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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.

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When Do You Have to Pay Back Private Student Loans?

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When Do You Have to Pay Back Private Student Loans?
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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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8 Things to Know Before Applying for Student Loans

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8 Things to Know Before Applying for Student Loans
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If you’ve never borrowed money before, applying for student loans can be confusing. You might have to choose between federal and private student loans, for example, or a fixed or variable interest rate. With all your options, it’s crucial to learn how to apply for student loans before entering any kind of contract.

By understanding how to apply for college loans, you’ll be empowered to make smart decisions about paying for your education. This beginner’s guide will go over what you need to know about how and when to apply for student loans.

What to know before applying for student loans

1. Your loans might be federal or private

As a college student or parent of a college student, you have two options for student loans: federal or private. Federal loans come from the Department of Education and are available for any student attending an eligible school.

You can access federal loans, such as subsidized and unsubsidized loans, by submitting the Free Application for Federal Student Aid, or FAFSA. In most cases, it’s smart to max out your eligibility for federal loans before turning to a private lender.

This is because the federal government offers relatively low interest rates and a variety of flexible repayment plans. But since federal student loans come with borrowing limits, you might need more help to pay for school.

In this case, you could turn to private student loans, which come from a bank, credit union or online lender. Unlike federal student loans, you’ll need to meet underwriting requirements for credit and income to get a private loan.

Most undergraduates apply with a cosigner, such as a parent. Although private student loans can help fill the funding gap, be careful about borrowing a loan with a high interest rate. Private lenders typically aren’t so flexible if you run into financial hardship.

2. You may pay interest right away

Whatever type of student loan you borrow, you’ll have to pay back the principal amount and interest. As of July 1, 2018, federal student loans have an APR of 5.05% for undergraduates and 6.6% for graduate students. As of July 1, 2019, federal student loans will have an APR of 4.53% for undergraduates and 6.08% for graduate students.

Private loan interest rates vary depending on which lender you choose and how strong your credit is. Lenders in MagnifyMoney’s private student loans marketplace offer fixed APRs starting at 5.25% and variable APRs from 4.07%.

Because of interest, you’ll end up paying back a good deal more than you borrowed, especially if repayment spans 10 or more years. Plus, interest typically starts accruing from the date your loan is disbursed.

For example, let’s say you borrowed a $30,000 loan at a 5.05% rate. Over 10 years, you’ll end up paying $8,272 in interest. If you can pay off your loan in five years, you could save $4,263 on interest.

Note that subsidized federal loans, which are available to students with financial need, work slightly differently. The government covers interest while you’re in school on subsidized loans, so you’ll only have to start paying interest once your repayment period begins after graduation.

3. You’ll likely have a grace period

As a college student, you probably won’t have a lot of money to pay back your loans. Luckily, federal loans, as well as most private loans, don’t require immediate repayment.

Instead, you can postpone payments while you’re still in school and for six months after you graduate. This deferment is called a grace period, and it lets you focus on your education before having to worry about student loan payments.

But since interest might be accruing, you could choose to make small payments while you’re still in school. If you can swing small payments, perhaps with income from a part-time job, you won’t be facing such a big balance after graduation.

Note that some private lenders require you to make in-school payments, sending your first bill just a month or two after your loan was disbursed. Make sure you understand all the terms and conditions of a private loan before borrowing so you don’t accidentally fall behind on repayment.

4. You have various repayment options

Learning how to apply for student loans is a crucial first step, but you also need to know how to pay them back. Your options will look different depending on whether you’re borrowing federal or private student loans.

Federal student loans come with a variety of repayment plans. The standard plan spans 10 years, but you can opt for a different plan to adjust your bills, such as income-driven repayment or extended repayment.

Income-driven plans, which span 20 or 25 years, can lower your payments and end in loan forgiveness. But if you stretch repayment over two decades, you’ll end up paying a lot more in interest.

If you owe $35,000 at a 5.05% rate, for example, you’d pay $9,650 in interest over 10 years. But if you stretch repayment out over 20 years, you could pay $20,669 in interest. With a 25-year loan, you’d pay $26,688 in interest. So even though your monthly payments feel more affordable on an income-driven plan, you’ll end up paying more on your loan overall.

Private student loans work a bit differently. When you apply, you’ll choose your loan terms, typically somewhere between five and 15 years. After this point, you might not be able to change your terms.

Some lenders will be flexible if you run into financial hardship, and you might be able to choose new terms through refinancing. But you won’t have access to the many plans available for federal student loans, so make sure to choose your repayment plan carefully before applying for student loans from a private lender.

And no matter the repayment plan you select, you can always prepay your federal or private student loans without penalty.

5. Your private loan could have a fixed or variable interest rate

Federal student loans come with fixed interest rates that remain the same over the life of your loan. But private lenders set their own rates and assign the best ones to creditworthy borrowers. Plus, they typically let you choose between a fixed rate and a variable rate on your student loan.

A fixed rate stays constant, while a variable one could rise over time. If you’re spreading out repayment over a decade or more, a variable rate could cost you. But if you’re planning to pay back your loan quickly, electing a variable rate could save you money on interest.

6. You might be able to pause payments in certain circumstances

Even if you have every intention to pay back your student loan on time, you can’t help it if an emergency pops up. Maybe you lose your job and don’t have an income for a few months. Or perhaps you decide to return to school and want to pause payments again.

If you have federal loans, you can postpone payments temporarily through forbearance or deferment. Both programs let you pause payments, but you won’t have to pay interest on subsidized loans during a period of deferment — only on unsubsidized loans.

Forbearance is typically used during times of financial hardship, while deferment is more often used when you return to school, go on active military service, join the Peace Corps or experience unemployment.

Some private lenders also offer forbearance and deferment, but this varies by lender. Plus, there’s not much of a distinction between these two programs when it comes to private loans, since private loans will always keep accruing interest.

If you’re worried about your ability to keep up with payments, consider applying for student loans with a lender who offers this benefit.

7. You could qualify for loan forgiveness or repayment assistance

Depending on where you live and work, you could get some of your student loan debt wiped away through forgiveness or repayment assistance. Federal programs, such as Public Service Loan Forgiveness and teacher loan forgiveness offer partial or total forgiveness after a certain number of years of service in a qualifying organization or profession.

Many states also offer student loan repayment assistance to certain professionals who work in a shortage area or with a high-need population. Several of these programs offer assistance to pay off both federal and private student loans.

A growing number of companies are offering a student loan-matching benefit to their employees to help them cut through debt. If you’re looking to get your debt discharged ASAP, explore your options for loan forgiveness and repayment assistance.

8. You can restructure your debt through student loan refinancing

With Americans owing more in student loans than ever before, many are looking for relief. For some, student loan refinancing can help.

When you refinance, you give one or more of your old loans (federal or private) to a lender. That lender then issues you a new loan in their place, hopefully with better terms.

Creditworthy applicants can snag lower rates on their debt as well as choose new repayment terms, usually between five and 20 years. Not only can refinancing save you money on interest, but it also lets you adjust monthly payments in a way that works with your budget.

Along with these benefits, though, keep in mind one potential downside: Refinancing federal loans turns them private. As a result, you lose access to federal protections like income-driven plans and forbearance.

But if you’re confident you can pay back your loan on time, applying for student loan refinancing could be a strategic way to manage your debt.

Learn how to apply for student loans to pay for college

Most students should borrow federal student loans before turning to a private lender. Submit the FAFSA and you’ll have access to the world of federal financial aid.

But if you need more funding, learn how to apply for student loans with a private lender. You’ll need to fill out an application and submit your (or your parent’s) documents, such as pay stubs and tax returns.

It’s a good idea to shop around with lenders before choosing one. That way, you can find a private loan with the best rate to finance your education.

The information in this article is accurate as of the date of publishing.