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Student Loan ReFi

SoFi Student Loans: Competitive Rates and Easy Application

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Well known for its low-rate student loan refinancing options, SoFi launched its own private student loans this year for undergraduates, graduate students and parents. With a SoFi student loan, you can enjoy a streamlined application process, competitive rates and flexible repayment terms, though there are some drawbacks as well.

This SoFi student loan review will try to help you decide if this loan is the right option for funding your college or graduate degree.

SoFi student loan review: What is SoFi?

SoFi Student Loan Review: Rates At a Glance

Loan type

Fixed interest rate

Variable interest rate

Undergraduate5.05% to 11.71% APR3.65% to 11.25% APR
Graduate 4.33% to 11.99% APR2.93% to 11.57% APR
Parent 5.05% to 11.71% APR3.65% to 11.25% APR

SoFi is an online lender that made a splash in the fintech world with its student loan refinancing business. After helping more than 250,000 customers refinance their student loans, SoFi is bringing its same approach to the world of student loans.

Through SoFi, you can borrow up to the full cost of attendance of your school. Parents also have the option to borrow student loans on behalf of their children. Thanks to its competitive rates and no-fee structure,SoFi student loans are worth exploring as you compare options for a private student loan.

Plus, SoFi doesn’t just offer money for school — the company also provides a number of special benefits for its members. For example, if you borrow with SoFi, you’ll have access to exclusive networking events, career coaching services and other activities.

While it’s always a good idea to focus on your best interest rates when you shop around to find a private student loan, SoFi’s special perks are also worth keeping in mind for the added value they could bring to your college and post-graduate experience.

Types of student loans SoFi offers

SoFi offers three types of student loans to borrowers: undergraduate, graduate, and parent student loans. Undergraduates will likely need to apply with a cosigner to meet SoFi’s underwriting requirements. (Note that applying with a cosigner is typical for private student loans — according to data firm MeasureOne, 92% of undergraduates applied for private student loans with a cosigner in the 2018-19 school year.)

See the chart above for the interest rates SoFi offers on its student loans. The lender will look at your creditworthiness, along with other factors, to assign you a from the appropriate range rate after you’ve decided whether to take a fixed-rate or variable-rate loan.

SoFi doesn’t charge any origination, prepayment or even late fees on its student loans. Student and parent loans must be at least $5,000, but can be as much as the entire cost of attendance of the school.

SoFi student loans repayment options

Whether you’re borrowing an undergraduate, graduate or parent student loan from SoFi, you have the option of a five-year, 10-year or 15-year repayment term. Going with a shorter term will mean higher monthly payments, but you’ll pay less interest and get out of debt faster. A longer term could be easier on your budget, but it will increase your overall cost of borrowing.

As for when you start paying back your loan, SoFi offers four options:

  • Deferred repayment: SoFi’s “grace period” — you don’t start repayment while you’re in school or for six months after you graduate. This option isn’t available on parent loans.
  • Interest-only payments: Pay any accrued interest while you’re in school to reduce the overall cost of your loan.
  • Partial payments: Make fixed payments of $25 per month while in school to lower the costs of your loan. This option isn’t available for parents.
  • Immediate payments: Start making full payments on the principal and interest right away.

As noted, parent borrowers can choose only the interest-only payment or immediate repayment on their SoFi loan. For students, meanwhile, choosing to make small or interest-only payments while you’re in school could cut down on costs and avoid a ballooning balance after you graduate.

How SoFi compares with other lenders

SoFistands out among the competition due to its relatively low interest rates and flexible repayment options. Here are a few ways in which SoFi beats the others, as well as some areas where it might fall short.

Advantages of SoFi student loans

You can choose a repayment plan that works for you. While some lenders have even more term-lengths to choose from, SoFi’s options of between five and 15 years still offers enough freedom to pick a repayment plan that works for your budget and goals.

You don’t have to worry about hidden fees. SoFi doesn’t charge any origination fees, application fees, insufficient funds fees or prepayment penalties — it doesn’t even have late fees. That said, missing payments could harm your credit, just as it would on any type of debt.

You could qualify for a very low rate. SoFi offers very competitive interest rates — its lowest rates even beat those on federal student loans. If you or your cosigner has excellent credit, you could qualify for a low-cost student loan.

You can check your rates without harming your credit. As an online lender, SoFi makes it easy to prequalify with an instant rate quote. This rate check only does a soft credit pull, so you don’t have to worry about dinging your credit score. You’ll only consent to a hard credit inquiry — which can lower your credit score slightly for a short period of time — after choosing a loan offer and submitting a full application.

You can qualify for an “unemployment protection” benefit. If you lose your job, SoFi might allow you to place your loan into forbearance for three months at a time, up to a maximum of 12 months total. You won’t have to make payments during this time, but your loan terms won’t get longer, meaning that you’ll have to make increased payments once forbearance ends.

You can put your loan in deferment if you go back to school. Borrowers who go back to school can pause payments through deferment for up to 36 months.

You can benefit from career coaching, networking events and other perks. As a SoFi member, you’ll get access to complementary career coaching, which can help you with your job search, personal branding and other aspects that can help in building your career. You can also access networking events, such as dinners, happy hours and financial education workshops. Benefits like these are rare among student loan lenders.

You could release your cosigner. SoFi allows borrowers to apply for cosigner release after 24 months of full principal and interest payments. Note, however, that cosigner release isn’t guaranteed.

You could get discounted rates on future SoFi loans. If you borrow another SoFi loan in the future, such as a personal loan or mortgage, you could get a rate discount of 0.125%. Plus, you can earn up to $300 for referring others to become SoFi members.

You can borrow a loan in all 50 states. While some other lenders have geographic restrictions, SoFi lends in all 50 states and the District of Columbia.

Disadvantages of SoFi student loans

You might have a tough time qualifying. You or your cosigner will have to meet certain underwriting requirements to borrow from any private lender, including SoFi. While SoFi doesn’t advertise a specific credit score, it says most borrowers have a score of 700 or higher. If you look at SoFi’s reviews on the BBB (the Better Business Bureau) website, you’ll likely see some dissatisfied customers that weren’t able to meet SoFi’s stringent credit requirements.

You might find a longer grace period elsewhere. While SoFi offers the standard grace period of six months, Earnest offers an even longer grace period of nine months. Although delaying repayment will make your loan more expensive, it could be helpful if you’re having trouble finding a job after graduation.

You might be able to find better rates with a different lender. Although SoFi offers very competitive rates, it’s always a good idea to shop around — you never know if you could get even better rates elsewhere unless you look.

You won’t have access to federal benefits. Finally, it’s important to note that SoFi student loans, just like any other private student loan, don’t qualify for federal benefits. You won’t be able to access income-driven repayment plans, or government-sponsored forgiveness programs, such as Public Service Loan Forgiveness. Before turning to any private lender, it’s probably a good idea to max out your eligibility for federal student loans first.

What it takes to qualify for SoFi student loans

When you apply, SoFi reviews your or your cosigner’s credit and income, as well as your financial history, your career experience and your monthly income versus your expenses.

Along with making sure you meet credit and income requirements, SoFi reviews your application to make sure you also meet these criteria:

  • Attend a qualifying school at least half-time. Most four-year public and private degree institutions qualify
  • Be the age of majority in your state, or apply with a cosigner who is
  • Use the loan for qualified educational expenses
  • Make satisfactory academic progress toward your degree
  • Be a U.S. citizen

Note that parent borrowers are not required to be the legal guardian of a student to apply for SoFi’s parent loan.

Are SoFi student loans right for you?

With its low rates, flexible terms and host of member benefits, SoFi could be the lender to meet your financial needs. But it’s always a good idea to look at several lenders, so you can find the private student loan with your best rate or other benefits.

Take advantage of the instant rate quotes that online lenders such as SoFi, Earnest or College Ave Student Loans offer, so you can compare offers without hurting your credit. By doing your lender-research homework, you can feel confident you’ve found a student loan with the lowest costs of borrowing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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College Students and Recent Grads

When Do You Have to Pay Back Private Student Loans?

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When Do You Have to Pay Back Private Student Loans?

Borrowing a private student loan can help put the cost of college or graduate school within reach. But when do you have to pay back private student loans, and can you defer private loans while in school?

Fortunately, most private lenders do give you a break while you’re in school and don’t require repayment until six months after you graduate, just as with federal student loans. But since every lender is different, it’s crucial to check your agreement before assuming you can put off repayment.

What’s more, you might prefer to start paying your loan off early to minimize interest. Here’s what you need to know about private student loan deferment and repayment options.

When do you have to pay back private student loans?

Unlike federal student loans, which abide by a blanket set of terms and conditions, private student loan contracts can vary from lender to lender.

Still, as mentioned, most private lenders don’t require you to make payments while you’re still in school. Instead, they typically honor a grace period, during which your payments are postponed while you’re enrolled in school and for six months after you graduate, withdraw or drop below half-time enrollment.

Once your grace period ends, you’ll start repayment according to the terms and conditions you agreed to when you borrowed your loan. And be prepared: You could be facing a bigger balance that you initially took out, since interest will accrue from the date of disbursement and might get added onto your principal (known as “capitalizing”) once repayment begins.

Note that some lenders do require immediate repayment of the interest on your loan. Make sure you’ve read through the terms of your contract so you don’t accidentally fall behind on your student loan bills.

What are my repayment options on private student loans?

Although the majority of private lenders offer in-school deferment on your student loan payments, many also let you choose alternative repayment approaches. If you can swing in-school payments, you could reduce the interest costs of the loan.

Here are some repayment options private lenders often offer to borrowers:

  • Deferred repayment: As mentioned, you can postpone payments while you’re in school and for an additional six-month grace period.
  • Interest-only repayment: Pay off any interest that accrues from month to month. With this option, you won’t be facing a bigger balance after graduation.
  • In-school fixed payments: Make a small fixed payment of $25 or so per month while you’re in school.
  • Immediate repayment: Although rare, some lenders will require you to start making full payments just a month or two after your loan is disbursed.

Make sure you understand all repayment requirements before signing your student loan contract. And if you can afford it, consider making small or interest-only payments while you’re still in school.

These in-school payments could cut down on interest and prevent your principal from ballooning, making your debt easier to manage after you graduate. In fact, you can prepay your loan at any time without penalty to save on interest and get out of debt ahead of schedule.

Is private student loan deferment or forbearance available?

As a college student, you might be eager to take advantage of your student loan grace period, giving yourself a little breathing room until you start making money. But if, later on, you’re struggling to find employment, lose your job or return to school, you might wish to pause payments again.

While federal student loans are eligible for deferment and forbearance, private loans aren’t guaranteed to have this option. Some private lenders let you pause payments if you run into financial hardship or go to graduate school, but not all of them do.

But even if your private lender doesn’t mention a deferment or forbearance option, it’s worth asking them for help if you’re struggling to repay your bills. Your lender might offer some flexibility, especially if the alternative is you going into default.

Remember that while deferment and forbearance can help you through a tough time, interest will continue to accrue, making your loan balance grow even bigger.

You can restructure your debt through refinancing

It’s crucial to read over the details of your private student loan contract before signing, since you can’t necessarily make changes to your repayment plan retroactively. But there is one way to change your terms — through student loan refinancing.

When you refinance, you basically trade in your old loan(s) for a new one. At this point, you can choose new repayment terms, often ranging between five and 20 years.

If you can swing heavier monthly payments, a shorter loan term can help you get out of debt more quickly. If, on the other hand, you’re looking for some relief, a longer term can save you more money each month (though it will cost you more in interest over the long run).

Refinancing can be a useful strategy for restructuring your debt, but you have to qualify first. Only borrowers with strong credit and income — or a creditworthy cosigner — will be able to qualify.

Consider paying back your student loans ASAP to save money

Even though you don’t have to make in-school payments on most private student loans, doing so could help your finances down the road. Some private student loans come with high interest rates, and some have variable rates that rise over time.

By making small or interest-only payments as a student — perhaps with income from a part-time job — you can cap interest before it grows out of control. Then you won’t have such a daunting balance when you leave school and are looking for work.

Once full repayment begins, you might also make extra payments to retire your debt faster. You can always prepay your student loans without penalty, but you might want to contact your servicer to ensure your extra payments are being applied to your principal and not being used to “prepay” interest.

Whether you choose to make extra payments or stick with the minimum, make sure to use a student loan calculator to learn about your loan. By playing around with the numbers, you can come up with a debt repayment plan that works for you.

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College Students and Recent Grads

Beware: Scholarship Displacement Can Cost You Grant Money

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You may be under the impression that winning a college scholarship reduces the amount you have to pay toward tuition, fees or living expenses. But due to a little-known practice called scholarship displacement, that’s not always the case.

Some schools subtract your scholarship winnings from your demonstrated financial need and take away some of their institutional financial aid as a result. So even though you worked hard to earn a scholarship, you might end up facing the same bill as if you never applied at all.

Read on to learn about scholarship award displacement — and what to do about it — so that you’re not caught by surprise when you see your tuition bill.

Here’s the deal with scholarship displacement

Once you’re accepted to college, you’ll get a financial aid package, typically made up of institutional and federal grants, as well as student loans. Students with financial need might also be invited to participate in the work-study program.

The amount of grants you get depends on your “demonstrated financial need,” as well as the policies of your college. While some colleges meet a student’s full financial need, others only offer a limited amount of aid.

However, colleges that practice scholarship displacement may adjust your financial aid award lower, based on your scholarship winnings. Basically, they’ll subtract your scholarship funds from your demonstrated financial need.

Since you now supposedly have less financial need, the college could take away part of your other grant awards as a result. Note that colleges can’t subtract from the federal Pell Grant — that will remain intact regardless of your scholarship winnings.

Why some colleges practice scholarship displacement

Before you freak out, note that most colleges don’t practice scholarship displacement. According to Edvisors, roughly only 1 out of 5 colleges will cut into those grant awards if you win scholarships. Rather, most schools will keep your grants at the same level and instead subtract from your student loan offer, so you won’t have to borrow as much to attend.

But why do any colleges practice scholarship award displacement at all? Well, they interpret the fact that you won a scholarship as evidence you have less demonstrated financial need. If you won a $1,500 scholarship, the college decides your need has gone down by $1,500.

Since you now have less need in the eyes of the financial aid office, it thinks you have been over-awarded financial aid — your package offers $1,500 more than you need. So it reduces its grant awards accordingly, perhaps to give them to another student with more financial need.

Colleges can practice scholarship displacement if your scholarship assistance exceeds your financial need by $300 or more.

Which states have banned the practice so far

By now, you might be feeling this system is pretty unjust. You worked hard to win a scholarship, so shouldn’t college become more affordable? It seems very unfair.

Well, the state of Maryland agrees with you. In July 2017, Maryland banned the practice of scholarship displacement at its public colleges and universities.

According to the state, colleges can only practice scholarship displacement if the student’s aid becomes greater than their school’s cost of attendance or if their scholarship provider gives them permission.

If neither of these conditions are met, then the school can’t cut into a student’s grants just because they won a scholarship.

Find out if your school treats scholarships as over-awarded financial aid

Since other states haven’t followed Maryland’s lead yet, it’s up to you to see if your college practices scholarship award displacement. The best way to find out is by calling the financial aid office.

If you do find yourself facing so-called “over-awarded financial aid,” it can’t hurt to ask the financial aid office to reconsider. Request that they adjust your student loan offer instead of cutting into your grants.

Or perhaps the school can raise your estimated cost of attendance by adding in certain expenses, such as the cost of a new laptop, so your aid no longer looks like an over-award. Although there’s no guarantee a financial aid officer will work with you, it’s worth making the request.

Another workaround is calling up your scholarship provider and asking them to defer the scholarship award until a later year. Although you might end up facing scholarship displacement in the future, you might at least get to keep your financial aid package intact for freshman year.

Applying for scholarships is still worth the effort

At first, scholarship displacement might discourage some students from seeking free aid. What’s the point of applying to scholarships if they won’t make college more affordable?

But remember that 80% of schools won’t cut into your grants for receiving other scholarships. So pursuing scholarship money could still help a great deal and stop you from having to borrow as much in student loans.

And if you do end up at one of the approximately 20% of colleges that engage in scholarship award displacement, ask your financial aid office to reconsider. You could even contact your representative in Congress: By bringing this issue into the spotlight, more states might join Maryland in banning the practice of scholarship displacement.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.