SoFi Review: The One Financial Platform for Every Millennial
SoFi is no longer just for student loans. Nowadays, the company offers a variety financial products and services that rival the more expensive competitors.
- Loan rate discounts
- Comprehensive financial community
Based in San Francisco, California, and launched in 2011, SoFi was founded by four students from Stanford Graduate School of Business. As students themselves, they were looking to provide a better and more affordable way for students to finance their educations.
Initially using investment capital from Stanford alumni, they soon brought venture capital into the mix. Eventually, SoFi developed into a peer-to-peer platform for student loans, with the help of bonds issued through Barclays and Morgan Stanley. The company has continued to grow as it has attracted more capital for loans.
SoFi has gradually added personal loans, home loans and mortgages, insurance products, career services, self-directed investing and even its own automated online investment platform, or robo advisor. The company now has nearly 1,400 employees, and has provided more than $30 billion in funded loans to 700,000 members.
In case you’re wondering, the SoFi name is short for Social Finance, Inc.
We’re going to provide a “high altitude” look at each of the many products now offered by SoFi.
Unlike traditional lenders, but very similar to the rising number of online lenders, the SoFi loan experience is entirely digital. They have no physical branch locations, which allows them to keep costs low.
On the lending side, they also keep costs low by being very selective in who they offer loans to. They avoid strict reliance on credit scores and debt-to-income (DTI) ratios, preferring to look deeper into member’s financial profiles. That includes considering a borrower’s education, career type, an estimated cash flow.
SoFi takes a radically different approach to its business model. Instead of being a SoFi customer, you become a SoFi member. This is similar to the model used by credit unions, in which all participants are also members. As a member, you’ll have access to the SoFi community, financial advisors, career services, the “Unemployment Protection” program (which we’ll cover in this article), referral bonuses and a member rate discount on any additional SoFi loans.
When you apply for financing with SoFi you can do so entirely online. The process takes only minutes, and you can check your rate without affecting your credit score.
Customer service: Available by email and phone, Monday through Thursday, 4:00 am to 9:00 pm, and Friday through Sunday, 4:00 am to 5:00 pm–all times Pacific.
Mobile App: The SoFi app is available at The App Store for iOS devices, 11.0 and later, and is compatible with iPhone, iPad, and iPod touch. It’s also available at Google Play for Android devices 6.0 and up.
This is the foundation of all SoFi programs, since it’s the one the company was built on. Since there are so many different federal and private student loan programs available for students while they’re in school, SoFi concentrates on providing refinances to graduates. Thus far, SoFi has provided $18 billion in student loan refinances to over 250,000 members.
Refinance loans are available for working graduates, and can be used to refinance the following loan types:
- Unsubsidized Direct Loans
- Graduate PLUS loans
- Private student loans
You can get prequalified online, and even upload screenshots of any required documentation. Once your loan is approved, SoFi will pay off your existing student loans.
Student loan refinances are available in both fixed and variable rates, and in terms ranging from 5 to 20 years. The minimum loan amount is $5,000, while the maximum is “the full balance of your qualified education loans”.
One of the major advantages of a SoFi student loan refinance is that there are no origination fees, which are typical of many student loans. There are also no prepayment penalties. You can add a cosigner to your loan either to help you qualify or get a more favorable rate. But be aware that SoFi does not permit a cosigner release.
To be eligible for a student loan refinance, you must:
- Be a U.S. citizen or permanent resident
- Graduated from a Title IV accredited university or graduate program
- Be employed or have an employment starting date within 90 days of application
- Have sufficient income, a responsible financial history and strong monthly cash flow (demonstrated sufficient to make the loan payments)
This SoFi loan product was launched just this year to help students pay for school. They offer no-fee private student loans for both undergraduate and graduate students. Loans will cover 100% of the full cost of attendance.
Fixed rate loans are available with rates between 5.45% APR and 11.71% APR, while variable-rate loans are available with rates between 4.14% APR and 11.39% APR. A 0.25% rate reduction is available when you make automated payments from your checking or savings account. And once again, there are no fees, including no prepayment penalties. It’s a true zero fee loan.
One of the distinguishing features of a SoFi Private Student Loan is that they provide four repayment options:
Similar to student loan refinances, the minimum loan amount is $5,000, while the maximum is up to 100% of the school certified cost of attendance. That includes tuition, books and supplies, room and board, transportation, and personal expenses.
Cosigners aren’t required, but they’re strongly recommended to keep your interest rate at a minimum. This is due to the fact that undergraduate students typically have limited income and credit history. You don’t need to be enrolled full-time, but you must attend an eligible school at least half-time, and be working toward a degree.
The loan process itself is expected to take between four and six weeks, between completing the paperwork and having the money sent to your school. If you choose a deferred payment option, payments will begin six months after graduation.
There are a lot of companies and web platforms now offering personal loans. But SoFi Personal Loans offer lower rates than most of the competition, and no origination fees. That last point is particularly important. Most online personal loan sources charge up to 6% for an origination fee on personal loans.
You can borrow from a minimum of $5,000 to a maximum of $100,000, with terms ranging from two years to seven years. SoFi Personal Loans are completely unsecured. And as a member of the SoFi community, you will be eligible for Unemployment Protection if you lose your job.
Basic terms are as follows:
Funds can be used for just about any purpose, such as consolidating credit card debt, making home improvements, taking a vacation, or covering wedding expenses. However, unlike some competitor’s personal loans, SoFi Personal Loans cannot be used for business or investing, for the purchase of real estate, short-term bridge financing, or to pay for post-secondary education.
Your loan funds should be available within a few days of loan application. Funds are sent directly to your personal bank account, allowing you to disperse the funds as needed.
SoFi Home Loans are available for purchasing a new home or refinancing an existing loan. Loans require a minimum down payment of 10%, and are available in amounts up to $3 million. The entire application process takes place online, and typically closes within 30 days.
SoFi Home Loans come with the following terms:
Home financing is available for both owner-occupied primary residences and second homes. This can include single-family homes, condominiums, duplexes, and houses located in planned unit developments. Investment properties are not eligible.
There are no lender fees, like application or origination fees. However, you can pay discount points to lower your interest rate. Like all mortgage financing, there are closing costs associated with third-party charges. These will include fees for title search and title insurance, state and local taxes, appraisal and attorney fees.
Since SoFi’s core market is college graduates, providing investment products is a natural additional service. SoFi enables you to either engage in self-directed investing, or to take advantage of automated investing through their robo advisor.
With self-directed investing, or active investing, there are no transaction fees to buy and sell stocks, nor are there any account minimums. You can trade using the SoFi Mobile App, and connect with other SoFi members to share your experiences.
SoFi allows you to buy fractional shares for as little as $1. That will enable you to diversify a small amount of money across many different companies. And since there are no transaction costs, you won’t have to worry about investment expenses. Stock Bit purchases are only available on certain stocks and exchange traded funds (ETFs).
The SoFi Invest trading platform provides real-time investing news, curated content, and other relevant data. You can create a personal watchlist to follow companies you’ve invested in or plan to.
One of the limitations however is that investing is limited to stocks and ETFs only. You won’t be able to trade bonds, options, or mutual funds. However, you will be able to invest in one of four SoFi ETFs:
All investment accounts are insured against broker failure through SIPC for up to $500,000 in cash and securities, including up to $250,000 in cash.
SoFi Automated Investing
If you’re not comfortable with self-directed trading, you can invest through SoFi Automated Investing. It’s a robo advisor that sets up your portfolio, and manages it going forward. That includes automatic rebalancing, to keep your stock and bond allocations consistent with their targets. You can make an investment with as little as $1, and there are no fees, either for management or for transactions.
Automated Investing offers five different investment strategies, ranging between conservative and aggressive. You can also set up separate portfolios for different goals, such as retirement or investing for shorter-term purposes. Each account is invested in between three and seven different ETFs. SoFi is also planning to add stock trading to the Automated Investing program in the near future.
Accounts available include traditional, Roth and SEP IRAs, as well as taxable accounts.
SoFi Money is SoFi’s cash management account That is, it’s an account that pays interest comparable to a savings account. It currently pays 1.60% APY on all balances, and has no fees. You can access your cash at any ATM in the world that accepts Visa. SoFi will reimburse any fees charged by the ATM owner.
In one of the more unique features, SoFi Money does provide paper checks at no cost. This is increasingly unusual among high interest paying online banks. The account also comes with automated bill pay. You can even set up direct deposits into your account. There is no minimum balance requirement.
Both individual and joint accounts are available, and all accounts are protected by FDIC insurance for up to $1.5 million. You can also add spend notifications, that will require a phone notification whenever money is spent on your Visa card.
The account can be integrated with payment services like PayPal, Venmo, Apply Pay and Samsung Pay. You can also accept checks with mobile deposit through the SoFi Mobile App. ATM cash withdrawals are limited to $610 per day.
SoFi offers insurance coverage under SoFi Protect. SoFi isn’t an insurance company, and doesn’t provide the coverage directly. Instead, they partner with insurance companies to provide coverage.
The following types of insurance are available through SoFi Protect:
For life insurance policies, term policies are offered, generally with no required medical tests.
Auto insurance is provided by Root Insurance Company, which offers policies in Arizona, Arkansas, Colorado, Delaware, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas and Utah.
To be eligible for coverage, you must be determined to be a safe driver. Root uses smart phone technology to measure your driving behavior. You won’t know if your policy is approved, or at what rate, until you complete the test drive.
Homeowner’s and renter’s insurance is available in 23 states, including Arkansas, Arizona, California, Connecticut, the District of Columbia, Georgia, Iowa, Illinois, Indiana, Maryland, Michigan, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Tennessee, Virginia and Wisconsin.
Lemonade provides both homeowner’s and renter’s insurance. And in an interesting twist, you pay a flat fee for your coverage, the company will pay any claims necessary, then gives whatever is left to charities selected by you, as the policyholder.
SoFi offers complimentary career coaching for all members. You can work one-on-one with an experienced career coach who will help lead you to career success. You can get help with career transitions, job searches, personal branding, and even customized support.
We’ve mentioned this several times in connection with SoFi loans. It’s a benefit offered with each loan. If you lose your job–through no fault of your own–you may be eligible. Your loan must be in good standing when you enter the program, and it will be subject to approval. But if it’s approved, your loan will be put in forbearance for up to 12 months. However, the forbearance is in three-month increments, and it will need to be re-approved each time.
As part of the program, you must be actively working with the SoFi Career Team to help you find a new job. It’s recommended that you at least make the interest payments on your loan during forbearance, to avoid additional principal being added to the loan.
The forbearance status will be reported to the credit bureaus, which may affect your credit scores.
As we’ve said throughout this article, SoFi is a community. And with that community come certain benefits.
SoFi conducts a series of life experiences around the country, to help members expand their workplace value. They also celebrate members who’ve paid off their loans. Then they offer SoFi Accelerate, a series of experiences for millennial’s looking to “break away, look beyond, and get ahead in their careers. Attendees are given tools and structures to help them reach their goals.
These experiences are also designed to help you make connections with other members of the SoFi community. Meetings will typically be a dinner or happy hour, and is led by a member of the community team. It includes hosted food and drinks, and generally lasts between two and three hours. There is no fee to attend, but you will be charged a refundable deposit to guarantee your spot.
You’ll have access to hands-on workshops as well as high-profile speakers. The purpose is to help you get ready for the future financially. It covers everything from buying your first home to preparing for retirement.
SoFi also makes its network available to you, not only helping you to get a job, but also to learn about an industry, swap ideas with others, and get valuable career advice.
- Comprehensive financial community — SoFi offers student loans, home financing, and personal loans, as well as renter’s, homeowner’s, and auto insurance, and self-directed and managed investment options, as well as high interest yielding cash management.
- Affordable — Most SoFi financial products require no upfront costs, like origination fees, membership fees, or even investment transaction costs.
- Access to a community and career resources — SoFi is a community, offering career and financial support.
- Loan rate discounts — Available on subsequent loans.
- You can grow with SoFi — Starting out with student loans, then moving to investing, and eventually to homeownership.
- Accessibility is limited — SoFi specifically targets those with strong financial profiles, including excellent credit and strong employment and income. If you don’t meet those qualifications, the service won’t work for you.
- Limited investing options — Though they offer no-fee investing, investment options are much more limited than they are on dedicated investment platforms.
- Unemployment Protection plan is reported to credit bureaus — While the plan is a welcome benefit, should you become unemployed, credit bureaus will know. This can potentially have a negative effect on your credit scores.
- 10% mortgage down payment — Mortgage loans require a minimum of 10% down.
- Auto insurance only available for good drivers — Auto insurance is available through Root and uses smart phone technology to measure whether or not you're a safe driver.
In just a few short years, SoFi has grown to become one of the top student loan sources in the country. In addition to competitive rates, they also charge no fees on their student loans, including no prepayment penalties. That no-fee policy also applies to the other types of loans they offer, including home mortgages and personal loans.
If you start out using SoFi for student loans, it’s a company you can really grow with. Student loans are just the beginning; as you move through life, SoFi offers most of the financial products you’ll need. For example, when you’re ready to buy a house, you can get home financing. When you want to invest for retirement, you can do that on the platform as well. And the 1.60% being paid on the SoFi Money cash management account is a welcome benefit for anyone.
But the non-financial benefits are also a major component of what SoFi has to offer. The orientation toward career development is a major plus. In most cases, you’d have to pay for career coaching–with SoFi it’s a complimentary part of the package. And the prospect of belonging to a community of like-minded people always pays dividends.
The major caveat with SoFi is that it definitely caters to those with excellent credit and strong employment. If you have credit issues, or you’re struggling on the career and income front, SoFi may not be so welcoming. But if you meet the SoFi member criteria–and particularly if you’re a millennial–SoFi is just the kind of financial services package that will help you reach a higher level in life.
If you’d like more information, or you’d like to apply for one of the many SoFi product offerings, visit the SoFi website.