SoFi Blog

I got a request to write something about the recent fall in gold prices.  Gold had rallied the last decade through a combination of “it’s the end of the world” buyers and concerns about inflation.  These concerns are now getting replaced with expectations for high real rates driven by growth and a Fed exit, and from expectations of low inflation.  Consequently, gold has suffered.  Oil – another hedge fund commodity favorite – has held on to its gains, showing support for some industrial commodities (and supporting a growth thesis – sort of).

There is a lot of debate going on these days about overhauling student loans.  Here’s a high-level summary of our view:

Much has been written about the new income based repayment (IBR) rules the President recently signed into law. Notably, maximum payments on qualifying federal loans are now capped at 10% of disposable income rather than 15% before, and after 20-years, any remaining balances are forgiven, versus 25-years before.

Student loans aren’t fun, and they can be confusing. What frustrates us at SoFi is the dogma in the market that students should always exhaust their federal loan options before considering private loans. This can be very bad advice. While we agree that subsidized Direct and Perkins loans are clear no-brainers for students if you are eligible for them, things get more ambiguous with unsubsidized Direct loans and become down right murky with the egregiously burdensome Grad PLUS loan.

The more you learn about the student loan market, the more you realize how broken the system really is. There are horror stories about companies suing parents whose children have died before repaying their student loans. Others tell tales of loan companies being totally inflexible and demanding full payment even when a borrower has hit a temporary rough patch.