterans include honorably discharged individuals with less than three years of active duty service, military academy graduates, ROTC members, and those who attended school more than 10 years after discharge. Participants must meet the same eligibility criteria, including employment requirements, as regular borrowers. SoFi doesn’t publicly reveal its Veterans Program loan rates, which are decided on a case-by-case basis. However, it claims they’re lower than current rates on Stafford and Grad PLUS, unsubsidized federal loans.

Career Services

SoFi’s Career Services department is staffed by Robert Park, former Assistant Dean of Career Management at the University of Rochester’s Simon School of Business. It provides current and former borrowers with job search assistance, professional development, and general career guidance. You can schedule one-on-one appointments with Mr. Park via email.

Referral Program

SoFi lets you create a unique referral link that you can share with friends who might be interested in its products. For every successfully referred individual, you earn $100. SoFi is also currently offering a $100 bonus to new borrowers who sign-up through a referral link, though this could change in the future.

Unemployment Protection

If you’re laid off from your job, SoFi may temporarily suspend your monthly loan repayments and help you find a new job by connecting you with other borrowers, investors, and alumni in its network. You must reapply for this program every three months. SoFi only suspends loan payments for a total of 12 months over the entire life 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 government unemployment benefits. To remain in this program, you must actively work with SoFi’s Career Services department to find a new job. If you obtained your loan with a cosigner, both of you must be unemployed to qualify.

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Becoming a SoFi Investor

To become a SoFi investor, you need to be considered 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 household income over each of the past two years.
  • Net household worth of at least $1 million.
  • The overseer of a trust, nonprofit organization, corporation, or partnership with assets of at least $5 million.

SoFi provides approved investors with a prospectus, which isn’t available to the public, detailing the conditions, term length, rate of return, and other aspects of its investments. SoFi doesn’t disclose returns online “due to regulations,” but other peer-to-peer lending services promise annual returns of 4% to 8% on loans of similar quality. You do not need to be an alumnus of one of its member schools or a previous SoFi borrower to become an investor.


1. Help for Entrepreneurs and Temporarily Unemployed Borrowers
SoFi doesn’t just temporarily suspend loan repayments for laid-off and entrepreneurial borrowers – it also lets you leverage its community of investors and borrowers for business development assistance, mentoring, and even startup funding. No other student lenders offer such a comprehensive deferment-and-support program for entrepreneurs. The Small Business Administration’s Student Startup Plan, however, does allow budding entrepreneurs to opt for income-based repayment on their outstanding federal loans. Federal Sallie Mae loans feature up to three years of unemployment deferment, compared to SoFi’s 12 months, but the organization doesn’t provide additional services like SoFi does.

2. Low or Nonexistent Origination Fees
Origination fees on SoFi’s personal loans range from 0% to 2% of the principal, depending on the size of the loan and the borrower’s credit history. Its refinancing and mortgage loans, however, never come with origination fees. Some MBA loans, including those for students at Georgetown University, the University of North Carolina-Chapel Hill, and the University of Michigan, charge origination fees of 1% to 2%.

Other private student loan consolidation services, such as NextStudent and Student Loan Network, may charge origination fees of up to 5%. Mortgage origination fees are common among traditional lenders like Wells Fargo ($50 to $900, depending on the borrower’s credit). Other peer-to-peer lending services, such as Lending Club, may charge far higher origination fees (up to 5%) on personal loans.

3. Attractive Fixed Rates for Qualified Borrowers
If you can qualify for a SoFi loan with a fixed interest rate, it may come at a significant discount compared to other lenders. Fixed rates on SoFi’s refinancing loans 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% to 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 may have rates 2% to 6% higher than SoFi’s. For personal loans, SoFi’s rates are up to 2% lower than Wells Fargo’s, and they offer the added bonus of a 12-month, 0.99% to 3.99% introductory rate. And whereas rates on personal loans from Wells Fargo range from about 7.25% (Libor plus 7%) to about 9.25% (Libor plus 9%) for borrowers with good credit, SoFi’s start near 5%. Discover’s fixed-rate MBA loans start at 5.99% and climb up to 9.74%, compared to a range of about 4% to 10% for SoFi loans.

4. Free Professional Development, Networking, and Business Funding Support
SoFi builds a community of talented, like-minded individuals who provide professional and financial support – including career counseling, entrepreneur mentoring, and even start-up or angel funding – to other members. While traditional lenders such as Sallie Mae and Wells Fargo provide college planning tools and general financial advice, their borrowers can’t leverage an entire community’s insights and resources. Though peer-to-peer lenders like Lending Club follow SoFi’s lead and encourage borrowers to eventually become investors, creating a de facto community, they don’t exploit that community to offer networking opportunities or professional development services.

5. Lucrative Referral Program
There’s no limit to the number of $100 referral bonuses you can earn by connecting student loan refinancing candidates to SoFi. Though 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 lending decisions on a case-by-case basis and doesn’t disclose the specifics of its methodology. However, to qualify for refinancing – which is the easiest way for graduates to become members – you must have a 700-plus credit score and ample monthly cash flow. To help figure out if refinancing is right for you, SoFi shows you four ideal candidates: The lowest-earning makes $95,000 per year, and the most modest credit score is 733. For recent four-year graduates, this may be a high bar to clear.

2. MBA Loans and Refinancing Products Aren’t Available for All Students and Graduates
Compared to products from bigger lenders such as Sallie Mae, Wells Fargo, and U.S. Bank (which are generally available to students and graduates at accredited two- and four-year U.S. institutions), SoFi’s coverage for MBA and refinancing loans is relatively small – about two dozen schools for the former, and 2,000 for the latter. No matter how attractive your profile as a borrower, you may have to look elsewhere if your school’s not on the list.

3. Other Products Are Also Restrictive
SoFi’s other products are also seriously restricted. Its mortgage loans are only available to borrowers in California, and its parent loans – which are still being tested, and may be discontinued altogether in the future – are only for parents of Stanford undergrads.

The company’s website encourages non-Californians to apply for mortgages in case SoFi starts lending outside the state’s borders, so it seems that the company has plans to expand elsewhere. Still, SoFi’s attractive loan rates, terms, and support simply aren’t available to huge chunks of the U.S. population.

4. Investing Isn’t Realistic for Many People
Though SoFi is a peer-to-peer lending service, it only accepts investments from people or organizations defined as accredited investors by the SEC. Other peer-to-peer lending platforms, such as Lending Club, may offer similar returns (4.77% to 8.24% for high-quality loans), but don’t limit entry in this way.

5. Variable Rate Options May Not Save You Much
Though SoFi’s fixed loan rates are generally cheaper than other lenders’, its variable rates for student loans and refinancing may not be. For instance, variable rates on Discover MBA loans are 1% to 3% cheaper than comparable SoFi loans.

Are You Eligible for a SoFi Loan?

To be eligible for any SoFi loan, you must meet these universal criteria:

  • Citizen or permanent resident status
  • 18 years of age or older
  • No past felony convictions
  • No bankruptcy declarations within the past three years
  • Currently employed or holding a binding offer of future employment
  • Law graduates must pass at least one state bar exam

You must also be a graduate of one of the 2,000 universities that SoFi works with. The company doesn’t currently refinance loans for residents of Alabama, Delaware, Idaho, Mississippi, Montana, Nevada, North Dakota, South Dakota, Rhode Island, or Vermont.

SoFi also uses strict underwriting criteria – the specifics of which aren’t made public – to approve or deny student loan refinancing applications. To have a good chance of being approved, you need to be ineligible for federal loan forgiveness programs, have a credit score of at least 700, and have a moderate debt-to-income ratio. However, SoFi doesn’t clearly define “moderate.” You must also have, or expect to have shortly, at least a four-year degree.

A 0.25% autopay discount, which applies when you sign-up to have your loan repayment automatically debited from your bank account every month, is available on all loans.

Qualifying for Other Loans

New SoFi borrowers can receive student loan refinancing or MBA loans, but aren’t eligible for personal or mortgage loans. To qualify for these, you must meet the universal eligibility criteria and be an existing SoFi investor, or a refinance or MBA loan customer.

sofi student loans

Applying for a SoFi Student Refinancing Loan

The refinancing application process is straightforward. After registering with the company and completing a pre-approval questionnaire that determines whether you meet the universal eligibility criteria, you’re immediately pre-approved or denied, with an explanation as to why. If pre-approved, you can select a plan that suits you and upload or fax documentation to verify your identity and the status of your outstanding loans.

Once you’re officially approved, which typically happens within minutes, you finish the process by e-signing your refinancing agreement. You also have the option to set-up autopay. It’s best to do this when you first apply, but you can always sign-up for it later and get the 0.25% discount going forward. SoFi’s MBA loan application process is similar, though you don’t have to prove your current employment status or cash flow.

Final Word

SoFi uses peer-to-peer lending to refinance student loans and to issue mortgage loans, personal loans, and certain student loans. Though your exact loan cost depends on your credit history and the amount you’re borrowing, rates are lower than those of many competitors. Plus, customers get valuable perks, including networking opportunities and job search assistance, that aren’t available through traditional lenders. It’s 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 caters to affluent, highly qualified borrowers, especially 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 can gain admission to this somewhat exclusive borrowing-and-lending club, you can make out well – but that’s a big “if.”


3.5 stars out of 5: Great for those who qualify, but restrictive qualification requirements and limited geographical coverage counts against. On the plus side, networking and career assistance could be huge for entrepreneurial clients.

Have you used SoFi to refinance your student loans?

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