Is it worth it to refinance a SOFI student loan? Pros, cons, and instructions

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Stanley tate

Student Loan Lawyer

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Let’s get down to it: It is worth it to refinance your student loans into a SoFi refinance loan if you can get a great interest rate and if you wouldn’t lose valuable federal loan benefits like income-driven repayment.

SoFi Refinancing Rating: ★★★★★

Bottom line: SoFi is a legitimate private student loan lender who specializes in refinance loans. SoFi offers flexibility, no hidden fees, unemployment protection, financial planning, and even live events to help students navigate student loan debt.

On the other hand, you may want to refinance your SoFi loan into another refinance loan. If you can find a better interest rate without any unfair fine print, go for it. You may even be able to refinance your SoFi loan for a better rate as your credit score improves.

Disclaimer: Although I am a student loan lawyer, this article contains general information and should not be taken as legal advice. If you want individualized legal advice, you should schedule a free consultation with me. In this post, I recommend some services using affiliate links for services I’ve seen work during my many years as a student loan lawyer.

What is student loan refinancing?

Student loan refinancing is when you take out a new private student loan to pay off your old student loans (federal and/or private). The goal is lowering your interest rate or condensing multiple loan payments into one monthly payment.

You can refinance your student loan with a fixed or variable rate loan.

I do not recommend refinancing federal student loans into a private refinance student loan because you lose the benefits that come with a federal student loan.

These can include missing out on income-driven repayment plans, loan forgiveness programs, and more forgiving deferment or forbearance periods.

However, I typically recommend refinancing private student loans into a refinance loan if you can find a great interest rate. Also, if multiple private student loan payments are driving you nuts, refinancing gives you one single monthly payment to deal with.

Direct Consolidation loans are only for federal student loans. You cannot consolidate private student loans. Refinancing is the next best thing because you can “consolidate” multiple private loans into a single refinance loan, and you might find a better interest rate!

What is the difference between a SoFi student loan and a private student loan? The difference between SoFi student loans and private student loans is that SoFi is one of many private student loan lenders, and SoFi’s refinance loans are just one of many types of private student loans.

Reasons to refinance a student loan

The main reason to refinance a student loan is to combine multiple federal and/or private student loans into one loan with a lower rate of interest. This saves the borrower money in the long run because you’re not paying as much total interest.

Let’s break it down into 2 categories: federal and private loans.

Refinancing federal loans

I do not recommend refinancing federal student loans. All refinance loans are private, even if they paid off old federal student loans.

If you refinance federal loans, they turn into private loans, and you lose the benefits that come with federal loans, such as:

  • Income-driven repayment plans (such as IBR, PAYE, or REPAYE) with a maximum payment period of 20-25 years
  • Loan forgiveness programs, such as PSLF
  • Emergency acts of the federal government, such as the 22-month no-interest forbearance period during the coronavirus pandemic

Important: SoFi is offering a limited-time offer to refinance federal student loans into a private refinance loan, but you can keep your federal benefits.

Refinancing private loans

If you can find a better interest rate on a refinance student loan, I think it’s usually a good idea to combine private loans into a refinance loan.

There are a couple of disadvantages to refinancing private loans:

  • Refinancing will negatively impact your credit score. Here’s why: Refinancing lowers the average age of your lines of credit, and a hard credit check also lowers your credit score. This can take up to
  • Refinancing takes time and effort, and your time is valuable. It’s not difficult, but it does take hours of preparation and communication.

SoFi refinancing at a glance

SoFi offers 5 different student refinance loan products for different types of loan holders. The categories are typical students, Parent PLUS loan holders, medical residents, medical professionals, and law or MBA students.

Here’s how each rate of refinancing stacks up:

  • Normal Student Loan Refinance Loans: 2.49%-6.94% Fixed APR w/autopay | 2.25%-6.59% Variable APR w/autopay
  • Medical Resident Refinance Loans: 2.62%-6.69% Fixed APR w/autopay | 2.25%-6.59% Variable APR w/autopay
  • Medical Professional Refinance Loans: 2.49%-6.94% Fixed APR w/autopay | 2.25%-6.59% Variable APR w/autopay
  • Parent PLUS Refinance Loans: 2.49%-6.94% Fixed APR w/autopay | 2.25%-6.59% Variable APR w/autopay
  • Law & MBA Refinance Loans: 2.49%-6.94% Fixed APR w/autopay | 2.25%-6.59% Variable APR w/autopay

Note that all of these variable and fixed interest rates are only applicable if you enroll in autopay. (An autopay discount is standard for most student loan programs.)

Credit check: You’ll need a credit score of at least 650 to get approved for a SoFi refinance loan. To check your anticipated interest rate, SoFi can run a soft check that won’t affect your credit score.

To get officially approved, SoFi will need to run a hard credit check, which will slightly impact your credit.

Perks for all SoFi refinance loans include:

  • SoFi does not charge origination fees, application fees, or insufficient fund fees. There are no prepayment penalties if you want to pay the loan off early.
  • SoFi is flexible with loan repayment terms (how long it takes to pay off your loan). One repayment option is a shorter loan term which saves you money in the long run. A longer repayment term means you pay a lower monthly payment. Choose from loan terms of 5, 7, 10, or 15 years.
  • SoFi member benefits include unemployment protection, financial planning, and live events — most of which other refinance lenders don’t offer.

FAQs on SoFi refinancing for student loans

The answers to all of your burning questions, right here.

  • How much does SoFi charge for a refinance? SoFi does not charge anything for refinance loans. There are no origination fees, application fees, or insufficient fund fees. However, if you’re 15 days late on a payment, there does seem to be a $5 late fee.
  • What is the interest rate on a SoFi student loan? The interest rate on a typical refinance student loan is 2.49%-6.94% fixed interest rate or 2.25%-6.59% variable interest rate. These rates may go up a little if you’re paying off med school debts.
  • What is the maximum amount of money I can borrow? The maximum amount of money you can borrow on a SoFi loan is however much your student loans are for. Sky’s the limit. The minimum refinance loan amount is $5,000.
  • How long does SoFi take to approve a refinance? It typically takes less than a month for SoFi to approve a refinance loan. It only takes minutes to find out if you’re pre-approved. Continue making payments on your original student loans during the application process.

Pros of a SoFi student loan refinance

  • SoFi can refinance loans up to the full cost of your student loans. The only maximum limit is however high your student loans go.
  • SoFi offers “membership benefits,” such as unemployment protection, financial planning, no-fee investing, deferment options, and career coaching.
  • SoFi has a history of letting student loan borrowers keep some federal benefits, such as coronavirus forbearance.
  • A student can refinance their parent’s PLUS loan in their own name.
  • Like most student loans, you can get an interest rate discount if you enroll in autopay.
  • From my understanding, SoFi’s customer support team is responsive and helpful.
  • If you default on a private refinance loan, settling the SoFi debt is easier than settling federal debt. In my experience, you can expect to settle private student loan debt for 60%-80% of the total loan amount.
  • Finding out if you’re pre-approved takes a few minutes and only requires a soft credit pull. Go to sofi.com/signup, create an account, and “view your rate in 2 minutes.”

Cons of a SoFi student loan refinance

Here’s what not to love when it comes to refinancing your student loans with SoFi:

  • You have to have earned a degree (associate’s or higher) to take out a SoFi loan.
  • You lose access to income-driven repayment plans available for federal student loans.
  • You lose eligibility for loan forgiveness programs or loan cancellation.
  • SoFi benefits may not be available in all 50 states.
  • You cannot get a cosigner release from a SoFi refinance loan without refinancing again.
  • You have to have at least a 650 credit score to qualify, but most borrowers have 700+.

Who is eligible to refinance with SoFi?

You are eligible to refinance with SoFi if you graduated with a degree (associate’s or higher), have at least a 650 credit score, and are a qualifying U.S. citizen or resident.

SoFi refinance loans can refinance any combination of federal and private student loans. SoFi can refinance one private loan, one federal loan, multiple of either, or any combination.

In 2012, SoFi was the first refinance loan lender to offer federal student loan refinancing. That tradition still continues today. (However, I do not recommend refinancing federal student loans in most cases.)

If you are a non-permanent resident of the U.S., DACA recipient, or without a qualifying visa, you need a qualifying cosigner to be eligible for a SoFi refinance loan.

Refinancing a student loan from SoFi

If you have a SoFi refinance loan, you can refinance that SoFi loan into another refinance loan — perhaps if you’re able to find a lower interest rate loan.

Underwriting the old refinance loan into a new refinance loan will impact your credit score in two ways, neither of which are that bad:

  1. The new refinance loan will likely run a hard credit check, which lowers your credit score.
  2. Replacing any old loan with a new loan reduces the average age of your lines of credit, which lowers your credit score.

Can I refi my SoFi student loan? Yes, you can refinance most student loans into a private refinance loan, even if the loan is already with SoFi.

What are the benefits of refinancing my SoFi student loan? The main benefit of refinancing your SoFi student loan is that you might find a better interest rate than your SoFi loan, saving you money in the long run. You may also find a refinance loan that offers benefits that SoFi does not offer.

Check out this article on whether you can consolidate your federal student loans twice.

The bottom line on SoFi loan refinancing

Consider refinancing with SoFi, especially if you’re just trying to find the lowest rate. They’re one of the best options for refinancing you can find. They offer lots of benefits and flexibility.

That’s why I give the SoFi student loan refinance deals 4.5/5 stars.

My takeaways:

  • Don’t refinance at all if you have federal student loans and rely on income-driven repayment or loan forgiveness programs.
  • SoFi Lending Corp. is one of the best refinance options available. It’s hard to go wrong when refinancing private student loans into a SoFi refinance loan.
  • SoFi offers many perks, like unemployment protection, financial planning, live events, and the option to have a cosigner on your refinance loan.
  • According to NerdWallet, the average income of SoFi borrowers is $100,000+. This is higher than even I expected. That financial status is not required, so don’t let the average borrower income scare you out of applying.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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