We’re Lending to MBAs In School (Again)
When the government lowered federal loan rates last year, we stopped lending to college students and refocused our business on refinancing graduates. The combination of lower loan rates and guaranteed government protections made it hard for us to justify choosing a SoFi loan while in school. Our advice was to graduate, get a job and then consider SoFi. Over 8,500 of you have done that, refinancing over $700 million in loans with us, saving money and gaining benefits like our unemployment protection and entrepreneur program.
This year, government rates are rising again. The headline interest rate for graduate direct and PLUS loans is jumping to 6.21% from 5.41% and 7.21% from 6.41%, respectively. But that’s just the rate. Incorporate the 1.07% and 4.288% (seriously, it’s 4.288%!) origination fees, and the APRs on those loans go to 6.353% and 7.895%. That’s a lot of interest to pay, and got us to reconsider our value proposition for lending to students.
This spring, we reached out to some of our investors and agreed to pull together what we think is a better deal for certain borrowers in school. Starting now, we are offering students at 22 MBA programs a 10-year loan with a 5.875% interest rate, a 2.0% origination fee and a 6.18% APR. You don’t pay while you are in school, get the same 6-month grace period federal loans offer, and you gain access to the SoFi community and benefits. Plus (no pun intended) you’ll save money. Borrowing $50,000 using the SoFi MBA Loan instead of a PLUS loan (at the new 7.895% APR) could save you over $5,300 over the life of the loan.
If you are in a qualified MBA program and are considering a career in public service, or are worried about being able to pay for your loan at graduation, federal loans might be a better option for you. If you want a SoFi loan, but your school or program isn’t eligible – give us some time. We’re working on securing alumni and institutional capital to expand this program.