So what is SoFi? Basically, it’s an online financial company that can help you get a mortgage, make investments, and build wealth; however, the best part about them (and what I –and they – consider their main gig) is that they also refinance student loans. And they are the best ones in the market doing this today.
Want to refinance your loans and get a $100 welcome bonus? Sign up through this link!
REFINANCING VERSUS CONSOLIDATION
Before we get into SoFi a little more, let’s talking about the difference between refinancing and consolidating student loans. These are both terms used quite a bit in the student loan world, but each has very difference effects.
Loan consolidation essentially means you roll multiple federal student loans into one new loan at the weighted average of your old loans’ interest rates. (Note: Private loan consolidation essentially acts like refinancing, which is discussed below). This doesn’t lower your interest rate or decrease the amount you’ll pay over the course of your loan. In fact, if you have a lower monthly payment, it’s most likely because they’ve lengthened your loan term, which will just make you pay more in interest over the long haul. The benefits then? To be truthful, there aren’t many, other than that you can lock a variable rate loan into a fixed rate and you’ll have fewer loans/payments to keep track of.
Loan refinancing, on the other hand, is where you roll multiple loans (federal or private) into one loan at a new, lower interest rate. The financial institution doing the refinancing will look at your financial and credit history, and if you’re a good candidate, will hopefully offer you a lower rate than what you’re currently paying on your loans now. And while it doesn’t seem like this could make a huge difference, it could save you a couple of hundred a month, depending on the amount of loans you have. How’s that for some extra cash in your pocket?
Want to learn more about loan consolidation and refinancing? Click here.
WHY I LOVE SOFI
While a lot of companies offer loan refinancing, SoFi is head and shoulders above the rest. Why am I so obsessed/excited about them?
They refinance both federal and private loans
Most financial institutions only refinance private loans, which could still leave you paying a high interest rate on your federal loans. Refinancing both can potentially cut the amount of interest you are paying even more. And saving more is always a good thing.
You can save an additional 0.25% of your loan when you enroll in AutoPay
It may not seem like much, but over the course of a 10-year loan at the average 2016 debt balance ($28,400), it will save you roughly $400. And if someone wants to pay me a few hundred dollars to simplify my life, I’ll take it.
Average savings for SoFi users is $19,000 over the course of their loan.
$19,000. Yes, that’s a car, people. And if you pay more than the minimum each month (which SoFi allows you to do), you can increase that savings even more.
I know, I saved the best reason for last. Saving $19,000 can have a huge impact on a 20- (or even 30-) something, and I want to get into a little more detail on just how refinancing with SoFi (Get a $100 welcome bonus by clicking here!) could change your financial situation drastically, making it easier to build that emergency fund, save for retirement, or even afford to go on a vacation this year. Or if you want to spend it on shoes, go for it. It’s your money.