SoFi Blog

As CEO of a company that’s working to revolutionize the student loan industry, I have to say the past couple of weeks have been interesting to watch.

President Obama’s much-debated plan to increase college affordability has stoked the fires of an already heated national dialogue about the rising cost of higher education. I applaud the President for addressing this issue, and I’m pleased that this event is bringing the conversation to the forefront.  However, I still think there are some fundamental flaws in the plan.

The House approved the Senate’s student loan bill yesterday.  This bill included some significant changes to how interest rates are set on loans made after July 1, 2013.  Here is how it impacts you.

SoFi announces its support for the landmark decision by Congress to tie student loan interest rates to the market.

San Francisco, CA – Aug. 1, 2013 – SoFi (Social Finance, LLC) announced today its support for the landmark decision by Congress to tie student loan interest rates to the market. The legislation will affect current students, but does not impact recent graduates.

“While these changes were needed, they haven’t replaced the need for SoFi for the vast majority of student borrowers,” said SoFi Chief Executive Officer Mike Cagney. “Recent graduates can still benefit by refinancing with SoFi, where they get rates as low as 5.49% (with ACH payments), exclusive access to a valuable community, and the convenience of loan consolidation. Current students who are PLUS loan borrowers can also benefit by choosing SoFi as their lender.”

In light of the changes in the government program, SoFi will introduce new products to increase its borrower footprint and borrower value. “We will continue to expand our community, and work on delivering products that offer compelling value relative to federal and other private loans,” said Cagney.

About SoFi
SoFi is using the power of social to disrupt the $1 trillion student loan industry. SoFi connects students and recent graduates with alumni and other community investors through school-specific student loan funds. Investors earn an attractive return, borrowers receive a lower loan rate than their private and federal options, and both sides benefit from the SoFi community. Founded in 2011, SoFi has funded over $135 million in loans to students and alumni from 100 top universities.

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Investors are often wrong.  Professional, retail – it doesn’t matter, there is never any shortage of folks on the wrong side of a trade.  No market has confounded the professionals more in the past few years than currencies, and no currency has caused more closure of 2/20 funds than the euro.

We had a good jobs report on Friday, adding 195K workers in June with unemployment holding at 7.6%.  And we had some good revisions to previous numbers as well, pushing the three month average to nearly 200K a month.  The bond market sold hard on this news, with a quantitative easing (QE) exit all but certain to start in September and tightening being priced in for late 2014.  While I’m not one to catch a falling knife – e.g., stand in the way of the one-way bond market sell-off, I think tightening doesn’t happen until 2017.