MBA students can no longer turn to SoFi for loans, but still have options(Read article summary)
The San Francisco company Social Finance will cease to offer loans for a Master of Business Administration degree, but the company states it will continue to offer refinancing for student loans along with their mortgage and personal loan services.
Marcio Jose Sanchez/AP/File
After the 2016-17 school year, SoFi will stop offering private loans for students pursuing a Master of Business Administration degree.
Social Finance, as the San Francisco company is officially called, will stop accepting applications for its MBA loans on July 15. The loans were available to students at 25 top MBA programs, including at Harvard, Stanford, University of Chicago and the University of Pennsylvania.
“We’re refocusing our lending efforts on student loan refinancing, mortgages and personal loans,” SoFi spokeswoman Laurel Toney says. The lender will continue to offer private student loans to parents who want to help their children in undergraduate programs.
Founded in 2011, SoFi was the first company to offer student loan refinancing for federal and private loans. It has lent more than $10 billion, including mortgages, personal loans and refinanced student loans.
This isn’t the first time SoFi has ceased its MBA loan business. The company previously stopped lending to MBA students in 2013, citing then-low interest rates on federal student loans of 5.41% for direct unsubsidized loans and 6.41% for direct PLUS loans, plus origination fees.
“The combination of lower loan rates and guaranteed government protections made it hard for us to justify choosing a SoFi loan while in school,” said a 2014 company statement about restarting the loans.
SoFi resumed lending to MBA students in July 2014 when federal rates rose to 6.21% for direct unsubsidized loans and 7.21% for PLUS loans, plus origination fees.
Currently, interest on the company’s MBA loans start at 4.83% annual percentage rate for variable-rate loans and 6.50% for fixed, with no origination fee.
Options for MBA students
MBA students still have many options when it comes to borrowing for tuition and living expenses: federal and private student loans.
FEDERAL STUDENT LOANS
Graduate students — including those pursuing MBA degrees — can borrow up to $20,500 a year through the government’s unsubsidized direct loan program. Those loans currently have a 5.31% fixed interest rate for the 2016-17 school year, plus a 1.07% origination fee. You can also take out a federal PLUS loan to cover the remaining balance; those loans have a 6.31% interest rate for the 2016-17 year, plus a 4.27% or 4.28% origination fee, depending on when the loan is disbursed.
PRIVATE STUDENT LOANS
Private student loans are another option. If you have good credit, you may be able to get a lower interest rate from a private lender than from the federal government. However, private loans don’t have the same borrower protections that federal loans do, such as access to income-driven repayment plans and forgiveness programs.
This article first appeared at NerdWallet.