“The $1 trillion US student loan market is broken. SoFi was founded to offer an innovative approach to addressing this problem using the power of social communities to transform the industry. SoFi connects students and alumni through a dedicated lending pool and an original social community approach where students, alumni and schools all benefit. Alumni earn a compelling double bottom line return, students receive a lower loan rate than their private or federal options, and both sides benefit from the connections formed.”

Curious about how the program functions, what it offers, and the results it has seen these past two years? Keep reading.

Who are SoFi’s founders, how did the idea come about and when did Sofi get up and running?

SoFi was founded by a team of Stanford Graduate School of Business (GSB) students including Mike Cagney, Dan Macklin, Jim Finnigan, and Ian Brady. Wanting to disrupt traditional financial services, the team came together to tackle a problem their classmates, themselves, and many others around the country are facing – student debt. SoFi was founded to offer an innovative approach to addressing this problem using the power of social communities to transform the industry.

SoFi’s inaugural loan program was a $2MM pilot at the GSB in the Fall of 2011. Since then, SoFi has funded nearly $150 million in loans to students and alumni from 100 top universities. SoFi is located in the Presidio in San Francisco, and is backed by a group of leading angel and institutional investors, including Baseline Ventures and Joe Chen, CEO of Renren.

How does SoFi function and who makes that happen?

SoFi connects in-debt students and recent graduates with alumni and other community investors through school-specific student loan funds.

Similar to peer-to-peer lending, SoFi’s model is “group-to-group lending” – SoFi manages the investments of accredited individuals and augments this capital with institutional funding. Investments go into school-specific loan funds, and that money is then lent out to current students & recent graduates at favorable rates.

What does SoFi offer and how does it differ from its competitors?

SoFi is one of the only lenders focused on refinancing student loans of graduates from the 100 schools in our company footprint. Grads can consolidate their federal and private loans in one simple monthly payment at rates as low as 5.49% with autopay over a 5-year loan term. Our average borrower refinances $85,000 of debt at a current blended rate of 7.2%. Assuming they move into a 10-year refinancing loan fixed at 6.125% they save $5,520 in interest over the life of their loan, and reduce annual payments by $552. These savings are typical across an average borrower.

But the benefits of refinancing with SoFi go beyond savings – we work with our borrowers to help them achieve their goals beyond simply paying off their debt.

Tell us about the additional benefits that members gain access to?

We provide access to exclusive educational and networking events for SoFi borrowers around the country. Students and graduates seeking career advice, expanded networks beyond their own alumni, and face-to-face access to industry leaders find these events particularly valuable. In recent weeks, we have “sold out” our SoFi Supper Clubs, small dinners of 8-10 borrowers, featuring high-profile CEOs, private equity executives, venture capitalists, and a Hollywood producer – many of whom are business school graduates themselves.

Whether a borrower is embarking on a new career, looking to switch industries, or working toward the next level in a chosen profession, SoFi Career Services can help. If a borrower becomes unemployed while in repayment, we will help them find their next job. We have already assisted a handful of existing borrowers find new employment, and recently hired a full-time recruiter to facilitate job matching across the SoFi community.

The SoFi Entrepreneur Program provides impressive benefits to borrowers pursuing new business ideas. Qualified entrepreneurs receive up to six months of loan forbearance to alleviate immediate cash flow needs, introductions to qualified investors, mentorship, and other benefits. A standout entrepreneur from last year’s batch, Benny Joseph, built out his company GoodApril while participating in the program. GoodApril was sold to Intuit two weeks ago, mere months after completes his tenure as a SoFi Entrepreneur.

Who can apply to SoFi’s program? When are applications due?

Graduates from one of SoFi’s 100 schools are eligible to apply (listed here: https://www.sofi.com/eligible-schools/) There is no deadline for applying to refinance your loans with SoFi; you can do so year-round. It’s a quick process that all takes place online.

What results has SoFi seen so far?

SoFi was founded on the belief that adding a social contract to traditional financial products would improve performance, repayment, etc. Starting with alumni-funded students loans, we wanted to test the hypothesis that individuals would not default within their own community. So far, we have seen very positive results from this model– we’ve had one borrower who was 30 days delinquent on his payment, but we got him back on track before the 60 day mark. As for defaults, we’re still holding strong at zero. Compare this to the federal student loan 3-year cohort default rate of 13%.

Does SoFi have an ultimate goal in mind?

The ultimate goal for SoFi goes beyond student loans. Our founders are aiming to build community around a wide range of traditional financial products – from home equity lines, to credit card consolidation, to asset allocation.

Any additional information that we can include for entrepreneurs?

From a recent blog post – 3 Key Insights from Mike Cagney:

“It’s no secret that Mike and his fellow co-founders started SoFi as a way to address the broken $1 trillion student loan market. As Mike puts it, “SoFi borrowers benefit not only from a potentially lower interest rate on their own loans, but also from the advantages of being part of the SoFi Community – a network that offers events, programs and mentoring opportunities that can help them have a successful career and life.”

This focus on Community underscores every business decision that Mike and the other senior leaders at SoFi make on a daily basis and, from Mike’s perspective, this adherence to the company’s founding values is one of the reasons SoFi has been so successful. “My advice to aspiring entrepreneurs is always to get really clear on your mission and values, then don’t stray. It sounds obvious, but I’m surprised how often I see businesses fail because they don’t follow this rule.”

This post was created by Raine Dalton, WIM’s editorial and community innovation intern. Raine is passionate about finding creative ways to empower women globally through tech. In addition to WIM, Raine has written, tweeted, and posted for the Global Banking Alliance for Women, WITNESS, and 90.7 WFUV News. You can find her work at www.rainedalton.com or get in touch with her through Twitter @rainedalton, or by emailing raine@wim.co.