How SoFi Will Revolutionize the Broken Student Loan Industry



We’ve gotten a lot of attention on the back of our $77 million B-round. Most of this attention has been positive, but there are still a few cynics out there. Notably, some people have asked, “OK – you lower loan rates – but how are you actually disrupting this market and solving the student debt problem?” Fair point, especially given how crappy student loan solutions have been to date – both from the government and private lenders.

The government-driven student loan industry is doomed to fail. Rates don’t commensurate with risk, students aren’t educated about life-altering borrowing decisions and no one – not the government, the students or the school – care about one another’s success. The government gets paid, the schools get paid, and the students lose out. We are tackling this crisis in three distinct and important way
In order of increasing importance, they are:

  • Lowering loan rates. Our loan rates are lower than Federal Direct and PLUS loans, and this delivers real savings that reduce student and graduate debt burdens. Graduates who have refinanced with us have saved an average of over $9,600. Students can avoid costly origination fees and reduce annual payments by $2,500 or more.
  • Providing critical education to borrowers. We believe the single greatest contributor to the growing student debt problem is lack of financial literacy. We are about to release an online application that allows you to enter your school, your major, where you plan on living when you graduate and how much debt you plan on incurring. The application then tells you how likely you will be to be able to make your loan payments when you graduate. You shouldn’t be taking out $100,000 in debt and going into a $30,000 a year job – it just won’t work. We’re going to help students “know before you owe.”
  • Connecting students and alumni. We believe the single greatest value proposition SoFi brings to the table is the student-alumni connection. By creating a community where everyone is vested in one another’s success, both students and alumni benefit. Alumni are incented both financially and through their school affinity to help students with career mentoring, advice and job placement. Because student loan performance is transparent to the alumni investors, borrowers are incented to ask for this help. An added benefit is that because defaults directly impact alumni, schools with high default rates face greater alumni backlash and will have to address whether student debt burdens commensurate with the value of the education.

Student loans are a $1 trillion problem and things won’t get better overnight. But we believe we are paving a way toward a better, more sustainable solution. SoFi is a lot more than just a lower loan rate. We hope we can convince you to join our community.


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit SoFi.com. Want an easy and convenient way to manage your financial life? Get the SoFi app. For iOS and Android.


TLS 1.2 Encrypted
Equal Housing Lender