SoFi Private Investment Fund

SoFi is sponsoring certain private investment funds that will invest in one or more portfolios of student loans to students and alumni of colleges and universities in the United States. Loans in the portfolios have been or will be originated and serviced by SoFi’s wholly owned subsidiary, SoFi Lending Corp., a California corporation formed in January 2012 to originate and service student loans.

By including alumni, SoFi uses social bonds to re-create the norms of community finance. SoFi is participating with alumni and institutional investors to lower loan rates to be more commensurate with risk for student loans. Alumni assist students and graduates, earning a financial return from the loan portfolio and a social return by helping enable affordable education. Both alumni and students benefit from the connections formed.

Each Fund will invest in Loan Portfolios that include loans to students and alumni of one college or university only. For example, one SoFi private fund will invest only in loans to students and alumni of Stanford University. Investment in the Funds will allow alumni Investors to earn a financial and social return and to network with current students and recent graduates of their respective educational institutions. At the same time, borrowers will benefit from a lower interest rate and increased interaction with an alumni community vested in their success.

Financial description

Each Fund will invest in Loan Portfolios that include loans to students and alumni of one college or university only. For example, one SoFi private fund will invest only in loans to students and alumni of Stanford University. Each loan in each Loan Portfolio will be made for the purpose of financing a specific student’s purchase of educational services at a specific educational institution (approx. 15% of portfolio), or for the purpose of refinancing outstanding loans made for such purposes (approx. 85% of portfolio).
SoFi’s loan portfolio has an average coupon of 6.1 percent. The funds can use a modest amount of leverage, or as much as 50 percent of their assets under management. The student loans have maturities ranging from 5 to 15 years. SoFi currently lends only to students and graduates of schools where 3-year cohort default rates do not exceed 1.5%. Default rates vary based on target SoFi school, ranging from 0.2% to 1.5%
Early investors in the SoFi Private Investment Funds will have the ability to allocate a portion of their investment to SoFi Series C preferred stock.