SoFi Private Investment Fund
United States of America
Last updated 13 May 2020, by Impactyield.
Developed countries (203) / More developed regions (202) / More developed regions (North America, Asia & Oceania) (153) / United States of America (112)
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.
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.
of track record
the year funded
Key performance indicators
Asset manager: Social Finance.
Product track record: Fund has 11 years of track record
Target IRR: 13.4%
Committed Capital: 22,000,000 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: United States of America
Product status: Open - post first close
Inception year: 2012
Vintage year: 2013
Target region: Developed countries, More developed regions, More developed regions (North America, Asia & Oceania), United States of America
Target close date: n.a.
Product term: Evergreen
Assets under management: n.a.
Investment size: Min: 10,000; Max: 200,000; Avg: 70,000
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 1
Fund investments to date exited or repaid: 21
Management fee: 1.35%
Carried interest: n.a.
Hurdle rate: n.a.
GIIN Investors' Council Investment: No
Limited Partners / Investors: n.a.
Limited Partner / Investor Type: Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors, Retail Investors
Phone number: 415-697-2047
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Co-Head of Capital Markets
Head of Institutional Relations
Co-Head of Capital Markets
The $1 trillion student loan industry is broken. The government now accounts for 93% of all student lending with a one-size-fits-all loan offering. Students at low default rate schools like your alma mater pay the same 6.8% Direct and 7.9% PLUS interest rates as students at schools with significantly higher default rates. Banks are locked out of the market due to their inability to target specific schools. As a result, many students significantly overpay for loans from a disinterested government lender.
SoFi is using the power of social communities to transform the student loan industry. SoFi will connect students and alumni through dedicated lending funds and an upcoming online social platform. Alumni earn a compelling economic and social return. Students receive a better interest rate than the government offers with comparable loan benefits. Both sides benefit from the online and offline connections formed. Schools access a new, stable funding source that enhances accountability to their students and alumni without cannibalizing giving.
With accordingly interested investors, SoFi is interested in exploring additional affinity funds beyond low-default universities e.g. veterans, women, HBCUs, international students, etc.