by Zoë Pollock
The company [SoFi] is creating university-specific funds for alumni to invest in, and those are used to make loans to students. SoFi says it’s offering to cover the full cost of attendance for participants, with loans ranging from $5,000 to $200,000. The loans are 6.24 percent fixed rate, and they can drop to 5.99 percent, lower than federal Stafford and PLUS loans and many private loans. So students get relatively low interest rates, while alumni get a significant financial return.
Walter Russell Mead is optimistic:
SoFi doesn’t just connect students with alumni money; it also allows alumni to play an active role in mentoring the students they support. Students get guidance to go along with their loan, and the alumni get a chance to help the next generation, as well as play an active role in making sure students are equipped to pay the loans back after they graduate. … [B]y giving students access to experienced mentors it can help students avoid some of the worst pitfalls of the present system.