SoFi Review - Is Student Loan Refinance Worth It?
Is student loan refinancing a good idea? Is SoFi worth the trouble? What is a good time to refinance? Read on. The answers may surprise you.
With SoFi student loan. Your federal grace period stays. Parent PLUS loans are eligible for refinancing. You need to have an amazing credit score. A great option if your credit score is amazing
In case you feel that your student loan isn't going anywhere anytime soon no matter what you do, you are not the only one to feel that way.
One way to make a bigger impact is with a better interest rate, and to do that you should consider refinancing.
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Wonder what is refinancing and how it works?
Although the word itself might sound confusing, "Refinancing" is not so much a complicated word as you might think.
It basically means that you are just replacing your old loans with a new loan that has a better interest rate or term or sometimes both.
Why is it that someone would grant you a loan with a lower interest rate you ask?
This is assuming that between the time that you had applied for your student loan initially and at present after you graduated from college, you have built good credit history and got yourself a good job.
Although most people are not so lucky. Know that if you are one of those people, with regard to the lender, you are a much lower risk than that time when you were a college freshman with no credit history and little or nothing to show in terms of income to get the trust of your lender.
To begin with, you need to first figure out your interest rate with SoFi.
Through the life of your loan, interest will add up to a significant amount. You can successfully get some of it back in your pocket. Have a look at how SoFi has a lot of people do the same by helping them with refinancing their student loans.
Are you looking to save some money?
In case you are able to find a lender who likely matches the needs that you currently have and they also approve of your credit history, you might have the chance to save a ton of money, and also possibly have much lower monthly payments.
For Example, if you had $25,000 in student loans and an interest rate of 5%, your monthly payments would be around $265. And you would pay around $6,800 in interest over the life of your student loan.
Now, lets take the same $25,000 in student loans and get it refinanced to an interest rate of say 3.2%, your monthly payments would be around $244. And you would have paid about $4,250 in interest over the life of your student loan. This equals an interest only savings of about $2,500.
Since there are a couple of companies that specialize in refinancing student loans. SoFi is one of the biggest in the business.
Have at look at our in detail review of the pros and cons of SoFi as your lender in terms of student loan refinancing. See if it worth the trouble of going through refinancing with them.
Why should you consider SoFi for refinancing your student loan?
If we're to assume that you do not refinance on a daily basis, we can also assume that you are not up to date on the ways to reduce your money being wasted by paying interest. So here are some of the perks of refinancing with SoFi
The Scope of your savings
You have the chance to save thousands in terms of money that might be going towards an unwanted interest rate. Since this is the whole point of refinance, which is to reduce the amount of money that you put into your student loan in terms of paying for the student loan interest. SoFi has your best interests at heart and that means getting big savings and one of the ways is to refinance your student loans.
If you didn't know - SoFi is current an A+ rated company with regards to the Better Business Bureau.
You should be able to land a lower interest rate.
Since SoFi offers variable and fixed interest rates on their loan refinance as options. This means that you have the option to decide how much you end up paying in terms of interest on your student loan.
Fixed rate loans - Here the Interest that you pay on your loan stays the same through the entire life of your loan.
Variable rate loans - Here the interest rate on your loan might change with respect to changes that are seen on the London Interbank Offered Rate Index or LIBOR for short.
SoFi determines its variable interest rates based on this number. This is amazing for you as long as the LIBOR Index stays low and doesn't rise.
You aren't going to lose that grace period that your federal student loan gives you.
Most student loan lenders have a small grace period before you are required to begin making payments and it normally extends for a period up to 6 months after you graduate.
This gives you some time to prepare before having to start making payments on your student loans. SoFi keeps this promise and continues the grace period when you go ahead and refinance along with them.
You are not required to pay any sort of origination fee.
Usually, this is a fee that lenders tend to charge for the work of processing your new loan called "origination fee".
With SoFi you will not be needed to pay any fee for anything of this sort called an "origination fee".
There is normally no penalty for clearing out your debt early too.
This is usually done by some lenders when you proceed to pay off your student loans early. SoFi will not charge you any sort of penalties in the instance that you decide to clear out your loans way ahead of the stipulated schedule that you were given when you managed to get the loan.
Extra marks for Referring others to SoFi
You will also be paid in case any of your friends that you referred to SoFi end up refinancing their student loans with them. Whenever someone that you refer to SoFi ends up refinancing with them you will get a $100 bonus which you can either spend or choose to put towards your loans and get out of them quickly.
You have the chance to get more rate discounts.
When you enroll in any sort of auto payments so that SoFi understands that you are not going to be late on your loan payments. You become eligible for a rate discount of 0.25% reduction in your interest rate this is because you are giving SoFi a guarantee that they will receive their money on time. So go ahead and put your payments on Autopilot.
You get to make the choice of your loan terms.
The General repayment term for almost all student loans is set at 10 years. SoFi will allow you to change that up between 5, 7, 10, 15 and even 20-year loan terms. This should definitely give you an advantage in terms of choosing a monthly payment plan that suits your lifestyle and your monthly budget.
Federal and private loans are both accepted by SoFi.
In case you are looking at student loan consolidation. Many private student loan lenders tend to offer to refinance only for a private student loan. SoFi on the other hand will let you consolidate or refinance your loans even if they are direct federal loans.
You are safeguarded even in the face of unemployment.
If you are trying to make loan payments while struggling with unemployment this can be a bit troublesome, but SoFi will let you take a break. In the instance that you become unemployed, your payments are suspended from needing to be met for a period of up to 12 months while you look for work.
One Exception though for this is that if you have a cosigner who is able to make the payments for you. Your interest keeps accumulating at the same time although. But SoFi will give you free Career Coaching in the meanwhile while you go around looking for work.
In case you are a medical resident you should be able to avoid Compounding interest.
SoFi has on its roll the Medical Residency Student Loan Refinancing to help out the students that are undergoing medical education in the country while they go through their medical residency.
This helps by allowing you to refinance your loans and make a very low payment of only $100 per month for a period of 54 months which is usually how long a standard residency program lasts. On top of the low-interest rates, your interest rates do not get added during your residency. That saves you a ton of money in the long run.
You are also eligible to refinance your parent PLUS loans.
If your parents somehow helped pay for your tuition during school with the help of a parent PLUS loan, you should do them a favour but refinancing their parent PLUS loans. SoFi enables you to add that loan into your student loan refinance program. This helps take such payments off the shoulders of your parents. They will definitely be thankful.
When is it a good time to refinance your student loan?
Since the interest rates are still low but they have the possibility of changing the future you might be under pressure to do it now.
But this does not necessarily mean that you will benefit from refinancing right away.
Here are a couple of things for you to keep in mind before you go ahead and get your student loans refinanced with SoFi -
You might lose a couple of federal loan protections.
Since federal loans come along with a couple of safeguards. In case you decide to refinance or consolidate your loans through SoFi, you will be bidding a farewell to those. This includes but doesn't limit to the income-dependent repayment plans or the public service loan forgiveness program that you can become eligible for with federal student loans.
If you feel you need those protections, or if you only have a private loan, continue reading and find out how you can benefit from SoFi.
Note - If you have both federal and private student loans, you would be better of refinancing only your private loans and it might be smarter for you too. And then you should continue making payments over your federal student loans.
You might actually end up forking out more in terms of interest.
If you switch from a fixed rate loan to a variable loan for the sake of low-interest rates and then end up going up, this could backfire in so many ways.
Think of this option as a gamble always.
Lucky for you that SoFi also offers loans that have both Fixed and Variable interest rate loans.
Their application process is a little troublesome.
Although it takes a couple of minutes to apply for a refinance of your loans through SoFi, getting it to the state of approved takes a load of time. We have looked for any negative reviews on SoFi and seemed to find only a few. One of the most common complaints was that they took a while sometimes up to 3-4 months to approve the loan.
The other complaint that was heard was from those people whose loans weren't approved for refinancing. SoFi is usually a little strict with their approvals, so keep a note that your financials are in a line before you go ahead and apply for refinancing.
What are the inner workings at SoFi?
Since SoFi is not like any other normal bank that you'd be aware of, you need to get an understanding of who and what they are under the covers.
To begin with, the money that they put into the refinancing of your student loans comes from the people that have invested in them such as the alumni, other individuals and some institutions. SoFi's way of giving loans also differs from the general bunch that it does not take numbers into much consideration such as your credit score and some others.
SoFi will definitely talk and consider these things like your monthly cash flow, some other personal factors and your job offers or the job that you are currently at. If these factors are on point in your life then you should most definitely be considered a good candidate for any loan that you have applied for.
If in some bad circumstances you end up having a bad credit score, or no credit score at all or currently are unemployed, you should be considering stopping here and looking elsewhere.
You need to focus on getting a job, improving on your credit score instead of struggling to get a loan which will most likely involve you need someone with a really good credit score cosigning for you or you to have to get a loan with a high-interest rate. So look for ways to get a salary in for yourself.
Get a good record of your repayments of bills so as to show your competence. Then you should definitely be able to get your interest rates down on the loans that you already have by refinancing or on any loans that you previously had got high-interest rates on offers when you applied for the same.
It might be a bit off course but it is most definitely the truth that we have here about getting your debt straight up and that's the reality.
So how is the process going forward?
So it is pretty simple with SoFi, and almost similar to many of the other lenders. So you go ahead and fill out some basic online form that consists of your basic info including info about your debt, the amount that you currently owe and also where you had attended or are attending school.
From here, SoFi will surely give you an interest rate as an estimate. SoFi performs a Credit pull which would not affect your credit history so it is a soft credit pull before they finalize your loan details so that when you actually apply they will do the hard credit pull. This is to make sure that you get the best of services without having to hamper you much.
If you think the rate is good enough for you, you should be able to apply and finish and directly apply for the loan through their website itself. You will be required to give all details regarding your loans, also you will be required to upload documents such as your most recent loan statements, and also give the company permission to have a look at your credit history.
In case you get their approval then you will be required to sign off on this so as to grant you the new loan, SoFi will then proceed to pay off your older loans in your favor. You will next proceed to direct your monthly payments to them.
Wondering if SoFi is worth the trouble?
Since refinancing means a lot of work like having to compare lenders, you need to get your paperwork, fill out some application forms. You have to figure out if it is worth the hassle going through all this for the change in the interest rates and whatever other benefits you believe you will be getting from the process.
If you are almost finishing your loan payments in a short while, refinancing might not really be the option for you. You might want to see if it would make sense if you just finished off your debt by paying it off early.
If this is not really a feasible option for you, you could look at what interest you can get. Then you should have the freedom to make a choice at whether you would refinance or if you would like to stay with the option you currently have.
In case you are looking at some other benefit from refinancing and not purely towards getting a better monthly payment or a reduced interest rate such as changing the timing of your monthly payment, you have that option too through refinance.
You can also reduce the amount that you would be paying. Since a lower interest rate means that you would end up paying a lot less over the life of your loan. Make a mental note that this could mean your monthly payments might go a little high in this situation.
You can choose to go the other way and get your monthly payments reduced. This might not be the best thing for you since it will cost you a bit more over the time of your loan but smaller payments are better than not making payments at all.
Depending on your situation, refinancing should help make a much bigger impact on your debt. To figure out all of this, give SoFi's website a visit and get your interest rates from the.
Is refinance with SoFi available for anyone?
Although SoFi is not a traditional lender, it does state a couple of rigorous eligibility norms. A couple of borrowers might not make the cut.
Here are some of the main points that SoFi takes into consideration when you are applying -
Minimum loan balance.
You are required to have at least $5,000 in terms of an outstanding loan amount for you to become eligible to refinance your student loans. This could also increase based on the state in which you reside.
SoFi requires you to be able to pay for your student loans in the situation that you refinance your student loan. You will need to be employed currently or at least have an offer on hand that is verified in which it states that you will be beginning work within the next 90 days.
Here you will need to prove that your income is sufficient to make do with all your bills which also includes your loan payments.
When you are consolidating your federal student loans, your credit score will not come into the picture. Although this is quite the opposite when it comes to your private student loans.
You are required to go through a credit check at the time that you are applying. In the instance that you do not meet the minimum requirements that SoFi has set, you might need to get a cosigner for you to get the approval of the loan.
Place of Residence.
You are required to be a Citizen of the U.S. or at least a permanent resident. Since SoFi offers to refinance in only 49 of the states and the District of Columbia, this means if you happen to live in the State of Nevada, you are sadly out of luck.
Refinance capabilities for student loans are given to only students who possess graduation certificates from Title IV Accredited Universities and graduate programs. This also means that your school needs to be accepting federal financial aid.
Chances of Approval?
Although getting denied is a little harsh, SoFi is on the stricter side of things. If you have any sort of missed payments on your credit history, these are called "Delinquencies", you will most likely be turned away. This is also a possibility if you do not possess a job.
Having someone with a good credit score cosign for you can improve your odds of getting the loan, although this means that SoFi has expectations of them making payments in the event that you do not make them. Although this does not necessarily mean that you will get the loan. The Co-signer will still be required to go through the same credit and employment checks as you did.
To get a brief summary of this, refinancing requirements are purely based on your financial history, your previous employment or current state of employment and your expenses and income or basically your cash flow.
Also, make a note -
Once you are approved of a loan, you become a member of SoFi. You will have access to their educational events, career advising, dinners and other sorts of happy hours. Through these programs such as the SoFi Entrepreneur program, you have the ability to defer your payments for a period of up to 6 months. Then you do not need to worry about any sort of fees or negative reporting. This also gives you the extra time to get involved in your business and not have to worry about your student loans.
Do I need to go through once I apply?
Not really, you have the choice every step of the way to go through with SoFi or not. Do not worry about being forced into making a decision. It is actually a good idea to have a comparison of the different rates and loan terms from the different companies to understand where you might find the best deal for your loan.
Who is my loan servicer?
MOHELA is your student loan refinance servicer. After your refinance goes into repayment, you can get in touch with MOHELA to answer any of your questions through their number 877-292-7470.
Will SoFi Charge any fees for refinancing my student loans?
No, SoFi does not charge any application fees, origination fees, or any prepayment penalties for student loan refinance.
What needs to be included in my loan statement?
Your loan statement will include your name, the account related to the loan, the interest rate on the loan, the outstanding principal amount and the name of your current servicer.
How do I go about changing the due date on my student loan?
It is possible for you to change your due date on their website by going to "forms" and then "online services". You will need to download and complete the form and mention the date which you would like as your new due date. Once you have completed the form, upload it using the "Upload Form" button. You must be in repayment to be able to make these changes.
Whom do I get in touch with regarding my student loan?
MOHELA will be servicing your student loan refinance and can be contacted through their number that is 877-292-7470.
What does Autopay discount mean?
Autopay discount is a 0.25% interest rate reduction on loans in which you give permission of automatic deduction on a monthly basis from a bank account of your choice.
When is considered a good time to refinance my loans?
The earlier you refinance to a lower loan rate the more amount of money that you will end up saving. Even in case you are in a grace period, your loan accumulates interest for your unsubsidized federal loans. SoFi will make sure to honor the 6 month grace period from your previous loan servicer.
Can I refinance both my private and federal student loans?
Yes, with SoFi you can consolidate all qualified education loans.
Will SoFi offer a grace period?
SoFi will honor the 6 month grace period that any existing grace period of the loans that you are refinancing