Are you sick of your student loan debt?
Are you trying to figure out how to make your payments smaller?
Or are you trying to pay your student loans off faster?
No matter how soul crushing your student loan debt is, this video is going to review one of the biggest student loan companies in the industry.
So, if you’re wondering, should I refinance my student loans, this blog is for you.
Today we’re talking about SoFi’s interest rates, the fees and penalties, some hidden fine print, their student loan forgiveness program, the application process, and how to get the best rates.
In the past several years, SoFi has turned into one of the largest student loan companies.
They are trying to dominate the market by providing the best college loans.
SoFi Student Loan Rates
The first thing I want to just briefly touch on is what the student loan interest at SoFi looks like.
For fixed-rate student loans, the interest rates range from 3.5% to 12%.
Variable-rate student loans range from 2.4% to 11.7%.
If you want to check out what your student loan interest rate might look like, I have a link in the description that will take you to the student loan page.
And if you use that link, you’ll get $300 in cash back from them when you sign up.
So, if you set your account up for auto-pay they will reduce your interest rate by a quarter of a percent.
Quite frankly, this quarter of a percent is kind of crap.
If you have a $10,000 student loan, then paying 5% means you’re paying $106.07 per month, which comes out to be $2,728.40 in interest over the ten year period.
But if you take this sweet discount quarter of a percent discount and you ONLY pay 4.75%, boy are you in luck.
Your monthly payment will be $104.85 each month, and you’ll be paying $2,582 in interest over the ten year payback period.
You get so save $1.22 per month, or $146.40 over a ten year period.
The real benefit here is that you don’t miss a payment and get hit with late fees.
You also don’t have late payments showing up on your credit report.
There’s hardly ANY benefits when paying back student loans.
If you currently have a loan with SoFi and you apply for a new loan, you’ll get ANOTHER discount of an eighth of a percent.
Just so that I don’t bore you to death, I’m not going to go over what the current student loan interest rates are for EVERY product in this video.
Just check out the link in my description and it’ll take you to the SoFi student loan page so you can check out the current interest rates.
Student Loan Fees and Penalties
So, let’s talk about fees and penalties.
SoFi charges no fees whatsoever — no origination fees, insufficient fund fees or late fees.
Student Loan Repayment Options
Five to 20-year repayment terms are available for SoFi’s student loans.
SoFi has 4 ways that you can pay them back when you graduate.
This was actually a pretty nice feature.
Like, if you are struggling to find a good job, you take leave and travel for a year, or you have a little kiddo then you can easily adjust your plan based on your needs.
So, they have…
Deferred Student Loans
This allows you to make no payments on your student loans for 6 months after graduating.
Deferred student loans could be beneficial if you’re strapped for cash after graduating.
And no, strapped for cash does not mean that you bought yourself a brand new car and you’re going out every weekend to party.
You haven’t EARNED your brand new car yet. You haven’t even started making money.
Graduating college is like the bare minimum.
After you have built solid money habits, made some investments, and have built an emergency fund – that’s when you have earned your brand new car.
So, only consider deferring student loans if you are struggling to find a job, are having to pay a lot of moving expenses to relocate for a job, or you’re allocating your money to paying down higher interest debt like a credit card.
If you choose the deferred
repayment plan, you will be charged the highest interest rates.
Our next one is Interest Only Student Loan payments.
Interest Only Student Loans
While you’re in school, you’re not making payments.
But the amount you owe in student loans IS accruing interest.
Each month, the interest is being added to your student loan balance.
This means that while you’re in school, your student loan debt is growing.
Making interest only student loan payments while you’re in school will make your balance, and monthly payments, lower when you graduate.
Or even if you don’t graduate.
Our next one is partial student loan payments.
Partial Student Loan Payment
Just like with interest only student loan payments, partial student loan payments chips away at how much you owe while you’re in school.
With this plan, you’re only paying a flat amount of $25 per month.
So, what’s the main difference in this plan and the interest only repayment plan?
With this plan only costing $25 per month while you’re in school, you’re going to be paying a lot less each month while you’re in school.
As you can see, interest only loan payments are much higher compared to partial payment amounts.
So, if you’re able to make the interest only payments during college, you’re going to be in a much better financial position when you graduate.
This is because making interest only payments while in college means that AFTER college, you can reduce your monthly payments by roughly 25%.
These two plans would allow you to reduce student loan debt so that you can pay off student loans fast.
The last student loan repayment plan is immediate repayment.
This means that your student loan payments kick in the month after you receive the funds.
If you get your loan and pay for tuition in August, then you’ll be making payments in September.
That’s right – you’d be making full student loan payments while in college.
If you can swing this, it can save you about 35% on the total loan amount that you pay off.
If you are able to work a job and go to school, then this won’t be a problem for you.
You’ll be able to transition fairly easily into making student loan payments and you’ll end up paying off student loans early.
Now that we know what our student loan options are, let’s talk about some fine print in the contracts we need to know about.
Any Concerning Fine Print?
When you refinance student loans with any lender, you lose the protections offered by Federal student loans.
For example, people who refinance student loans with SoFi cannot opt for an income based repayment plan.
SoFi does have a student loan forbearance program if you’ve become unemployed.
The Unemployment Protection is offered in three month increments.
But, it is capped at 12 months over the life of the loan.
To be honest, other lenders offer better student loan forbearance programs.
Which does not make sense to me.
The long you DON’T pay your loans, the more interest they earn on their money.
SoFi also offers student loan deferment plans for borrowers who return to graduate school, undergo disability rehabilitation, or serve on active military duty.
It also offers a six month deferment to people who are in SoFi’s entrepreneurship program.
BUT during either deferment or forbearance interest continues to accrue on the loan.
However, there is no option for disability discharge at this time.
Federal student loans do offer this protection, and some private student loans have started to as well.
If you borrow with SoFi, consider a low cost life insurance policy or disability insurance policy to make up for NOT having this protection.
One unique aspect of borrowing with SoFi is its emphasis on career growth.
As a borrower, you will qualify for free career coaching and local networking events. (By the bookcase)
These personalized services can help push you towards a higher income and help you pay back student loans faster.
Refinancing your federal student loans means that you’re losing your loan forgiveness.
So, the main question you should be asking is does SoFi have a student loan forgiveness program?
Does SoFi Have A Student Loan Forgiveness Program
When you refinance federal student loans with a private lender like SoFi, you lose access to federal student loan protection.
These programs offer perks like an income based student loan repayment and student loan debt forgiveness.
But, if you need student loan debt relief, not all is lost.
While SoFi does not forgive student loans, they do offer some protections that can be helpful if you have a change in plans or an unexpected life event.
The first one is unemployment protection.
If you’re laid off, SoFi’s career services team will help you find another job.
While you’re looking, you can postpone student loan payments for up to three months at a time, for up to 12 months in total.
Interest will still accrue on your loans while they’re in forbearance.
The other one is student loan deferment.
Student loan deferment.
If you decide to go back to school to get another degree, are called up for active duty military service, or undergo disability rehabilitation, you can request a student loan deferment.
Deferring student loans allows you to temporarily stop making your student loan payments.
In some cases, you can temporarily reduce the amount of your student loan payments.
Let’s talk about the student loan application process.
Student Loan Application Process
Figuring out how to apply for student loans is easy with SoFi.
The student loan application process through SoFi can be completed entirely online.
You can apply and get a decision within minutes.
You’re probably wondering how long does the student loan application take to process?
That’s especially true if you’re a procrastinator like me and you apply for your loans at the absolutely last second.
The full process — from completing the application to SoFi sending the money to your school — takes anywhere from four to six weeks.
Here’s what the process looks like when applying for a student loan from SoFi.
- Start the process online and find out if you’re pre qualified. The entire application can be filled out online.
- Choose an interest rate and repayment option. You have the option of variable or fixed rates and four different repayment options.
- If approved, sign the loan and accept it. SoFi allows you to upload screenshots of your information and electronically sign paperwork.
- SoFi sends the loan application and information to your school for certification.
- SoFi sends money to your school within four to six weeks.
So now that you know how to apply, let’s talk about the SoFi student loan refinancing review.
SoFi Student Loan Refinancing Review
SoFi’s ideal customer looks a lot like its founders
These nerds are graduates of one of the nation’s top business schools, the Stanford Graduate School of Business.
Their ideal customer has an advanced degree from top schools, which allows SoFi to offer competitive rates.
That’s because its customers tend to be high earners who have a lower risk of becoming unemployed than less “ELITE” borrowers.
A survey of its customers from 2018 reveals a lot about the type of borrower SoFi is looking for.
- 69% holds an advanced degree in a field like law or medicine.
- 39% graduated from a top 100 college.
- The average credit score was 779
- 96% had a credit score of 700 or higher.
- The average income was $161,476
- The average amount of debt refinanced was $68,678
So, you definitely have a better chance of qualifying with SoFi if you have an advanced degree from a top school.
But, there’s no harm in checking interest rates if you don’t fit the typical profile.
SoFi uses a soft credit check to prequalify borrowers, so you don’t have to worry about dinging your credit report.
But if you find a refinancing option you like and apply for it, SoFi will run a hard credit check that could have a small impact on your credit score.
But that’s all I have for today guys.
I have a link in the description to SoFi’s student loans if you want to check it out.
If you use that link, you get $300 cash back.
And make sure you smash that like button for the YouTube algorithm.
I put out finance videos every Monday and Wednesday that help you stop living paycheck to paycheck and start making your money work for you.