SoFi has extended its Parent Loans product. These loans are marketed to be an affordable alternative to both private and Federal Parent PLUS Loans that are for parents who are looking to finance their children’s college education.
The SoFi Parent Loan was piloted at Stanford University last year and following that success is now available in 49 states and the District of Columbia.
Student loan debt in America has passed the $1.2 trillion mark and parent borrowing for college makes up almost 13% of that outstanding debt. The other options available to parents include Federal Parent PLUS loans that currently require a 4.3% origination fee and a 7.21% interest rate. However, SoFi’s Parent Loans have no fees and start at 4.50% and 2.93% for fixed and variable rates, respectively.
The loans start at $10,000 and are capped at the cost of attendance and there is a range of available terms.
Mike Cagney, CEO of SoFi, commented:
"The cost to attend college has skyrocketed to about $50,000 year or more and that's just for one child. As the lowest cost marketplace lender, we're providing serious savings to parent borrowers. And by doing so, we're hoping to relieve parents from the burden of Federal debt and help solve one of the biggest financial burdens facing families today."
SoFi is also offering parents the ability to refinance their existing Parent PLUS Loans. Currently more than 3 million Parent PLUS borrowers owe nearly $62 billion, or about $20,000 per borrower. SoFi offers refinancing on Parent PLUS Loans with variable rates ranging from 1.90% to 5.17% and fixed rates from3.50% to 7.24%, with Autopay. Also, when refinancing parents have the chance to transition their existing Parent PLUS loans to their children, alleviating some of that repayment burden.
This new product is a continuation of SoFi’s expansion. In February SoFi moved into consumer loans, these allow consumers to borrow between $10,000 and $100,000 at fixed interest rates starting at 5.5% APR. And in March the platform launched a mobile mortgage experience. This expansion is set against the background of whispers of a SoFi IPO this year but we are yet to have any confirmation of this.