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SoFi Student Loan review

SoFi is a surprising competitor to the more popular student loan lenders, despite many downsides

Our Verdict

SoFi is a worthy choice for many borrowers with no hidden fees and generous repayment plans, but may not be for students who want to borrow less than $5,000 or who may anticipate needing to postpone payments for personal reasons.

For

  • Generous repayment plans
  • Absolutely no fees
  • Beneficial perks like career coaching and networking events

Against

  • Minimum $5,000 loan
  • Other private lenders likely have better rates
  • Relatively stringent credit requirement
  • Forbearance and deferment options are unclear
  • No co-signer release option

SoFi Student Loans: What you need to know

SoFi is an online personal finance company that provides several types of loans, including personal loans, mortgages, student loans, and student loan refinancing. SoFi - short for Social Finance - is also a significant online resource of tools to help people manage their money better, such as learn content and calculators. SoFi was established in 2011, and has served over 250,000 customers since. 

SoFi Student Loans: Common questions

SoFi: Key features

Loan type: Undergraduate, Graduate, Parent student loans

Rate type: Fixed or variable

Loan term: 5 - 15 years

Loan amount: $5,000 - up to 100% of the school-certified cost of attendance

Application and origination fees: Zero fees, meaning no application, origination, disbursement, insufficient fund or late fees.

Discounts: Loans are a eligible for a 0.25% interest rate discount if you sign up for automatic payments. Existing SoFi members (borrower or co-signer) can get an additional 0.125% interest rate reduction on student loans. 

Repayment options: Deferred (no payments until 6 months after leaving school), interest only (interest payments while in school), partial ($25 fixed monthly payment while in school), and immediate (principal and interest payments while in school)

Deferment or forbearance hardship options:  Some, like SoFi's "unemployment protection". Deferment available if you go back to school. Loan payment deferment available for active servicemembers. Other than these benefits, SoFi's forbearance or deferment policy is murky and is considered on a case-by-case basis. 

Co-signer release: None

Grace period: 6 months

Perks: Career coaching, exclusive networking events, job search assistance, entrepreneur support

What is SoFi?

SoFi, which is short for "Social Finance," is a personal finance company that provides a range of services. Essentially, the company's website has tools to help people manage their wealth and debt, creating a community of customers who benefit form using SoFi's services. Such tools include a vast repository of learning content, calculators, and accounts that can help you budget, for example. 

Although SoFi is not a bank, it provides financing options like student loans, mortgages, personal loans, and student loan refinancing. In reviewing SoFi's student loans, we found that SoFi's message is somewhat unclear: the company has extensive resources detailing a borrower's options and courses of action, but the advice does not necessarily apply to SoFi. For example, there are pieces about how to apply for a co-signer release, when this option doesn't actually exist for a SoFi student loan borrower. Therefore, whether intentional or not, we've found the messaging to be both somewhat conflicting and, in some cases, duplicitous.

How are SoFi's student loan interest rates?

In a nutshell, SoFi's student loan interest rates aren't terrible, but they also aren't the best. At any given time, you're likely to find lower rates with another lender, whether you're looking at variable or fixed rates. However, those lenders may not be the right fit for you and your needs, and in that case, SoFi's relatively average rates are a good deal. 

Can SoFi help consolidate my student loans?

Yes. One of SoFi's first products was student loan refinancing, which was introduced in 2013, just two years after the company's founding. SoFi claims that if borrowers refinance with them, borrowers can ultimately save thousands of dollars. However, this is more likely to be true for borrowers who initially opted for high-interest loans. As usual, assessing whether or not you will save money on interest must be evaluated on a case-to-case basis. 

SoFi student loans

(Image credit: SoFi)

SoFi Student Loans: Advantages

SoFi shines in some key areas when it comes down to their student loans. The company likes to emphasize that its is not a bank and therefore does not operate like one. Instead, it prefers to refer to itself as a community of borrowers and financially-literate people who are taking their debt and wealth-management into their own hands.

The application

Because SoFi isn't a bank, the company doesn't make a hard inquiry on your credit, meaning that your score won't be negatively affected. And once you submit your application, you may be approved within minutes, according to SoFi's website.

The loan

For many borrowers, one of SoFi's main selling points is the fact that it does not charge any fees - ever. There are no fees associated to the loan itself, such as disbursement or origination fees, and no fees associated to borrower behavior, such as late fees.

Repayment

The second selling point for SoFi is its generous repayment plans. While several other lenders have similar, if not identical payment plans, loan terms are usually not as flexible. SoFi also makes it easier for borrowers to determine which plan is best for them by indicating which option will cost them less overall (immediate payments - paying the principal and interest right away, while in school - are the lowest cost option). SoFi also offers deferred payments (no payments while in school, the highest overall cost option), interest only payments (interest payments only while in school), and partial payments (flat $25 fixed monthly payments while in school). While these options are also offered by some other lenders, the having all four options makes SoFi relatively competitive in the area of student loans.

Unemployment Protection

SoFi borrowers whose SoFi student loans are in good standing are eligible for Unemployment Protection, given that they have involuntarily lost their job. Unemployment Protection beneficiaries can get student loan deferment in 3 month increments for up to 12 months, and receive advice on interviewing and networking. While this is benefit is well advertised, it does not differ much than other deferment options from other lenders. 

After school

Because SoFi brands itself as a community, and is not a bank, it has the freedom to offer post-college perks for its borrowers. Some of the benefits include career coaching, networking events, and even singles' events. This can be beneficial to those who choose to utilize these services to ease the transition from school to the workforce.

SoFi Student Loans: Disadvantages

While there are clear benefits in opting for a SoFi student loan, some borrowers may not want to jump on the SoFi bandwagon without looking at the disadvantages. 

Approval

SoFi's student loan eligibility criteria appears fairly straightforward and similar to that of other lenders: borrowers must be of age (or their co-signers must be of age), the borrower must use the loan for their education and related expenses, and the borrower must be working toward a degree in a "satisfactory" way, among other criteria. However, many customers report that borrowers must have a credit score of at least 650 to 700 in order to qualify, which may be difficult for borrowers with little credit history. 

The loan

Students looking to borrow less than $5,000 are out of luck: that's the minimum amount you can borrow with SoFi. 

SoFi has relatively competitive interest rates, and you may be approved for one of the lowest rates you can get with SoFi. However, we encourage potential borrowers to check out other lenders before committing to SoFi, as they may get better rates elsewhere. Similarly, while SoFi's grace period of 6 months is fairly standard, if this is an important factor to you, you may be able to find a lender with a longer grace period. 

Forbearance and deferment

SoFi's Unemployment Protection may be an added bonus, but the company is somewhat unclear about what other protection it can offer in the event that you are unable to make payments due to reasons other than unemployment. Most likely, student loan specialists will evaluate each case individually to determine whether or not the borrower qualifies for deferment. 

Discharge approval

Discharge due to death or disability is approved on a case-by-case basis, meaning that a borrower's co-signer may find themselves responsible for the entirety of the loan in the worst case scenario. 

Co-Signer release

SoFi student loan borrowers are encouraged to have a co-signer, as they are likely to get a lower rate with a co-signer who has better credit and a higher income. However, SoFi student loan co-signers are somewhat tied to the loan for the life of the loan. Per the website, co-signers cannot apply to be released from the loan - the only way to accomplish this goal is for the borrower to reapply for the loan and see if they qualify on their own. 

Applying and qualifying for a SoFi student loan

SoFi isn't immediately clear about what it takes to qualify for a SoFi student loan, and in fact, by using customer testimonials and SoFi's website, we've found that not all qualifying criteria has been disclosed. The site offers the bare minimum in terms of qualifying criteria, which appears to be fairly standard: the borrower or the co-signer must be of majority age, the student must be working toward a degree at an approved institution in any of the 50 states, and the combined income of the borrower and the co-signer must be satisfactory. However, there is no mention of a minimum credit score, and several customers report that they were not approved for a SoFi student loan because of their credit score. 

However, applying for a SoFi student loan seems fairly simple and straightforward. SoFi appears to encourage potential borrowers to apply without much consideration, as there is no hard credit pull that would affect a credit score. Pre-approval is communicated often in a matter of minutes, which makes it easy for a borrower to simply sign a few documents in order to secure the student loan. 

This lack of transparency isn't unique to SoFi - many, if not most student loan providers purposefully don't clearly advertise their requirements for getting approved for a student loan. 

SoFi Student Loans: User experience and customer service

Generally, most potential borrowers don't have a difficult time navigating the site for more information or for filling out forms. The process appears to be relatively seamless, although some people report trouble uploading their photo to the online application. There is also the SoFi app, which is an avenue through which you can maintain your account. 

Customer service representatives are available over the phone, but are not available 24/7. However, SoFi does have generous time windows: 4am to 9pm Monday through Thursday, and 4am to 5pm Friday through Sunday. 

SoFi Student Loans: What happens if I can't pay my student loan?

For SoFi student loans, it's somewhat unclear as to what happens if you are unable to pay your student loan. The company doesn't disclose its deferment or forbearance policy unless deferment is requested in the event of involuntary unemployment. We've determined that these types of requests are evaluated on a case-by-case basis, as is the length of deferment. 

Unemployment protection is the only guaranteed deferment, given that you are eligible for it. 

For many borrowers, having no other protection may feel like a big risk to take. If you are in the market to take out a student loan and are considering SoFi, we strongly urge you to consider your finances, your relationship with your co-signer if you have one, and any foreseeable difficulties before opting for SoFi.  

SoFi Student Loans: What borrowers and co-signers have to say

While SoFi certainly makes an effort to look good on paper, many borrowers have expressed extreme dissatisfaction with SoFi in the area of pre-application materials, loan details, and customer service. 

A major complaint across the board is about the stringent qualification requirements, with many applicants baffled by why they were rejected. While we are willing to believe that a portion of these negative reviews are due to customer error or misinformation, the sheer amount of negative reviews indicate to us that SoFi still has some work to do in terms of providing accurate information on their website. 

There is still a decent amount of positive reviews for SoFi student loans, and some borrowers express that they have had a positive and predictable experience with SoFi. 

What type of borrower is SoFi student loans best for?

In theory, SoFi student loans are best for students who can meet the requirements, who have more than $5,000 to borrow, and who are certain they have methods to pay for their student loans other than employment, such as assistance from a parent or a savings account they can pull from. Students with the widest safety nets are perhaps the best candidates for SoFi student loans, due to the lack of information about forbearance and deferment options. 

SoFi student loans versus federal student loans

SoFi student loans don't really compare to federal student loans - we believe that there are too many outcomes that are dependent on a borrower's financial situation. This is not a lender that offers many guarantees other than zero fees. We encourage borrowers to evaluate their federal student loan options before going for any private lender, especially SoFi. 

SoFi Student Loans: Verdict

SoFi is a surprising competitor in the student loan world, despite its shortcomings. It has a lot going for it: it is a private lender that is not a bank, had handy tools to help you manage your debt, and highlights the positive features of its loans, including student loans. However, we believe that SoFi thrives mainly because it chooses to omit much of the information that borrowers need in the hopes that borrowers see how easy it us to apply and simply pull the trigger. 

The tactic works. SoFi isn't the worst option out there, but it still has a long way to go to become one of the best student loan providers. While it's been in the student loan refinancing area for some time, its student loan program is new as of 2019 - so there's time and room for SoFi student loans to improve.