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. Since then, it has emerged as the field’s biggest lender, having refinanced more than $5 billion in student loans, according to co-founder Dan Macklin.
The company is known for both its comparatively low interest rates and the job-related benefits it offers, including members-only career coaching and networking events. It also has a $5,000 minimum loan balance requirement — lower than some of its competitors — and doesn’t cap the balances it will refinance.
AT A GLANCE
- Variable interest rates between 2.14% and 5.94%; fixed rates between 3.5% and 7.74%.
- Seven-year loan term available in addition to five-, 10-, 15- and 20-year terms.
- Nevada residents can’t currently refinance with SoFi. Minimum loan balance is higher in Arizona, Massachusetts and Pennsylvania due to state laws.
In January 2016, the company announced it would no longer consider FICO scores when evaluating potential customers. Instead, SoFi looks at your financial behavior, such as where you’ve worked and for how long, whether you’ve paid your bills on time, and how much you have to spend after expenses. This method can work in favor of grads with short credit histories who haven’t yet built good or excellent credit scores.
“The credit score itself is not important to us,” Macklin says. “The fact that you have met your obligations and paid your bills is important to us.”
Do you qualify?
| Minimum qualifications | The typical borrower | |
|---|---|---|
| Credit score | None. Considers factors including employment history, income and record of meeting financial obligations. | 774 |
| Annual income | None; taken into account with other factors. | $124,630 |
The average SoFi customer qualifies to refinance on his or her own, without a co-signer. Still, between 15% and 20% of SoFi customers use co-signers, according to the company. You must be a college graduate to refinance with SoFi.
Reasons to use SoFi
Interest rates: SoFi offers lower interest rates than many competitors. Rates start at 3.5% for a five-year, fixed-rate loan and 2.14% for a five-year, variable-rate loan. All rates include a 0.25% discount for signing up for automatic payments from a bank account.
As with other lenders, having an attractive financial profile and choosing a shorter loan term will qualify you for SoFi’s lowest rates. Fixed interest rates are generally safer, as they won’t increase (or decrease) due to changes in the market the way variable rates can.
Career coaching: SoFi keeps career services representatives on staff to help customers practice job-hunting skills or learn how to negotiate a higher salary. You can work with a staff member one on one or attend online webinars, whether you’re employed or not. You can also make professional connections at SoFi-hosted happy hours, dinners and networking events.
Where SoFi falls short
Forbearance limitations: SoFi’s unemployment protection program offers borrowers who have involuntarily lost their jobs the ability to pause loan payments for three-month periods and a total of 12 months. The company says it will work with borrowers who experience other types of financial hardship on a case-by-case basis.
But some lenders offer longer forbearance periods than 12 months total in cases of unemployment or economic hardship. They include CommonBond (24 months) and U-fi (24 to 36 months).
Next steps
You can apply to refinance with SoFi directly on its website. Enter your education, employment and current student loan details to find out the interest rate you might receive.
NerdWallet’s partner Credible can provide you refinancing offers from up to six other companies if you’re interested in comparing multiple lenders. Enter your information below to receive an estimate for how much you could save by refinancing with Credible. The calculator assumes a 15-year loan term and the lowest interest rate currently available, which could be variable.
This post was updated. It was originally published on July 22, 2015.
Brianna McGurran is a staff writer at NerdWallet. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe. NerdWallet writer Hal Bundrick also contributed to this post.
Image via iStock.
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