Raising the Bar: How SoFi Takes the Hassle out of Student Loan Repayment
Last Wednesday, the Consumer Financial Protection Bureau (CFPB) released a report summarizing complaints from 3,800 student loan borrowers. SoFi was not named in these borrower complaints, but as a private lender focused on refinancing existing student loans, we hear a lot about the challenges our customers have faced with their previous lenders.
Since the report’s release, a number of publications – from the New York Times to The Washington Post – have covered the challenges borrowers face in payment processing, in particular related to problems with paying off their debt early. While private lenders are prevented from charging prepayment penalties, borrowers often face a number of hurdles when tackling their student loan balance.
Paying back your student loans shouldn’t be such a hassle, here’s how we’re eliminating these hurdles at SoFi:
1. Increasing options for refinancing debt after graduation
Washington Post columnist Michelle Singletary reported, “Many student-loan borrowers can’t refinance their student loans or have limited options. So to reduce their borrowing costs, they make extra payments.” SoFi is the only lender currently focused on refinancing private and federal student loans and offers eligible borrowers the opportunity to take advantage of lower interest rates and reduce their monthly payments or the length of their loan term.
By combining all loans into one SoFi loan with one rate, we make it impossible for borrowers to miss out on paying their highest-rate loan first. And, if we offer a better product in the future, our existing borrowers may refinance their loans again without penalties or hidden fees.
2. Providing a Customer Advocate to our borrowers
We face many of the challenges outlined by the CFPB when we pay off and consolidate the loans of our refinancing borrowers. If an initial letter to a loan servicer is ineffective, our Customer Advocate works with the borrower to ensure all loans are paid off correctly. By leveraging our decades of experience in student loans, we help our borrowers avoid navigating this difficult process alone.
3. Allocating Payments to Help Borrowers Save
New York Times reporter Ann Carrns notes, “Borrowers sending in extra payments may find that the money is not allocated in the way they intended.” At SoFi, we always apply payments to maximize your savings: accrued fees (late fees or non-sufficient funds fees, when applicable), accrued interest, and then principal. Unless you ask us to do so, we will never earmark additional payments for future amounts due or put borrowers into “paid ahead” or “advanced payment” status as other loan servicers do. It’s also easy for SoFi borrowers to schedule and increase upcoming payments at any time, and any additional payment we receive is applied immediately using the same formula as your regular payments.
At SoFi, we believe the process of paying down your student loans and becoming debt-free shouldn’t be painful. Be sure to ask your private loan provider about how they handle prepayments before you take out or refinance your loans.