Benny Joseph is testing one of those fresh out-of-the-box ideas that could cut his $70,000 in graduate school debt and also forge invaluable networking connections with alumni and venture capitalists to help build his own upstart business.

Joseph, 33, who grew up in Sterling Heights, Mich., and now lives in San Francisco, refinanced his student loans last October through a young California company called SoFi.

SoFi, short for Social Finance, offers a social platform that mixes online loans and also career mentoring. Graduates save while making career connections. Well-off alumni have a way to give back to the school's students and also connect to bright talent. The company, with its venture capital backing, books revenue by collecting money management fees and the loan payments plus interest.

Borrowers apply online mostly to refinance to a lower fixed rate, though some original loans are available. The student loan refi model won't work for everyone, though. SoFi notes that the loan rates offered would likely be an attractive alternative only to unsubsidized federal Direct and PLUS loans, as well as some private loans.

Once a borrower applies online to refinance, SoFi approaches the current holder of the loan, pays it off and issues a new SoFi loan. The money for the loans is raised from alumni who have at least $100,000 to invest; as well as from venture capital funds and institutional investors.

Joseph cut his interest rate by 1.51 percentage points - to 5.99 percent from 7.5 percent. He kept his payment at $750 a month but will pay off his debt a year early.

Joseph said the connection to the alumni network has helped him with advice on how to work at building his company, GoodApril, which provides year-round tax guidance.

Most of SoFi's work has involved financing or refinancing MBA loan debt, but the borrower base has been gradually expanding to other degree holders, such as those with medical school debt. So far, the company has mitigated financial risk by working with degree-holders in high-earning disciplines.

The idea is young. But with 1,500 student loan borrowers so far, it's catching on. About $100 million in student loans have been made via the program so far. About 85 percent have involved refinancing student debt.

Mike Cagney, SoFi's co-founder and chief executive officer, said the target for this year is $1 billion.

Arden Grady, SoFi public relations and social media manager, said the company makes money by charging an asset-management fee to its investors. Grady said the company's entrepreneur program gives borrowers an edge by enabling them to connect with alumni digitally. There are also special events in various cities known as "supper clubs" that enable the borrowers to interact with industry leaders, not just the alumni investors.

While the idea is unusual, a few others have similar programs, such as CommonBond and another called Upstart, for example, allows people to raise money to pay off loans in exchange for a small share of income for 10 years. The website notes: "It's an investment in you, not your idea or your business."

Ann Arbor, Mich.-based Marc Weiser, managing director of RPM Ventures, is one of the major investors. RPM is an early stage venture capital fund that invests in social media infrastructure, as well as other ideas. Its portfolio includes ShareThis, BountyJobs and Glyde.

Weiser sees the alumni networking aspect of SoFi as a true advantage.

"You now have a community that's involved," Weiser said. "This doesn't work if you don't build a community around it."

Kevin Crosby, 27, has taken out $69,000 in student loans through SoFi to work on his MBA program at the University of Michigan Ross School of Business.

"I love the company. I love the community," Crosby said. He said the network has helped him learn more about how to approach his internship at in Seattle this summer.

SoFi was started by a team of Stanford Graduate School of Business students in 2011 as a $2 million pilot project, which lent $20,000 to 100 students.

The startup got some publicity in May after SoFi's general counsel spoke at a Consumer Financial Protection Bureau field hearing on college debt in Miami. SoFi was invited after it made recommendations to the CFPB as part of an information-gathering process on college loans.

For the strategy to expand, some investment rules and federal regulations need to change that govern crowdsourced funding. Cagney, the CEO, has hopes that pending federal legislation will change the rules.

Right now, the firm operates under the Securities and Exchange Commission Regulation-D exemption, where general solicitation and advertising are not allowed. Not all alumni can invest. Only accredited investors can pool their money and get some stake in funds.

Nonaccredited investors would be allowed to participate once the crowdfunding section of the Jumpstart Our Business Startups Act is adopted by the SEC. The SEC still needs to create rules before ordinary investors can participate in SoFi and other crowdfunding programs.

"It's really an old-school community finance model," Cagney said.

Susan Tompor is a personal finance columnist. She can be reached at