Gotta be honest u/hoegermesiter - you lost me at:
> Most people care way less about what their rate is than what their monthly payment is. If SoFi can refinance a loan at a higher rate but a longer term than what borrowers are facing, many will do it anyway.
This is a pretty baseless assumption (unless you have data to prove otherwise) and is one of the most important factors behind SoFi’s potential to pick up these customers after the moratorium lifts.
As stated in your article, SoFi’s customer base is well educated and high earning. Customers with this profile are smart enough to calculate the weighted average interest rate across their fed student loans and compare that to SoFi’s refi rate. If the fed loans (which offer downside risk protection via IDR and forebearance during periods of unemployment and emergencies) are cheaper than Sofi’s rate, it’s clearly a bad financial decision to refi into private loans. I also think it’s fair to assume that these customers aren’t overly burdened by SL payments each month, which (I think) would be the driving factor in moving to a longer term, higher interest loan. For the folks that borrowed from the fed between 2014-2021, I’m guessing that their rates are lower than what Sofi’s refi rate is today, given that rates were lower through those years (as shown in the chart within your article) compared to today’s rates.
As a LT shareholder who’s been averaging down over the last year (~1000 shares @ 6.30), I’m bullish on SoFi, and I think they’re doing a phenomenal job marketing their loan and refi products to prospective customers. I just don’t think we should expect a massive wave of SL originations from refi when the summer ends.
My Initial thought, "I'm not reading all that!". 20 minutes later (I re-read several parts ) my thought "best SOFI article I've read, maybe ever!"
Great job. I especially like the bearish estimates. You weren't afraid to cover it all. I definitely understand the business more than I did 25 minutes ago! Thx
Just curious. The figures you mention for the average borrowers salary. Is that only for student loan borrowers or does this include all the loans on SOFI’s books.
This article is better than 90% of articles in SA that regurgitates the same information over and over and mostly lack data l. Pity they don't seem to allow you to post about SoFi anymore.
One thing I am missing in this article (I scanned quickly so may have missed it) is the competitors for student loan refi. I believe some of them have pulled out so would that mean SoFi has a bigger part of tbe pie in student refi than before since there are less players in this area?
Hoeger - I see that you mentioned that Noto's Nov statement is still valid because federal student loan rates have been the same. Is that the same for private loans ie SoFi student loans?
Yes, my understanding is that all student loans provided by public companies like banks will be priced mostly against long-term treasuries like the 5-year and 10-year treasury.
This web site says that interest rates are different between federal and private loans https://www.nerdwallet.com/article/loans/student-loans/student-loan-interest-rates
Student loan interest rates work differently, depending on whether the loan is federal or private. For federal loans, every borrower taking out the same type of federal loan in a given year has the same interest rate. For private loans, borrowers with higher credit scores generally qualify for lower rates and borrowers with lower credit scores get higher rates.
Yes, it is a great article that does a deep dive on one of the biggest rocket fuel for SoFi. It lifts our spirit and makes us more proud to be a SoFi stockholder. Cheers!
Gotta be honest u/hoegermesiter - you lost me at: > Most people care way less about what their rate is than what their monthly payment is. If SoFi can refinance a loan at a higher rate but a longer term than what borrowers are facing, many will do it anyway. This is a pretty baseless assumption (unless you have data to prove otherwise) and is one of the most important factors behind SoFi’s potential to pick up these customers after the moratorium lifts. As stated in your article, SoFi’s customer base is well educated and high earning. Customers with this profile are smart enough to calculate the weighted average interest rate across their fed student loans and compare that to SoFi’s refi rate. If the fed loans (which offer downside risk protection via IDR and forebearance during periods of unemployment and emergencies) are cheaper than Sofi’s rate, it’s clearly a bad financial decision to refi into private loans. I also think it’s fair to assume that these customers aren’t overly burdened by SL payments each month, which (I think) would be the driving factor in moving to a longer term, higher interest loan. For the folks that borrowed from the fed between 2014-2021, I’m guessing that their rates are lower than what Sofi’s refi rate is today, given that rates were lower through those years (as shown in the chart within your article) compared to today’s rates. As a LT shareholder who’s been averaging down over the last year (~1000 shares @ 6.30), I’m bullish on SoFi, and I think they’re doing a phenomenal job marketing their loan and refi products to prospective customers. I just don’t think we should expect a massive wave of SL originations from refi when the summer ends.
Thanks, Hoeger! Great information as always.
Fantastic article once again! Good call on the plug at the end, hadn't even crossed my mind but I know what I will be doing. :)
we gonna fk rich
My Initial thought, "I'm not reading all that!". 20 minutes later (I re-read several parts ) my thought "best SOFI article I've read, maybe ever!" Great job. I especially like the bearish estimates. You weren't afraid to cover it all. I definitely understand the business more than I did 25 minutes ago! Thx
Glad it was helpful to you. You're right about the length though, brevity has never been my strong suit.
Thanks for this and for your time. Great morning read
$20 EOY When Noto personally hires Hoeger as his personal assistant at 10x his current pay…. But no dillution!
He can use me as a reference!
Just curious. The figures you mention for the average borrowers salary. Is that only for student loan borrowers or does this include all the loans on SOFI’s books.
That's for student loans only, but they also disclose that their personal loan borrowers have salaries above $160k
Well done. Great article!
This article is better than 90% of articles in SA that regurgitates the same information over and over and mostly lack data l. Pity they don't seem to allow you to post about SoFi anymore. One thing I am missing in this article (I scanned quickly so may have missed it) is the competitors for student loan refi. I believe some of them have pulled out so would that mean SoFi has a bigger part of tbe pie in student refi than before since there are less players in this area?
In Hoegermeister we trust!
Hoeger - I see that you mentioned that Noto's Nov statement is still valid because federal student loan rates have been the same. Is that the same for private loans ie SoFi student loans?
Yes, my understanding is that all student loans provided by public companies like banks will be priced mostly against long-term treasuries like the 5-year and 10-year treasury.
This web site says that interest rates are different between federal and private loans https://www.nerdwallet.com/article/loans/student-loans/student-loan-interest-rates Student loan interest rates work differently, depending on whether the loan is federal or private. For federal loans, every borrower taking out the same type of federal loan in a given year has the same interest rate. For private loans, borrowers with higher credit scores generally qualify for lower rates and borrowers with lower credit scores get higher rates.
They are different. I'm saying that SoFi's interest rates move with treasuries. Federal rates are fixed by the department of education and move yearly
Hoe-ger, Hoe-ger!
2024 🚀 🚀 🚀
Awesome write up I always enjoying reading them. Thanks Hoeger
Nicely done sir!
Yes, it is a great article that does a deep dive on one of the biggest rocket fuel for SoFi. It lifts our spirit and makes us more proud to be a SoFi stockholder. Cheers!
40¢ EPS EOFY2024! We’re gonna be so fuk rich
Great analysis
Thanks Hoeger, fantastic article as usual.
Sweet write up! I love it! Makes me proud to be a shareholder!