Return on Education (ROEd) Methodology:

The data was gathered from more than 200,000 applicants for SoFi student loan refinancing between January, 2014 and July, 2015.

Individuals were divided into degree category cohorts that reflected whether they have 1) an undergraduate degree or 2) some combination of undergrad and graduate degree. Degrees are self-reported and only verified at the underwriting stage if a loan is approved.

To calculate Return on Education (ROEd), SoFi estimated lifetime income based on two components:

  • Cumulative Earnings at time of application – For any given applicant, this is the median salary for the applicant’s undergraduate degree category, accumulated between age 22 and the applicant’s current age, and assuming a growth rate that gets the applicant to their current salary. For those with graduate degrees SoFi assumed $0 in income was earned during years spent in grad school. The length of this earnings absence varies depending on the graduate degree: for example, in SoFi’s estimate, doctors forgo earnings for a longer period of time vs. MBAs.
  • Cumulative Earnings until retirement – This is the total sum of earnings between the applicant’s current age and age 68, assuming today’s salary grows at 2.5% each year until age 55 and then levels off.

Loan Cost:

Following calculation of lifetime income, the cost of graduate school was subtracted, as measured by an applicant’s student loans. Knowing the loan balance for which a refinancing was sought, SoFi assumed these existing loans to be 15 years in term with 7% annual interest.

While loans may not reflect the full cost of a graduate degree, it is a good proxy for the cost to the student. Graduate students usually receive grants, assistantships, fellowships, and other forms of aid, such as assistance from relatives. Absent reliable data on these sources, the amount the student borrowed is a good measure of the portion of the cost that the student is actually bearing.

Net Lifetime Income:

This is the Lifetime Income less the Loan Cost.


ROEd is the percentage increase (or decrease) of net lifetime income. SoFi calculated ROEd by comparing the net lifetime income of applicants with no graduate degree (but a certain undergraduate degree) to those with the same undergraduate degree that have also gone on to obtain a graduate degree.

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