March 4, 2014
Cash Strapped: With a mountain of debt looming, recent dental school graduates are wondering how they’re going to make ends meet as they embark on their dental careers.
SoFi has a way to help.
SoFi, WSDA’s newest endorsed company, consolidates and refinances student loan debt from both federal and private sources at markedly lower rates than those paid today, without charging the fees typically associated with loans — including application, origination or prepayment penalties — to its applicants and borrowers.
The company’s goal is to reduce the burden of student loan debt for as many graduates as possible. On average, dentists who refinance with SoFi with $275,000 of student loan debt have saved $18,000 dollars over the life of their loans.
SoFi’s co-founders recognized that high financing rates and poor service in the banking industry were driven by the lack of direct relationships between institutions and their customers. The problem was worse in student loans, where the government controls 93 percent of the market and charges the same rates for all borrowers regardless of the school, course of study, or profession of the borrower.
SoFi began to solve this problem by raising capital from alumni investors, which was then invested in funds used to refinance the outstanding student debt of fellow alumni. The success of this program led many alumni investors, themselves successful doctors, entrepreneurs, lawyers and businessmen, to ask whether SoFi could help their organizations improve the financial wellness of their members. As a result, SoFi has begun to work with numerous organizations to help educate more people about the opportunities of consolidating and refinancing their loans to lower the cost of their educations. To date, SoFi has processed close to 5,000 applications and are on target to have refinanced more than $1 billion of student loan debt in 2014.
Changing the service model
A major impetus for the creation of the SoFi business model was the poor service provided by financial institutions. At SoFi they started by changing the service model, making sure that the customer felt informed and in control of the process. SoFi associates take pride in their customer service, and these unique benefits:
• Every borrower receives the name, email and direct phone number of their loan origination associate who is assigned to them for the length of their loan. Borrowers may contact their associate at any time.
• SoFi has an in-house recruiter team to help borrowers in case they are laid off and need to find a new job.
• SoFi regularly holds networking events for its borrowers.
All of these provide a level of support that is unprecedented in the industry.
Unique WSDA member offer from SoFi
In addition to the direct savings of thousands of dollars over the life of their loans, WSDA members will be offered the following:
• SoFi will provide WSDA members $500 off their first loan payment.
• SoFi will consolidate WSDA members’ student loans regardless of their source (i.e. private or public) and the number of loans. By consolidating multiple loans (the average borrower has 6 – 8 different loans), borrowers no longer face difficulties managing their loans.
• SoFi will accept applications from WSDA members from all US-based accredited schools.
• Each WSDA borrower will be given the personal contact information for their loan origination associate. This includes their name, direct phone number and email address. This SoFi associate will remain their point of contact throughout the life of the loan.
What loans are eligible for refinanancing with SoFi?
To be eligible for refinancing through SoFi, loans must be qualified student loans as defined in the Internal Revenue Code.
What is the application process?
The online application process takes about 10 minutes to complete, and applicants can be pre-approved within 30 seconds. At this time SoFi provides the rate the applicant qualifies for.
After the applicant is pre-approved, they will be asked to upload a few documents. The required documents include: Income verification (one most recent paystub), and existing student Loan Documents (billing statement and 10-day payoff amount). In addition, they will require identity verification (License/ Permanent Resident card/ Passport) and address verification (utility bill to verify current address) documents. SoFi has a dedicated customer experience team on hand through the application process and the life of the loan.
SoFi is very well funded, raising more than $500M from a variety of sources including individuals (alumni), Morgan Stanley, Bancorp and other banks and institutions such as ECMC.
The fine print: *Savings assumes 10-year student loan refinancing with an average rate of 7.67%, consisting of 6.80% Federal Unsubsidized Direct loans and 7.90% Federal Grad PLUS loans, and a loan balance of $150,000, compared to the current average SoFi variable rate of 3.92% (1-month LIBOR + 3.75%) with 0.25% AutoPay discount. LIBOR is the London Interbank Offered Rate. Applicants must meet SoFi’s underwriting criteria. Fixed rates range from 4.99% to 6.75% APR with AutoPay. Current variable rates range from 2.91% to 4.92% APR with AutoPay. For the SoFi variable rate product, the 1-month Libor index will adjust monthly and the loan payment will be re-amortized and changed monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. ** SoFi average physician savings assumes 10-year student loan refinancing with a weighted average rate of 7.67% and a loan balance of $150,000, compared to SoFi’s median 10-year rate of 5.875% (with AutoPay). ***$500 welcome bonus offered to approved applicants. All loans made by SoFi Lending Corp. CFL license #6054612.