Student loan refinancing has become a booming business in the last decade, given that millions of borrowers collectively owe more than $1 trillion in education debt. Refinancing presents a viable option for borrowers seeking a lower aggregate interest rate on their loans, a more affordable monthly payment, or different benefits not available through private or government lenders and servicers.
Here’s a SoFi vs. Laurel Road student loan refinancing comparison of the cost of refinancing, repayment plans, borrower qualifications, and unique benefits passed down to borrowers.
At a Glance: SoFi vs. Laurel Road (DRB) Student Loan Refinancing
|Fixed APR||3.89% – 8.07%||3.50% – 7.02%|
|Variable APR||2.49% – 7.11%||3.23% – 6.65%|
|Loan Terms||5, 7, 10, 15, 20||5, 7, 10, 15, 20|
|Loan Amounts||$5,000 up to your total outstanding loan balance||$5,000 up to your total outstanding loan balance|
Costs of Refinancing: Interest Rates and Loan Fees
Most student loan borrowers with either public or private student loan debt are drawn to refinancing through a private lender because of the potential for a reduced interest rate. SoFi offers both variable and fixed interest rates for refinanced student loans, with variable rates ranging from 2.47% to 6.99% and fixed rates ranging from 3.90% to 7.98%.
The lowest possible interest rate for both variable and fixed loans include an automatic payment discount of 0.25 percent. Laurel Road offers fixed and variable interest rates as well, starting as low as 2.80% and up to 5.90%for a variable rate, and fixed rates from 3.37% up to 7.02%. Laurel Road’s interest rates are lowest for its 5-year repayment plan, and a 0.25 percent automatic payment discount is assumed.
In addition to considering the interest rate as part of the total cost of refinancing, student borrowers must also take into account fees for funding and servicing the new loan. SoFi does not charge an application fee, an origination fee, or prepayment penalties for refinanced student loans. Laurel Road does not assess additional charges for the application, origination of the loan, or prepayment should a borrower pay off a loan balance before the end of the term.
Loan Amounts and Repayment Plans
SoFi requires borrowers to take out a minimum loan amount of $5,000, but the maximum loan amount offered is subject to the full balance of a borrower’s qualified student loans. Laurel Road also imposes a minimum loan amount of $5,000 and a maximum not to exceed $300,000 for a single refinanced loan. Both SoFi and Laurel Road offer a variety of repayment plans for qualified borrowers, based on loan amount and monthly payment preferences. For SoFi borrowers, loans may be repaid over a term of 5, 7, 10, 15 or 20 years, and Laurel Road borrowers can select repayment terms of 5, 7, 10, 15, or 20 years.
Both SoFi and Laurel Road require that all borrowers listed on a private student loan refinance application be U.S. residents or permanent residents, and at least 18 years old. SoFi has a more selective underwriting process for evaluating a borrower’s creditworthiness which includes a review of credit score and history, debt-to-income ratio, monthly cash flow, career choice, and past or current education.
Qualified borrowers must have proven income or an offer letter to begin employment with 90 days of the application. Laurel Road borrowers are evaluated based on their employment, the size of their employer, debt-to-income ratio, the amount of disposable income, and credit history. Currently, SoFi and Laurel Road offer student loan refinancing in all 50 states and the District of Columbia.
SoFi and Laurel Road differ slightly in the added benefits offered to student loan borrowers. SoFi provides a member rate discount which is equal to a 0.125 percent interest rate discount for borrowers who have an additional line of business with the lender, such as a personal loan.
Additionally, SoFi borrowers have access to no-cost unemployment protection which pauses student loan payments temporarily if a borrower loses his or her job. The lender also offers career support through a network of coaches who focus on assisting borrowers to advance their careers, build a personal brand, negotiate salaries, and search for a new job. SoFi provides no-cost access to wealth advisors through its online platform to help borrowers learn about personal financial management and investments.
Laurel Road provides unemployment assistance in the form of a short-term forbearance should borrowers become unemployed or face other economic hardships. Although Laurel Road does not offer the same direct access to wealth advisors and career coaches as SoFi, the private lender does make available a variety of online resources for borrowers at no added cost. Both SoFi and Laurel Road also provide a 0.25 percent interest rate discount for borrowers who elect to establish automatic repayment for refinancing student loans.
Author: Jeff Gitlen
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