NEW YORK (MainStreet) -- Millennials looking to have their student loans paid off are vying for support on social media as part of a contest from SoFi, a San Francisco-based marketplace lender and student loan refinancer. For those burdened by the student loan crisis -- with Americans owing $1.2 trillion in total -- Twitter and Facebook campaigns to garner votes in the contest may be just the antidote to secure financial liberation.
This contest began two months ago with over 24,000 candidates who had refinanced their student loans through SoFi. On SoFi's contest web page, participants uploaded a photo and a short bio with special SoFi details on how refinancing their loans has impacted their lives and how getting the rest paid off through the contest would benefit them further. The SoFi staff then choose 20 finalists based on how compelling their personal narratives were.
"We chose people who we thought were deserving and had achieved something or were on the road to achieving something great," said Daniel Macklin, co-founder and vice president of business development at SoFi. "As we lent out more money and interacted with more customers, we noticed the great stories they have to share and we wanted to reflect that."
Since its start in 2011, SoFi has surpassed $2 billion in loans. The company is using its alternative lending platform to eliminate student debt en masse, promoting its efforts through the contest's Twitter hashtag #2billiontogether. Bringing the true personal details to the debt figures and statistics was the foundation for this contest initiative, the company said.
"Since we hit $2 billion, we wanted to do something to involve members," Macklin said. "These are real stories from real members."
Voting to pick a winner among the finalists began this Tuesday and is now left up to the public to decide. One member will have his SoFi refinanced student loan paid off for this fiscal quarter.
28-year-old contest participant Erin Costello, a Brooklyn resident who work as a vice president and project manager at JPMorgan Chase, had a total of $170,000 in student loan debt after finishing her schooling.
"Unfortunately I graduated right after the market crash in 2009," she said. "Given the lack of job opportunities and the desire for advanced degrees, I immediately went on to my master's."
By the time Costello graduated in 2011 with her master's in global affairs, she had two sets of loans. For her undergraduate degree from Virginia Commonwealth University, the private loan lender Maine Educational Loan Authority gave her an 8.5% interest rate on a $49,000 loan. In theory, the loan had a flexible interest rate between 6% and 8.5%; however, the interest rate consistently stayed between 8.36% and 8.43% for the three plus years Costello was in repayment. Deferring this loan through graduate school burdened her further with about $15,000 to $20,000 in interest payments. When she entered repayment the total loan was approximately $65,000.
It got worse. For her graduate degree from New York University, federal loans ran her 7.9% interest rate, she said, amounting to about $122,000 in debt. Because of the high interest rate on this loan, the balance has remained the same while Costello has continued to pay $800 or more each month for four years.