In 2017, 35 percent of parents said they were worried about not being able to pay for their children’s college educations, according to a Gallup poll. Parental fears about covering costs have persisted for decades. In fact, since 2001, Gallup polls have consistently shown that paying for the costs of a child’s college education is a top worry across all income levels.
If your child is nearing college age and you’re exploring your options for how to help your son or daughter pay for school, SoFi student loans for parents are worth considering. SoFi is a private student loan lender that offers loans to parents that might be more affordable than Parent PLUS loans under certain circumstances.
Read on to find out about whether a SoFi student loan for parents might be a good choice for you and learn the five key steps you need to take if you want to use SoFi parent loans to help cover the cost of your child’s education.
1. Determine if SoFi student loans for parents are the right choice
The first step for parents is determining if SoFi loans are the best choice for covering the costs of a child’s college education. SoFi Parent Loans should be compared with Parent PLUS loans from the Department of Education, as well as with other parent loans offered by different private lenders.
To find out if SoFi loans could indeed save you money over PLUS Loans, or could save you money in comparison with other private loans, you should compare:
- Interest rates
- Loan terms
- Origination costs
The table below shows different interest rates for SoFi versus Parent PLUS loans, with rates current as of January 2018.
|SoFi Parent Loan||Parent PLUS Loan|
|Fixed-Rate APR||4.350% APR||7.00% APR|
|Variable-Rate APR||4.020% APR with autopay||Not available|
The Parent PLUS loans offered by the Department of Education also have a 4.276% origination fee, while SoFi student loans do not charge an origination fee.
The quality of the application process and loan servicing process is something to consider as well when comparing SoFi student loans with other alternatives. Parents who’ve borrowed from SoFi have had mixed experiences with the process.
One reviewer from November of 2017 indicated the following in a review left on Credit Karma: “It was very easy to apply for a loan through SoFi,” and stated that “we received a great interest rate, so very satisfied with the loan and the process.” However, others have experienced difficulty with the loan application process, or with getting a loan approved.
“I was refinancing and consolidating student loans of our daughter’s and get 22 days into the project and were told they cannot do that type of loan,” said one reviewer on Consumer Affairs.
Another complained, “They only ask you for a little bit of information when you first apply. Then, after they made a hard inquiry on your account, they start asking for more.” The reviewer also expressed frustration at facing requests for one document at a time, rather than finding out up front all the documents that would be needed. “It is the worst loan application process I have ever experienced,” said the reviewer.
2. Determine how much to borrow
If you’ve decided to apply for a SoFi student loan, you should determine the total amount you want to borrow. The minimum amount you can borrow is $5,000, and you can borrow up to the total cost of attendance for your child’s school.
Typically, parents should take out private loans only after their child has exhausted options for federal student loans. Federal student loans available to your son or daughter have a number of benefits private student loans from SoFi don’t have including:
- Income driven-repayment plans
- Subsidized interest on some loans so interest does not begin accruing until after graduation
- Deferment and forbearance options in case of financial hardship
- Loan forgiveness options for working in eligible public service jobs
If your child cannot obtain any more federal loans, and you’ve exhausted other options like scholarships, grants, and work-study programs, you might decide to borrow the difference between financial aid your child has received and the costs of attendance.
However, you should be very careful not to compromise your retirement security. Although you want to help your child pay for school, borrowing so much money that you cannot fund your retirement could create a dire financial situation for you.
You should also look into other options, such as having your children take out student loans in their name, to ensure that borrowing through a parent loan is your best course of action.
3. Determine whether to apply for a fixed or a variable rate loan
When you use SoFi parent loans to pay for your child’s education, you’ll need to choose between a fixed or a variable rate loan.
- Fixed rates typically have higher initial rates than a variable-rate loan, but fixed rates don’t change over the course of the loan. As of January 2018, the starting rate for a fixed-rate Parent Loan through SoFi is 4.250% APR with autopay.
- Variable-rate loans might have a lower initial rate, but your rate can adjust upward or downward during the loan term. As of January 2018, SoFi parent loan rates for a five-year, variable-rate loan start at 4.020% APR with autopay.
4. Apply for a loan
Once you know what kind of loan you want and how much you hope to borrow, it’s time to go through the application process. You’ll do this by visiting the SoFi Parent Loan page, scrolling down through the loan information, and clicking Get Started.
You’ll be taken to a form to complete to begin the application process. You must input:
- Your name
- Your state of residence
- Your email
- A secure password you create
Once you’ve signed in, you’ll need to select the loan you are applying for. Choose the box for Parent (In School) Loan if you’re applying for a loan while your child is in school, or select Parent Plus Refi if you want to refinance PLUS Loans you’ve already taken out.
You’ll need to complete a detailed application including:
- Your mailing address
- Your phone number
- Your date of birth
- Your citizenship status
- Whether you own or rent a home
- Information about where you went to school and your graduation date
- Employment information
- Total individual annual income
- Years of work experience
- Information about the student whose education you’ll be paying for
- Your child’s expected graduation date
- The university your child will be attending
SoFi provides information about your rate, which doesn’t require a hard credit pull and won’t impact your credit score. You also won’t pay any loan application fees to initiate this process.
You’ll receive details about your rate and eligibility immediately upon submitting your application in most circumstances unless you need to provide additional documentation. SoFi considers your credit score, income, and the amount you wish to borrow in deciding if you’re eligible for a loan and in setting your loan rates.
If you wish to continue with the application process after seeing your rates, you’ll need to move forward with uploading documents to provide proof of income. Once approved, your loan will be disbursed directly to the school your child is attending within seven to 10 days after you’ve signed for the loan.
5. Begin repayment
SoFi student loans for parents do not have a grace period. You’ll need to begin repayment within 30 to 45 days after the loan is disbursed.
This is an important consideration when deciding if SoFi parent loans can help pay for your child’s education. However, most private loans for parents do require immediate repayment, so you’ll need to be prepared to begin making payments monthly if you’re going to take out loans to help fund your child’s schooling.
If you can repay your SoFi parent loan early, you can reduce the total amount of interest paid, so making extra payments is often worthwhile if there is room in your budget. By repaying loans as aggressively as possible, you can keep the costs of using a SoFi student loan for parents down overall.
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|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.24% – 13.24%1||Undergraduate and Graduate|
|4.07% – 11.32%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 11.35%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|6.08% – 7.22%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|