private student loans

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Apache is functioning normally

According to the Federal Reserve, 4 in 10 people who go to college incur debt to pay for their education. Currently, individuals with outstanding student loan debt owe as much as $100,000 or more, with more than 40% owing between $20,000 and $99,999. 

If you’re struggling with student loan debt, you certainly aren’t alone. Understanding your loan is an important first step in creating a viable plan to pay it back. You may be dealing with one of many student loan service providers, including Navient. Find out more about Navient below, including what to expect if this company is calling you, so you’re more educated about your student loan debt and avoid making mistakes on your student loans. 

In This Piece

What Is Navient?

Navient is a student loan servicer. This means it’s a company that handles student loans, including the collection of those loans. Navient previously existed as an arm of Sallie Mae, the Student Loan Marketing Association. However, the company split off from Sallie Mae in 2014.

Is Navient Legitimate?

Yes, Navient is a real company with real contracts with student loan lenders. If this is your student loan servicer, it’s not a scam, and you can make your payments with confidence. Still, it’s always a good idea to keep records of all your debt payments in case you need to prove them later. 

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What Does Navient Do?

Note that Navient is not the lender. It didn’t loan you the money for the student loan or buy the student loan debt from your lender. It’s more of a middleman between the borrower and the lender and is responsible for a variety of tasks, including:

  • Sending information about your student loan balances and when payments are due
  • Working with you on deferrals and other measures when you’re in school or after you graduate
  • Collecting payments from you
  • Working with you to set up payment plans when necessary
  • Reporting payments—both timely payments and late or missed payments—to the credit bureaus

Navient primarily services private student loans after ending its contract with the Department of Education in late 2021.

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Why Is Navient Calling Me?

If Navient is your student loan service provider, it may call you for a number of reasons. Navient reps may contact you due to:

  • A need to update your records or questions about information on your account
  • To ensure everything is on track while you’re still in school
  • Because your account is in danger of defaulting and you need to attend to it or set up payment plans

It’s important to pay attention to communication from your student loan provider so you can keep your account in good standing. Student loan servicers may also send you emails or mail, so watch for those types of communications as well. You should always know what company is servicing your student loan accounts so you can work with it to repay your loans.

Defaulting on your student loans can have great consequences on your finances, including your credit score. So, you should contact your loan servicer to find out what options you may have. For example, you can contact them to learn how to discharge your student loans, and for what programs you may qualify.

What Should I Expect When Navient Calls?

Always verify that someone calling about a debt is who they say they are. Check the phone number on your caller ID. You can look it up online or compare it with phone numbers listed on paperwork you might have from the company. 

Avoid answering questions with personal information. Navient reps won’t call you and ask for specifics like your account number or Social Security number. They already have all the pertinent information they need in their files. 

Whether Navient is calling you or you’re calling your student loan servicer, be prepared to discuss the best ways to deal with your debt. Have a plan for how much you can pay, and don’t be afraid to ask about payment plans and other options to help you get back on track if your student loan payments have fallen behind.

The Bottom Line

Student loan servicers want to collect the debt from you, but they also have a number of tools they can use to help you pay that debt. You also have options, including refinancing your student loans.

Not paying your student loans will affect your credit score. Always make sure you understand the terms of any loans or refinance loans and how they might impact your credit. See where your credit stands at Credit.com by checking out your free credit report card.

Source: credit.com

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Apache is functioning normally

Editor’s Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Student loan debt is at an all-time high, with more students graduating with debt than ever before. Consider this: Almost 44 million borrowers have federal student loan debt and they owe, on average, $37,338. As recent graduates begin their careers, it can be overwhelming to figure out how to make monthly student loan payments.

Ignoring your payments may seem like an easy way out, but student loan default can have extreme consequences. If you’re struggling with student loan payments or are already in default, there are ways to recover. For instance, you could consolidate defaulted student loans. Or you could refinance them. This guide will help you figure out your best option.

What Is Student Loan Default?

If your student loan is in default, it means you have failed to make payments on your student loans for several months in a row. However, there are a few steps that occur before defaulting on student loans.

Federal student loans are considered delinquent once you miss a student loan payment. After 90 days of delinquency, your loan servicer can report the missed payments to the three major credit bureaus. Generally, after 270 days of nonpayment, your loan will go into default.

If you have private student loans, they can go into default even sooner. Typically, after you miss three payments or 120 days, your private student loans go into default. Different lenders have different terms when it comes to default, however, so be sure to check with yours to get the specifics.

How Common Is Defaulting on Student Loans?

Defaulting on student loans is fairly common. The latest data from EducationData.org finds that one in 10 student loan borrowers has defaulted on a loan. In fact, roughly 4 million student loans go into default every year, and about 7% of loans are in default at any given time. As of 2021, the median loan balance among delinquent and defaulted borrowers was $15,307.

What Are the Consequences of Student Loan Default?

Defaulting on your student loans can have some steep consequences. For starters, the entire balance of your student loans could become due in full.

If you default on your student loans, your lender may eventually turn your debt over to a collection agency who will usually start calling, emailing, and even texting you to try and collect on your debt. You may even have to pay collection fees on top of everything else.

If you default, you may lose eligibility for programs that could help you manage your debt, such as deferment, forbearance, or Public Service Loan Forgiveness.

Once your student loans are in default, your loan servicer or collection agency will report your default to the three major credit bureaus, which will negatively impact your credit score.

And if your servicer can’t collect the money you owe on your federal student loans, they can ask the federal government to garnish a portion of your wages or your tax refund.
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How Can You Recover From Student Loan Default?

If you failed to make payments on your student loans and they’ve gone into default, you don’t have to let it ruin your financial future. Here are some steps you can take to get back on track.

Loan Rehabilitation

One option for getting out of student loan default is student loan rehabilitation. To rehabilitate your loan, you work with your loan servicer and agree in writing to make nine reasonable and affordable monthly payments over a period of 10 months.

In order to rehabilitate a Direct Loan or FFEL program loan, your monthly payments must be no more than 20 days late. Your loan servicer will determine the new monthly payment, which is 15% of your discretionary income.

When you have successfully rehabilitated your loan, the default may be wiped from your credit history. Note that any late payments reported to the credit bureaus before the loan went into default will remain on your credit reports.

Private student loans are not eligible for rehabilitation.

Repaying Your Loan in Full

Another option to get out from under the shadow of student loan default is to repay your loans in full. Of course, if you had the funds to do so, you probably wouldn’t have defaulted in the first place. That said, you could look into ways to cover the balance due, such as borrowing from a family member or close friend.

Options for Private Student Loans

If you have private student loans that are in default, you can contact your lender and see what possibilities are available. Some lenders may have hardship options similar to the federal programs. As mentioned, the time it will take for your unpaid private loan to go into default depends on the lender — but the timeframe could be relatively short, even just 120 days.

However, if you’ve only recently missed a payment, you can start making payments again (and repay the missed payment) to try to prevent your loan from going into default.

Is Refinancing an Option for Defaulted Student Loans?

If your student loans are currently in default, refinancing your loans can be difficult. When you refinance your student loans, you take out a new loan with a private lender to pay off the existing loans. When you apply for a refinancing loan, lenders will use your credit score and financial history, among a few other factors, to determine if you qualify.

If your loan is already in default, your credit score has likely decreased significantly and will likely impact your ability to get approved for a new loan. If you have a family member or friend who is willing to cosign the loan, however, you may be able to refinance your student loans that way.

Another possibility for refinancing your student loans would be to rehabilitate your loans first. A lot of lenders might turn you down for having a defaulted loan on your credit history, but others might be willing to look past that and onto your education and income potential to approve you for a loan.

Can you Consolidate Defaulted Student Loans?

Another way to recover from student loan default is to consolidate your student loans in default. If you have federal loans, you can pursue defaulted student loan consolidation with the Direct Consolidation Loan program. This program allows you to combine one or more federal loans into a new consolidation loan.

To be eligible, you must either make three full, on-time, and consecutive payments on the defaulted loan or agree to make payments on an income-driven repayment plan.

Private student loans aren’t eligible for Direct Consolidation Loans. However, you can consolidate these loans with a private lender by refinancing.

Tips for Consolidating Defaulted Student Loans

Wondering how to consolidate defaulted student loans? To consolidate federal student loans, first gather all the documents you need. This includes your personal information such as your name, address, email, Social Security number, and FSA ID; financial information such as your income; and details about your loans, including amounts, account numbers, and loan servicers.

Next, go to studentaid.gov to fill out the Direct Consolidation Loan application. You’ll need your FSA ID to log in. Specify the loans you want to consolidate.

Then, choose one of the income-driven repayment plans if that’s the option you prefer. Review the plans in advance to determine which one is the best option for you.

Filling out the application typically takes less than 30 minutes.

Pros and Cons of Student Loan Consolidation

Choosing to consolidate defaulted student loans has advantages and disadvantages you’ll want to weigh before you move forward.

Advantages include:

•   One loan and one monthly bill. This means there will be less for you to keep track of.

•   Lower payments. When you consolidate, you can choose an income-driven repayment plan or to lengthen the term of your loan, which could lower your monthly payments. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

•   Fixed interest rate. You’ll get a fixed interest rate for the life of your loans with Direct Loan Consolidation. The new rate is a weighted average of all your federal loan rates, rounded to the nearest eighth of a percent.

•   Access to forgiveness programs. With a Direct Consolidation Loan, you might be able to get access to programs you weren’t eligible for previously, such as Public Service Loan Forgiveness.

Disadvantages include:

•   Longer repayment period. You could end up repaying your loans for an extra year or two, which will cost you more overall.

•   Pay more in interest over the life of the loan. With consolidation, the outstanding interest on your loans is added to the principal balance, and interest may accrue on that higher balance.

•   Possible loss of benefits. Consolidating loans other than Direct loans could mean giving up perks you have with those loans, such as rebates or interest rate discounts.

This comparison chart of the pros and cons of student loan consolidation can be helpful as you consider the question of should you refinance or consolidate your loans.

Pros of Student Loan Consolidation Cons of Student Loan Consolidation
Simplified payments with just one bill to pay each month. Longer repayment period means paying more overall.
Monthly payments may be lower. Pay more in interest over the term of the loan.
Fixed interest rate. Could lose benefits associated with current student loans.
Possible access to certain forgiveness programs.

How to Manage Student Loans Without Going Into Default

If you’re struggling to make student loan payments but haven’t yet defaulted on your loan, taking action now could help prevent financial issues in the future. Here are some options that could help you take control of your student loan debt and avoid going into default.

Take Advantage of the Temporary Grace Period

Federal student loan payments and interest accrual has been paused since March 2022 in order to alleviate some of the financial challenges created by the coronavirus pandemic. However, the latest debt ceiling bill officially ended the payment pause, requiring interest to begin accruing again on Sept. 1. and payments to resume on October 1.

The Department of Education understands that restarting student loan payments after such a long pause will put many borrowers in a difficult financial position. So to prevent struggling borrowers from facing the harsh penalties of defaulting on their loans, there will be a 12-month ramp-up period to help borrowers adjust to repayment.

During this period, which takes place from Oct. 1, 2023 to Sept. 30, 2024, federal student loan borrowers who don’t make their payments on time and in full will not be reported to the credit bureaus, have their loans placed in default, or be referred to debt collectors.

Forbearance or Deferment

If you’re unable to make payments on your student loans due to a sudden and temporary economic change, you might consider applying for student loan deferment or forbearance. Both allow you to temporarily pause your loan payments.

If your loans are in forbearance, which is granted for 12 months at a time, you will be responsible for paying accrued interest during the forbearance period. If your loans are placed in deferment, which can last up to three years, you may not be responsible for accrued interest during the deferment period, depending on the type of loan you hold.

While your loans are in deferment or forbearance, you do have the option to make interest-only payments on the loan. If you choose not to, the accrued interest on most loans will be capitalized, or added to the principal balance. You’ll then be charged interest based on the larger loan amount.

Applying for Income-Driven Repayment (IDR)

Another option to help manage your student loans is income-driven repayment. There are four income-driven repayment plans available to federal student loan borrowers. Depending on the type of plan you qualify for, your monthly payments will be anywhere from 10% to 20% of your discretionary income. (Beginning in July 2024, the new SAVE plan will adjust payments to 5% of discretionary income.)

Income-driven repayment plans also stretch out the repayment term of the loan to either 20 or 25 years, depending on the specific plan. This means that while you could pay less per month, income-driven repayment could cost you more in interest over the life of the loan. The good news is that if you have any remaining debt at the end of the term, it will be forgiven (but you may need to pay income taxes on the canceled amount).

Consolidating Your Loans

Even if you’re not in default, you can consolidate your federal loans through the Direct Loan Consolidation program. As mentioned, the new interest rate will be the weighted average of the existing loans, rounded to the nearest eighth of a percent. So you won’t lower your effective interest rate, but you’ll only have to keep track of one monthly payment.

Refinancing Your Loans

If your monthly student loan payments are difficult for you to manage, you could consider refinancing with a private lender. If you have a combination of private and federal student loans, you could refinance both types into a single, private loan.

Refinancing can give you an opportunity to qualify for a lower interest rate or lower monthly payments, and you’ll only have to worry about tracking one payment each month. You may also be able to customize your repayment term — either lengthening or shortening the term.

By lengthening the term, you could reduce your monthly payments, but you may end up spending more money in interest over the life of the loan. To see how refinancing could impact your student loans, plug your numbers into this student loan refinance calculator.

It’s important to note that if you’re thinking of taking advantage of any federal programs such as income-driven repayment or Public Service Loan Forgiveness, refinancing may not be a good idea, as you’ll lose your eligibility for these programs.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Does consolidating student loans remove default?

No. When you consolidate your student loans, the record of the default will stay on your credit history. Another option is loan rehabilitation, which removes the default from your credit history.

Can you consolidate defaulted student loans?

Yes, you can consolidate defaulted student loans. If you have federal loans, you can consolidate them with Direct Loan Consolidation. To be eligible, you must either make three full, on-time, and consecutive payments on the defaulted loan or agree to make payments on an income-driven repayment plan. You can fill out an application at studentaid.gov. You can consolidate private student loans with a private lender.

Can you refinance student loans that are in default?

You can refinance student loans that are in default, but it may be difficult. That’s because your credit score has likely decreased, which may impact your ability to get approved for refinancing. If you have a family member or friend who is willing to cosign the loan, you may be able to refinance your student loans that way. Or, you could rehabilitate your loans first, which could help improve your odds of being approved for refinancing.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Source: sofi.com

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Apache is functioning normally

Yes, you can refinance student loans with a private lender more than once in the quest for a lower interest rate and different repayment term.

How Many Times Can You Refinance Student Loans?

If you’re a graduate who has the credit score and income to qualify, you can refinance your student loans as many times as you’d like. In fact, some folks refinance multiple times.

But before you get too refi-happy, it’s important to know the advantages and disadvantages of this strategy.

What Are Some Advantages of Refinancing Multiple Times?

One of the biggest advantages of refinancing your student loans is that you may be able to qualify for a lower interest rate, whether you refinance once or several times. A reduced rate can help you save money in the long run.

For example, let’s say you’ve been paying down an older federal Grad PLUS loan that currently has a balance of $40,000 and an interest rate of 7.90%. You have 10 years of payments left, which are currently $483.20 per month.

You have good credit and qualify for a seven-year, fixed refinance rate of 6%. If you were to go through with the refinance, you’d actually increase your monthly payment by about $100. However, you’d save about $8,900 in total interest.

Later on, you might qualify for a lower fixed rate or an even lower variable rate, and so on.

Or you might find it helpful to refinance to a longer term, with lower monthly payments. That will likely mean paying more in interest over the life of the loan, but lower monthly payments may put you in a better position to accomplish your short-term financial goals.

Reputable lenders charge no application or origination fees, so refinancing each time will not cost you anything.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Are Some Disadvantages of Refinancing Multiple Times?

One disadvantage of refinancing your student loans is that your credit score could temporarily drop by a few points. Whenever you apply for a loan, the lender performs a hard credit inquiry. One or two inquiries usually have a small and temporary impact on your score. However, too many hard inquiries within a short time frame could cause some damage. The good news is that many student loan refinancing lenders allow you to shop for rates and get quotes online using a soft credit pull, which has no impact on your score.

Another factor to consider is your time. Though you can refinance as many times as you want, it helps to make sure it’s worth the effort. That means researching reputable lenders and the rates and terms they offer.

It’s important to point out that refinancing federal student loans even once will cause you to permanently forfeit government-backed protections and benefits, such as federal student loan forgiveness programs, deferment, and forbearance.

How Is Student Loan Refinancing Different Than Consolidation?

It’s important to make a distinction between refinancing and consolidation. When you refinance your student loans with a private lender, you are borrowing one new loan with new terms, such as a lower interest rate or different repayment term, and using the proceeds to pay off your existing loans.

When you consolidate federal student loans into a Direct Consolidation Loan, you combine your existing loans into one. The term may be drawn out to up to 30 years, and the interest rate will be the weighted average of the original loans’ rates, rounded up to the nearest eighth of a percentage point. For this reason, your new rate may actually be higher than the rate of your previous lowest-interest loan.

Things to Look for When Refinancing

Whether you refinance your student loans for the first or sixth time, it would be smart to check that your new rate and term make sense for you.

You’ll encounter fixed-rate and variable-rate loans. Fixed-rate loans have one set interest rate that does not change over the life of the loan. The rates on fixed-rate student loans are typically higher than the initial rates of variable-rate loans. However, because the rate never changes, it can make budgeting easier.

Variable-rate loans have interest rates that start off lower, but can fluctuate based on the prime rate or another index. Rates can climb if the rate or index they are tied to goes up (and vice versa).

Variable-rate loans might be a good choice for shorter-term loans. The longer the loan term, the bigger the chance of a rate hike.

Also, beware of qualifying for a low interest rate that’s attached to a longer-term loan. Though monthly payments might be low, a longer term might mean you’ll end up paying much more in interest over the life of the loan. If you can afford the higher monthly payment, loans with shorter terms can be a good cost-saving option.

Consider looking for a refinance lender that offers competitive rates and flexibility in choosing the repayment term. And if you want to refinance both federal and private student loans into one new loan, look for a lender that does that.

Serious savings. You could save thousands of dollars.
We offer flexible terms and low fixed or variable rates.

Refinancing Your Student Loans More Than Once

It’s all about the great rate chase.

Having a low debt-to-income ratio can help you qualify for a lower interest rate. So if you have a higher salary, get a big bonus, or pay off other debts, your debt-to-income ratio might improve.

Similarly, if your credit score increases, you typically become more attractive to lenders. This could happen if you are using a small amount of your available credit, or if you find and correct a mistake on one of your credit reports. (Do student loans affect your credit score? Continuous on-time payments may have a positive effect.)

Married couples may want to consider refinancing student loans together to put the power of two earners to use. A solid cosigner could also be brought aboard.

If you’re thinking about a refinance, it could help to keep an eye on the federal funds rate, which is the rate banks charge one another for overnight loans. When the Federal Reserve raises or lowers short-term interest rates, private lenders respond in turn. (This does not apply to federal student loans, whose interest rates have been set by Congress once a year since 2006.)

Even if interest rates rise now, they could still be considered low by historical standards.

Refinancing Your Student Loans With SoFi

Is it bad to refinance multiple times? If it saves you money, that’s nothing but a good thing. Refinancing won’t be the right move for all people, but everyone should know the rates they’re paying, their total student debt load, and their repayment strategy.

SoFi is a leader in refinancing student loans, with low fixed or variable rates and flexible loan terms.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can I consolidate student loans more than once?

You can consolidate federal student loans into a Direct Consolidation Loan more than once only if you have federal loans that were not included in a previous consolidation, or if you previously consolidated loans under the Federal Family Education Loan (FFEL) consolidation program. Remember that consolidation does not lower your loan rate.

How many times can you refinance a loan?

As many times as you qualify to do so.

How many times can you take out student loans?

When it comes to federal student loans, there is no time limit on how long a borrower can receive Direct Unsubsidized Loans or Direct PLUS loans, but annual and aggregate limits for Direct Unsubsidized Loans apply.

Private student loans, for which you must qualify or have a cosigner, usually have an annual limit equal to an institution’s cost of attendance minus other financial aid. Most have aggregate loan limits for undergraduate and graduate students.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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Apache is functioning normally

On top of sorting out whether you’re eligible for federal student loans and the difference between subsidized and unsubsidized loans, you may be wondering how student loans may impact your taxes and whether student loans count as income. In a nutshell, the answer is no, student loans are debt, and do not count as income.

Fellowships and other forms of financial grants, however, may be counted as income, depending on how the funds are spent. And loans that are forgiven have counted as income.

Read on for more about the tax implications of student loans, grants, and student loan repayment. Of course, this is just a helpful guide as you begin to explore the basics of student loans and taxes; always seek out a tax professional to help you with your specific situation.

Are Student Loans Taxable?

There are multiple types of student loans — each with their own unique terms. As noted earlier, though, student loans are not taxed as income.

This is true of other types of loans generally as well, like credit card spending, mortgages, and personal loans (unless the loan is forgiven) — basically most credit that needs to be repaid. The IRS considers student loans a form of debt — not income — therefore, it is not taxed.

The only time that student loans (or other types of debt) can be taxed is if they are forgiven during repayment. If you are eligible for a federal student loan forgiveness program and have met the requirements (which vary, and may include stipulations like making eligible payments for 20 to 25 years via an income-driven repayment plan or completing eligible public service work/payment requirements, and others), the remaining balance on your student loans (the amount forgiven) may be taxed as income, depending on the repayment plan. This could amount to a hefty tax bill.

Are Scholarships Taxable?

The high-level answer to this question is: it depends. There are many different forms of scholarships, grants, and fellowships that are awarded to students to cover the costs of studying and research. Some are need-based and some are merit-based. The basic difference between scholarships and loans is that a scholarship is given while a loan is borrowed. You won’t typically have to pay back a scholarship, but you do have to pay back a loan.

Most scholarships are not taxed when you are enrolled in a formal educational institution and the scholarship is directly used to cover the costs of tuition, fees, books, and supplies used for study.

There are some situations in which scholarships can be taxed, however. For instance, a scholarship can be taxed as income if you use it to cover what are considered “incidental” expenses related to your education such as travel, room and board, and supplementary equipment and supplies.

Another type of scholarship that can be taxed is a scholarship that has a service-related requirement to it. This frequently applies to scholarships for graduate students. If you are required to teach, provide research assistance, or perform other services as a condition of your scholarship, it can be taxed as income and you will be required to report the scholarship as part of your gross income.

(For more about which types of scholarships are considered income and what scholarship-related activities are taxable, check out IRS Publication 970 .)
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Do Student Loans Come with Any Tax Benefits?

Student loans aren’t usually taxable as income, and in fact, may come with a tax benefit that is meant to make repayment a little easier on borrowers investing in their education.

The Student Loan Interest Deduction allows you to deduct the amount of interest you paid on both federal and private student loans, up to a maximum of $2,500 per year. In order to be eligible to deduct the full amount, your modified adjusted gross income (AGI) must be $70,000 or less (or $145,000 for married couples filing jointly). The amount you’re allowed to deduct is gradually reduced if your modified AGI is more $70,000 but less than $85,000 (or more than $145,000 but less than $175,000 for married couples filing jointly. Income above these thresholds renders you ineligible for the deduction.

As a tax deduction, the amount deducted helps to lower your overall taxable income, potentially resulting in a lower tax bill or higher tax refund. This deduction can also help defray some of your repayment costs.

Are Employer Student Loan Payments Taxable?

An increasingly popular benefit offered in some workplaces is help with education costs and student loan repayment. Employers such as Aetna, Fidelity Investments, Google, and more offer student loan assistance programs to employees.

Currently, employers are allowed to contribute up to $5,250 toward employees’ qualified education costs tax-free. Payments or reimbursements above that amount are considered taxable income for the employee. It’s important to note that this special tax treatment is temporary, however, and expires December 31, 2025. After this date, the full amount of any employer contributions toward education expenses or student loan repayment will be taxed as income.

How Can I Make My Student Loan Repayment Easier?

The cost of a student loan comes in the form of the interest you pay each month on the balance owed. Consider this example: Say you have a $30,000 loan with a 7% interest rate. On the 10-year Standard Repayment Plan, you would pay roughly $11,800 in interest in addition to repaying the $30,000 principal.

So what can make repayment easier, other than the student loan interest deduction? One option is to refinance your student loans with a private lender.

If you already have private and/or federal student loans, you may be able to refinance your student loans at a lower interest rate than you currently are paying. If you are eligible to refinance your student loans, you could shorten your term length, qualify to lower the interest rate on your loans, or possibly lower your monthly payment (by extending your term). But there can be some drawbacks to think about.

For instance, federal student loans come with several benefits and protections such as forbearance, deferment, income-driven repayment plans, and certain forgiveness programs that private loans do not offer. If you think you might need some of these benefits, or if you are eligible for student loan forgiveness, it might not be the right time to refinance.

However, if you have a steady income and good cash flow — along with other aspects of your financial picture that are appealing to a lender — and you are ready to focus on paying down your loans, refinancing might be the right solution for you.

SoFi is a leader in the student loan space, offering refinancing options to help you save on the loans you already have.

The Takeaway

Generally, student loans are not considered income, so they are not taxed. The exception is when some or all of your student loan balance is forgiven. In some cases, the IRS may count the canceled debt as taxable income.

Educational grants and scholarships, on the other hand, may or may not count as income. Typically, they are taxed when they are spent on expenses outside of tuition and fees, such as room and board and travel.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSL0823018

Source: sofi.com

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A FAFSA is an application for financial aid that determines your eligibility. This application will not appear on your credit report, and does not affect your credit score.

Congratulations on your high school graduation! You put in a lot of hard work to get that degree, and you deserve to celebrate. This might be your last summer of “freedom,” but that doesn’t mean you don’t have any responsibilities to take care of.

If you haven’t submitted the FAFSA—a crucial step toward receiving financial aid or taking out student loans—now is the time to buckle down and get to work. Even if you don’t think you’ll qualify for financial aid, we recommend getting familiar with the FAFSA, understanding its potential impacts on your credit score and financial future, and submitting an application.

Here’s what we’ll cover in this piece:

What Is the FAFSA?

FAFSA stands for Free Application for Federal Student Aid. It’s a one-stop application for all federal student loans, grants, work-study opportunities, and other financial aid sponsored by the US government. In order to qualify for federal financial aid, you must fill out a FAFSA.

Filling out a FAFSA is free, and the federal government provides more than $112 billion in FAFSA funds each year. States and other aid organizations may require you to fill out a FAFSA as part of their loan, scholarship, or grant applications as well.

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Does the FAFSA Affect Your Credit Score?

The FAFSA is just an application for financial aid, which means it won’t affect your credit scores. You complete it to find out what type of financial aid you might be eligible for. The fact that you completed the FAFSA never shows up on your credit report—it’s not considered a credit inquiry—so it can’t impact your credit score.

Does Financial Aid Show Up on Your Credit Report? 

The results of your FAFSA could impact your score depending on how you handle them. Financial aid that you don’t have to pay back, such as scholarship or grant money, doesn’t hit your credit report. It’s not debt, so there’s no reason for it to. But student loans can show up on your credit report.

Student loans, whether you qualified for them via the FAFSA or took out private student loans, are a form of debt. They may be reported to the credit bureaus. Paying those loans on time and as agreed could help improve your credit—and this is one way you can start building credit.

Missing payments or defaulting on student loans can hurt your credit. In this way, the outcome of the FAFSA could have an impact on your credit score.

Who Can Complete the FAFSA?

Anyone who is planning to attend a college or university in the next academic year can complete the FAFSA to find out what they qualify for. Completing the application isn’t a guarantee of any financial aid and it doesn’t create an obligation on your part—other than to tell the truth on the form. You may want to complete it each year to see what you qualify for.

Parents of dependent students can also complete the FAFSA. In these cases, it would be the parental household income that would be considered in determining what someone is eligible for.

The federal government does not consider credit scores or credit history when determining what someone is eligible for. The financial aid is decided mainly on financial need and income. You do have to meet some other requirements, such as having a valid Social Security number.

When Should You Complete the FAFSA?

The deadline for the FAFSA differs for each academic year, however, many schools have their own deadlines, as do states. They may process some financial aid based in part on the FAFSA. A good rule of thumb would be to complete the application as soon after October 1 as possible, to ensure you’re early enough to be eligible for the highest number of opportunities.

What Do You Need to Complete the FAFSA? 

First, you have to create an FSA account. This is the account you use to complete the FAFSA, review any requests for additional information, and see what student aid you might be eligible for. Once you have an account, you will need the following to complete the application:

  • Your Social Security number and driver’s license number
  • Tax records for you and your parent for the qualifying year—typically it’s two years before the academic year in question
  • Any records of untaxed income and assets
  • A list of all the schools you want to apply to, as you’ll have to add them to the FAFSA

Can You Modify a FAFSA?

If you make a mistake or information changes, you can modify the FAFSA. If your income situation has changed drastically and is not well reflected by the tax return required by this year’s FAFSA, you can speak to the financial aid office at the school you’re attending or applied to. Those offices sometimes have options for addressing this issue.

Do You Have to Pay Back FAFSA Money?

Whether or not you have to pay back FAFSA money depends on the type of aid you receive. Certain need-based grants don’t have to be paid back. Student loans do.

What if You Don’t Qualify for FAFSA Money?

Federal student aid isn’t the only way to pay for college. For some, private student loans can be an option. Check out the student loan marketplace at Credit.com to see some of your options. And if you get some FAFSA money but it’s not enough to cover all your college expenses, you might consider applying for a college student credit card. Use it responsibly to help build your credit as you go through school.

Revvi Visa® Credit Card

  • Earn 1% Cash Back Rewards on All Purchases with Revvi!
  • The Perfect Card for Not-So-Perfect Credit
  • If approved, pay the $95 Program Fee to open your account
  • Fast and easy application process with a response provided in seconds!
  • Reports to All Three Major Bureaus to Build Your Credit History
  • Eligible for a Credit Line Increase after 12 months of on-time payments!
  • Choose between 2 free card designs and 4 Premium designs
  • Accepted by Merchants Across US & Online
  • Free Credit Monitoring Powered by TransUnion
  • Simple, Powerful Mobile App

Source: credit.com

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At the end of 2022, the Federal Reserve reported that roughly 43.5 million Americans have student loan debt, which totals over $1.7 trillion. Each borrower owes an average of $37,787.

If you owe tens of thousands of dollars in student loan debt, you’re not alone. According to the Federal Reserve’s Consumer Credit report, 43.5 million Americans have some form of federal or private student loan debt. That’s 13 percent of the population. Not only can you not declare bankruptcy on many forms of student loan debt, but it can also harm your credit.

Here, we’re going to help you better understand the student loan debt dilemma that millions of Americans are facing. We’ll cover both federal and private student loan statistics, which states have the most student loan debt as well as delinquency rates. This will help you see where you stand in comparison to others in a similar situation.

Table of contents:

  1. Average student loan debt
  2. How many Americans have student loan debt?
  3. Student loan debt by state
  4. Total federal student loan debt
  5. Total private student loan debt
  6. Average student loan debt by age group
  7. Student loan repayment status
  8. Student loan default and delinquency rates
  9. Student loan debt forgiveness
  10. Student loan debt FAQ

Average student loan debt

The Education Data initiative is a primary source for tracking data on student loan debt and other educational statistics. In a January 2023 report, their analysis showed that the average debt per borrower was over $37,000 for federal student loans and nearly $55,000 for private loans.

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Student loan debt has reached new highs in recent years and has been rising since 2007. Less than 20 years ago, the average student loan debt per borrower was just $18,200. This means that by 2022, we saw a 106 percent increase.

Here’s some more interesting data from their report:

  • Those with a medical degree have an average student loan debt of over $300,000
  • The least amount of student loan debt is those with a Master of Education, which is $67,500
  • Stafford loan borrowers owe $25,249 on average
  • 10 percent of borrowers owe more than $100,000 and 45 percent owe less than $20,000

How many Americans have student loan debt?

Over 43 million Americans have student loan debt. The following table from the  U.S. Department of Education shows how many Americans have debt by federal loan type. 

Year (Q4)

Direct loans (in millions)

Federal Family Education Loans (FFEL) (in millions)

Perkins loans (in millions)

Total (in millions)

2018

34.2

13.5

2.3

42.9

2019

35.1

12.1

2.0

42.9

2020

35.9

11

1.7

42.9

2021

37

10.2

1.5

43.4

2022

37.8

9.2

1.3

43.5
Source: U.S. Department of Education

As you can see, more people are accumulating different types of federal student loans, with a one-and-a-half percent increase in recipients between 2018 and 2022. 

Student loan debt by state

The Federal Reserve Bank of New York tracks student loan debt by state. Below, we’ve provided a chart with each state listed in alphabetical order.

The state with the lowest average student loan debt per borrower as of the fourth quarter in 2021 is South Dakota, where borrowers owe an average of $28,218. The District of Columbia has the highest average owed per borrower at $53,769, which is nearly $16,000 higher than the national average.

State

Average balance

Alabama

$37,730

Alaska

$30,427

Arizona

$36,682

Arkansas

$31,851

California

$37,783

Colorado

$37,235

Connecticut

$36,391

Delaware

$39,238

District of Columbia

$53,769

Florida

$38,653

Georgia

$41,826

Hawaii

$34,608

Idaho

$34,196

Illinois

$37,869

Indiana

$32,045

Iowa

$29,845

Kansas

$33,954

Kentucky

$33,155

Louisiana

$34,839

Maine

$33,584

Maryland

$42,543

Massachusetts

$35,400

Michigan

$36,221

Minnesota

$33,161

Mississippi

$36,366

Missouri

$35,095

Montana

$32,459

Nebraska

$31,551

Nevada

$35,688

New Hampshire

$33,094

New Jersey

$37,003

New Mexico

$32,944

New York

$38,668

North Carolina

$37,511

North Dakota

$30,542

Ohio

$35,806

Oklahoma

$32,102

Oregon

$38,248

Pennsylvania

$35,349

Rhode Island

$33,838

South Carolina

$36,698

South Dakota

$28,218

Tennessee

$36,155

Texas

$32,998

Utah

$33,474

Vermont

$34,595

Virginia

$39,001

Washington

$34,846

West Virginia

$32,214

Wisconsin

$31,482

Wyoming

$30,581

States with the most student loan borrowers

The Federal Reserve Bank of New York also tracks how many borrowers there are per state. This gives us a good sense of how many individuals are seeking college degrees, but we should also keep in mind that the cost of living varies in different states as well as how much there is for state funding.

State

Total borrowers

California

4,021,200

Texas

3,759,300

Florida

2,646,400

New York

2,579,600

Pennsylvania

2,032,400

Ohio

1,810,900

Illinois

1,713,900

Georgia

1,641,600

Michigan

1,430,900

North Carolina

1,340,500

New Jersey

1,339,800

Virginia

1,143,200

Massachusetts

1,046,800

Indiana

924,000

Minnesota

902,500

Arizona

872,600

Tennessee

872,000

Maryland

864,700

Missouri

829,100

Washington

816,900

Colorado

804,300

Wisconsin

785,600

South Carolina

745,500

Louisiana

644,600

Alabama

615,800

Kentucky

588,800

Oregon

556,000

Connecticut

542,800

Oklahoma

480,800

Iowa

465,500

Mississippi

414,300

Kansas

395,200

Arkansas

374,900

Nevada

351,300

Utah

325,100

Nebraska

261,000

Idaho

219,400

New Hampshire

219,000

West Virginia

217,200

New Mexico

215,500

Maine

203,200

Rhode Island

153,200

Delaware

137,300

South Dakota

135,600

Montana

132,900

District of Columbia

125,000

Hawaii

123,600

North Dakota

114,000

Vermont

96,300

Alaska

70,600

Wyoming

57,600

States with the highest delinquency rates per borrower

As stated by the U.S. Department of Education, a student loan payment is considered delinquent the first day after missing a payment. If the payment goes unpaid for at least 270 days, the loan then goes into default. 

The following are some consequences of going into default:

  • The entirety of the loan and the interest is due immediately
  • You lose the ability to obtain additional federal student aid
  • It will harm your credit score

The state with the highest borrower delinquency rate, `per the Federal Reserve of New York, is Maryland at a rate of 11 percent. This is followed by the state of Washington at 10.7 percent and Utah at 10 percent.

Total federal student loan debt

Included in the U.S. Department of Education’s report is the total amount of outstanding federal and private student loans. Outstanding FFEL loans have dropped over 50 percent since the fourth quarter of 2013, and outstanding Perkins loans have fallen the same amount. 

Now, you may be wondering, “Then how is there more outstanding student loan debt than in previous years?” This is due to the rise in outstanding direct loans, which have risen over 133 percent since 2013.

Here’s a look at the past five years of outstanding federal student loan debt:

Year (Q4)

Direct loans (in millions)

Federal Family Education Loans (FFEL) (in millions)

Perkins loans (in millions)

Total (in millions)

2018

$1,150.3

$281.8

$7.1

$1,439.2

2019

$1,242.6

$261.6

$6.1

$1,510.3

2020

$1,315.2

$245.9

$5.2

$1,566.3

2021

$1,375.9

$230.4

$4.4

$1,610.7

2022

$1,422.8

$207.8

$3.9

$1,634.5
Source: U.S. Department of Education

Total private student loan debt

When taking out a student loan, you can receive federal student loans or private student loans. Private student loans aren’t provided by the federal government, and they often come with much higher interest rates. While federal student loans sometimes have forgiveness programs that can help eliminate some of your debt, private loans don’t have the same benefit.

  • Less than two percent of private student loan borrowers default on their student loans (MeasureOne)
  • The average interest rate on private loans is between four and 15 percent (Education Data Initiative)
  • Refinancing a private student loan can range between 2.25 to 12 percent (Education Data Initiative)
  • 53 percent of private loan borrowers did not borrow the maximum amount of Stafford loans (TICAS)
  • 11 percent of these borrowers didn’t apply for federal financial aid (TICAS)

Average student loan debt by age group

The debt among Americans is divided by age group in the U.S. Department of Education report, and it shows that people ages 35 to 49 owe the most in federal student loans. While this age group owes a total of $634 billion, those under 24 years of age only owe $104 billion, followed by people 62 and older at $107 billion.

Age group

Total outstanding loan balances (in billions)

Under 24

$104

25 to 34

$497

35 to 49

$634

50 to 61

$293

62 and older

$107
Source: U.S. Department of Education

Student loan repayment status

While many Americans are paying their student loans on a monthly basis, for a variety of reasons, some people may need to apply for a deferment or forbearance. If you’re facing financial hardships, you can apply for these services to pause your loan payments. It’s also helpful to know that you may still accrue interest while in forbearance or deferment.

The following table shows the total number of Americans by loan status as per the U.S. Department of Education during the fourth quarter in 2022: 

Loan status

Recipients (in millions)

Currently in school

6.3

In grace period

1.3

Repayment

0.4

Deferment

3.0

Forbearance

25.6

Cumulative in default

4.8

Other

0.1
Source: U.S. Department of Education

Student loan default and delinquency rates

When graduating from college, it can take some time for people to begin making enough money to pay back their student loans. But remember, missed payments turn delinquent the day after missing the first payment and then go into default after 270 days.

Here are some notable statistics from the Education Data Initiative: 

  • The majority of borrowers have at least one late payment in the first five years of repayment
  • Over 40 percent of borrows in default status owe between $20,000 and $40,000
  • Almost 11 percent of borrowers default within their first year of repayment
  • Less than 20 percent of borrowers are delinquent at least five times
  • Graduates with Arts and Humanities majors have the highest default rate at 26 percent

Student loan debt forgiveness

The most common form of federal student loan forgiveness is the Public Student Loan Forgiveness Program (PSLF). This is a student loan forgiveness program for a variety of different service jobs. According to the PSLF website, there are no specific jobs, and all a company needs to do is qualify for PSLF. Although there are no specific jobs listed, here are some of the typical careers that qualify, as reported by Kristen Kuchar at SavingforCollege.com:

  • Law enforcement
  • Public health
  • Education
  • Social work
  • Emergency management
  • Public safety
  • Government jobs

PSLF releases a monthly report with some interesting information. The following is data from their December 2022 report: 

  • There were 1.8 million forms processed for people qualifying for PSLF
  • Of the more than 1.9 million forms processed, 88,202 did not qualify for PSLF
  • The largest portion of borrowers qualified for income-driven repayment, which allows for lower payments based on current income
  • 34,000 people who applied have employers that do not qualify for PSLF
  • The primary sector qualifying for PSLF is government employees, who accounted for 61 percent of the processed forms

Student loan debt FAQ

We’ve covered a lot of data about student loan debt statistics in America, but you may have some lingering questions. Below is a list of some frequently asked questions, along with their answers.

What is the average student loan debt in 2023?

The average American graduate owes $37,787 in student loans. 

Who suffers the most from student loan debt

According to the Education Data Initiative, Black and African American graduates owe $25,000 more than white graduates on average. About 48 percent of these former students also owe six percent more than they borrowed.

Is student loan debt increasing or decreasing?

The credit bureau Experian® shows the average student loan balance increased 91 percent between 2009 and 2022.

Who owns the most student loan debt?

As of September 2022, the U.S. Department of Education reported that people ages 35 to 49 owe the most student loan debt at a total of $634 billion.

Don’t let student loan debt affect your credit score

If you’re having trouble paying your student loan debt, you’re not alone. With 4.8 million Americans in default and 28.6 million in deferment or forbearance status, it’s clear to see that many people are in the same situation. Unfortunately, not paying your student loan debt can harm your credit score, which can make your financial life difficult and cause additional stress.

Fortunately, Credit.com is here to help. We offer different tools that can help you work to repair and improve your credit. We’re also here to help you learn how to manage your debt so you can make your payments on time and avoid any dings to your credit in the future. If you’re curious about your current credit status, sign up for your free credit report card today.

Source: credit.com

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Student loans can help you finance your college education without paying much interest. However, you don’t want to take on more debt than you can comfortably pay back after you graduate. As of June, 2023, student borrowers owe 1.76 trillion in student loan debt, including federal and private student loans, according to the Federal Reserve.

High school can be a great time to start learning about the types of student loans available to you, how interest accrues, and what you can expect when it comes time to repay any student loans you take out. Read on to learn some of the ABCs of student loans, and how to not let them weigh down your financial future.

Student Loan Types

There are two main categories for student loans: federal and private student loans.

Federal Student Loans

Federal student loans are funded by the federal government. Interest rates are fixed (and comparatively fair) and are set annually by Congress every July. Federal student loans also come with protections like income-driven repayment plans and deferment or forbearance options in the case of life changes, such as sudden loss of a job or other roadblocks to repayment.

The following are the federal student loan options offered:

•   Direct Subsidized Loans These are available to eligible undergraduates with a proven financial need. The government subsidizes (meaning it pays for) the interest that accrues on these loans while the student borrower is enrolled in school at least half-time and during the loan’s grace period (more on that below), and other qualifying periods of deferment.

•   Direct Unsubsidized Loans These are available to eligible undergraduates and graduate students regardless of financial need. Student borrowers are responsible for paying all of the accrued interest on unsubsidized student loans.

•   Direct PLUS Loans These are available to eligible parents of undergraduate students and to graduate or professional students. They are not subsidized by the government.

Private Student Loans

Private student loans are issued by non-government institutions, such as banks, credit unions, and online lenders. The requirements for applying for these types of loans may be more stringent.

Lenders will typically look at the student’s or their cosigner’s credit history, income, and other financial information. Some lenders require you to begin making payments while you are in school, while others allow you to wait until six months after you graduate. Either way, interest typically begins to accrue as soon as the funds are disbursed.

How to Apply for a Student Loan

The process for applying for student loans varies based on whether the loan is private or federal.

Applying for a Federal Student Loan

To apply for a federal student loan, you need to fill out and submit the Free Application for Federal Student Aid (FAFSA®) . Even if you don’t think you’ll be approved for financial aid, it can be worth submitting the FAFSA. The application is free and you may qualify despite your circumstances. The FAFSA also gives you access to federal student loans.

Every year, the FAFSA form usually becomes available online as of October 1 for the next school year. (Note that the FAFSA for 2024-25 academic year won’t be available until December 2023 due to the roll out of a new, more simplified form.)

You can easily apply online (see the link above). Completing the FAFSA determines the combination of federal loans, grants, and work-study you’re eligible for. Some colleges and universities also use information from the FAFSA to determine if you qualify for school-specific financial aid.

Applying for a Private Student Loan

It’s important to take the time to do some research and find a lender with a good reputation that offers competitive rates and terms. Ideally, you want a lender that offers flexible repayment options, reasonable (or no) fees, and will provide helpful customer support if you find yourself having any issues with your student loan payments.

If you decide to apply for a private student loan, you will more than likely have to reveal personal financial details, like your credit history. Since students typically don’t have much, or any, credit history, they often need to apply with a cosigner. That’s someone who will share the responsibility with you of paying back the loan.

In many cases, that cosigner would be a parent or an adult with whom you have a close relationship. Getting a cosigner may increase your chances of getting a better interest rate, which could help you spend less in interest over the life of the loan.

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Types of Student Loan Interest Rates

The interest rate on your student loans could have a lasting impact on your future finances. The interest charged is a percentage of your unpaid loan principal — that is, the amount you borrowed. Interest is paid to the lender in exchange for the opportunity to borrow money from them.

You can typically choose from between two types of interest rates: fixed-rate and variable rates.

Fixed-rate student loans: These types of loans offer an interest rate that remains the same throughout the life of the loan. This could give you peace of mind, knowing that the rate won’t change, even if the state of the economy does. Interest rates could fluctuate wildly during the course of your loan, but a fixed-rate won’t be affected. As previously mentioned, federal student loans have a fixed interest rate. Some private lenders also offer student loans with a fixed interest rate.

Variable-rate loans: These types of loans come with an interest rate that can increase or decrease based on market fluctuations. Some private lenders offer student loans with variable interest rates. These are also sometimes called floating-rate loans, because the interest rate can change during the life of the loan.

A variable-rate school loan might start with a lower rate than a fixed-rate loan but keep in mind that your interest rate — and monthly payment — could rise later on. A variable- rate loan can make sense if you plan to pay off your student loan early before rates have a chance to rise too much, expect rates to fall in the future, or you have some wiggle room in your budget in case of rising interest rates.

Student Loan Mistakes to Avoid.

1. Failing to Research Your Loans

With any type of student loan, it’s key to understand what you are agreeing to. You’ll want to make sure you understand what the interest rate will be, what your monthly payment will be, when you’ll need to start repayment, and how you plan to cover that obligation.

2. Borrowing Too Many Loans

It’s nice to be approved and accepted, but too many loans (borrowing more money than you actually need) can lead to a heavy financial burden after graduation. Generally, you’ll want to use any college savings, financial aid, and federal student loans before looking to private student loans (which tend to come with higher interest rates than federal student loans). If you’ll need to take on significant debt to attend a certain school, you might consider choosing a less expensive institution.

3. Not Having a Plan

Life can be unpredictable. The one thing you could have power over is your school loan repayment plan. It’s important that you know exactly when your student loan repayment plan starts (in some cases, that could be before you graduate), and exactly what your monthly payment will be.

It can also be helpful to set up a budget that accounts for all of your college costs, including tuition, books, room and board, food expenses, and anything else related directly to your education. If you budget for it ahead of time, you can help make it easier to use your student loan money wisely.

4. Not Realizing That Interest Continues Accruing

Understanding how and when interest accrues on your student loans is critical. For many student loans, interest will accrue while you are in school and during your grace periods. (A grace period is the period of time after you graduate or drop down below half-time attendance, during which you are not required to make payments.)

With the exception of subsidized federal student loans, interest will continue to accrue even if you are not making payments on your student loan. It will then typically be capitalized. Capitalization occurs when the accrued interest is added to the principal balance of the loan (the original amount borrowed). This new value becomes the balance on which interest is calculated moving forward.

Recommended: Understanding Capitalized Interest on Student Loans

Repaying Your Student Loan

Another important factor is understanding what repayment plans are available to you based on the type of loan you borrowed.

Repaying Federal Loans

For Direct Subsidized and Unsubsidized Federal Loans, students who are enrolled in school at least half-time aren’t required to make payments on their student loans. On these loans, repayments officially begin after the loan’s grace period.

Federal loans typically have a six-month grace period after graduation, which allows you time before you have to start repaying your loans. It’s important to note that even though you may be granted a grace period, depending on the loan you have, you may still be responsible for paying the interest on the loan during the time you are not making payments.

Note that PLUS Loans, which are available to parents of students and graduate or professional students, require repayments as soon as the loan is disbursed (or paid out).

Borrowers with federal loans are able to choose one of the federal repayment plans . These include:

•   Standard Repayment Plan On this plan, monthly payments are a fixed amount and repayment is set over a 10-year period.

•   Graduated Repayment Plan On this plan, payments start out on the lower end and then gradually increase as repayment continues. Loans are generally paid off over a 10-year period.

•   Extended Repayment Plan Payments may be either fixed or may gradually increase over the loan term. Loans are paid off within 25 years.

•   Income-Driven Repayment Plans There are four income-driven repayment plans. These tie payments to the borrower’s discretionary income. The percentage and repayment term may vary depending on the type of income-driven repayment plan the borrower is enrolled in.

With private student loans, the repayment terms are determined by the lender. That schedule will tell you exactly when your first payment is due and how much you will owe.

Unlike federal loans, many private loans have to be paid back before you graduate, so be sure to review your agreement closely and know exactly what you are going to need to do. Contact the lender directly if you have any questions.

Recommended: How to Pay Off College Loans

Named a Best Private Student Loans
Company by U.S. News & World Report.

If Repaying Loans Becomes a Problem

Nobody plans on not paying back their student loans, but sometimes life can throw a few financial punches that you weren’t expecting. A smart strategy if this were to happen to you: face the problem head-on.

Options for Federal Student Loans

If a borrower is struggling to make payments on their federal student loans, they may consider changing their repayment plan. Federal loans, as mentioned, offer income-driven repayment options which tie the monthly payments to the borrower’s income. This can help make monthly payments more manageable for borrowers.

In cases when even income-driven repayments are too much, borrowers may be able to apply for deferment or forbearance. These allow borrowers to pause their loan payments. Depending on the loan type, you may or may not accrue interest during periods of deferment or forbearance.

Options for Private Student Loans

Private lenders are not required to offer the same repayment plans or borrower protections (like deferment and forbearance, mentioned above) as federal student loans. Some private lenders may be willing to work with you during times of financial difficulty so that you can continue making payments. Check in directly with your lender to see what payment plans or options they may have available to you.

A Note on Student Loan Default

After a certain number of missed payments (which can vary depending on whether you have borrowed a federal or private student loan), your loan may enter default. That can have serious financial consequences, such as impacting your credit score.

Declaring bankruptcy generally won’t rid you of your federal student loan obligations. It is extremely challenging to get student loans (federal or private) discharged in bankruptcy.

What to Do if You Don’t Get Enough Federal Loans

It’s never too early (or too late) to begin researching methods of additional funding if your federal loans aren’t going to cover your tuition costs. Here are just a few to consider.

Scholarships

Scholarships do not typically have to be paid back. If you’re not sure where to begin your scholarship search, you might ask your high school guidance counselor for recommendations. An online scholarship search tool can also be helpful.

In addition, you may want to try local community and civic organizations, as well as businesses and religious groups. You can also ask about scholarships in your college’s financial aid office.

You can also try scouting scholarships based on a certain skill or talent: music, writing, sports, and even academics. Qualifying for multiple small scholarships could add up and go a long way toward helping ease your financial burden.

Grants

Grants work like scholarships in that you typically don’t have to pay them back. They are often offered by the federal government (and would be part of your federal aid package); in some cases, in exchange for a grant, you agree to work in a certain field for a set period of time after graduation.

Work-Study

Through the federal work-study program, you can earn money to put toward school expenses by working jobs around your college’s campus. If you are approved for the work-study program, it will be included as a part of your financial aid award. Then, you may need to apply for jobs that are part of the program. These jobs may be on- or off-campus.

If you can’t find a work-study job to fit your schedule, there may be other part-time job opportunities available off-campus. You could inquire about part-time work at your on-campus career services office.

Private Student Loans

As mentioned, a private student loan may cover the remaining tuition costs not covered by your federal financial aid package. Qualifying for these loans might require a credit check and your credit history can potentially affect your private loan interest rate. For undergraduates with little-to-no credit applying for private student loans, they may benefit from applying with a cosigner in order to qualify for a more competitive rate.

As another reminder, private loans are not required to offer the same benefits or borrower protections afforded to federal student loans. As a result, most students only consider private student loan options after all other sources of aid and funding have been carefully evaluated.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Apache is functioning normally

Apache is functioning normally

Once you decide where you want to go to college and what you want to major in, you may still have another decision to make — whether to pursue a Bachelor or Arts (B.A.) or a Bachelor of Science (B.S.) degree. Depending on the school and program, you may be limited to getting either a B.S. or a B.A. With some majors, however, you may have a choice. Whether you should go with a B.A. or B.S. will depend on both your educational and career goals.

Generally, a B.A. is more focused on the arts and humanities, while a B.S. is more centered around science and math. Read on for a closer look at a B.A. vs. a B.S., including how it can affect your coursework and future job options.

What’s the Difference Between a B.A. and a B.S.?

A Bachelor of Arts and a Bachelor of Science are both four-year undergraduate degree programs. Students completing either of these degrees will typically need to take similar general education requirements, such as courses in English, mathematics, natural science, writing, history, and social science.

A B.A. focuses on traditional liberal arts subjects like history, literature, art, philosophy, the social sciences, and other topics in humanities. It will provide a student with a more diverse course of study and may require fewer credits than a B.S. degree.

On the other hand, a B.S. program emphasizes science, engineering, technology, and math, and is more focused on one subject. When looking into a B.A. vs. B.S., you’ll want to decide what kind of job or graduate school program you want to pursue after graduation.

For instance, if you have a choice of earning either a B.A. or a B.S. in psychology and know you eventually want to go into one-on-one counseling with patients, you may want to choose a B.A. degree.

If, on the other hand, your plan is to earn a Ph.D. and pursue a career in research, then a B.S. may be a better choice. Keep in mind that some colleges offer students the opportunity to earn a B.A. or a B.S. in the same major, while other colleges don’t offer that choice.
💡 Quick Tip: SoFi offers low fixed- or variable-interest rates. So you can get a private student loan that fits your budget.

Which Degree Is Better?

When looking at a B.A. vs. a B.S., you may be wondering which one is better and more attractive to employers. In reality, it may not make much of a difference which one a student earns, as long as they have a bachelor’s degree in general.

Some employers may want graduates with a broader view of liberal arts topics, while others might prefer candidates who honed in on a particular subject. However, a candidate would probably not lose a job opportunity just because they had the “wrong” type of bachelor’s degree.

When prospective employers and graduate school admissions officers are looking at candidates, they generally care much more about factors like a student’s grades, the courses they took, the major they enrolled in, and which school they went to.

They may also care about whether or not a student completed internships and work-study programs related to their major.

Recommended: Return on Education for Bachelor’s Degrees

Finding a Good B.A. or B.S. Program

Instead of getting hung up on the difference between a Bachelor of Arts and a Bachelor of Science, you may want to instead dive into the content and quality of the curriculum you could be studying for the next four years. You can see if the curriculum sounds interesting to you and if it would be applicable to your future career.

You may also want to evaluate all the schools you want to apply to or have gotten into before making a decision.

It’s a good idea to research a school’s reputation through a site like College Board® or Niche to determine how hard it is to get into, who the alumni are, what kinds of opportunities their graduates have pursued, and the strength of their programs.

Of course, it’s critical to investigate the location, enrollment size, and cost of attendance as well. You may find it helpful to create a shortlist of potential colleges/bachelor’s programs and then rank what’s most important to you.

For example, if you want to go to a competitive grad school, you may want to emphasize selectivity for your undergraduate program.

If you’re concerned about how you’re going to pay for college, you may also want to look into programs that are less expensive or that tend to offer scholarships to students. You can also research your options for private and federal student loans to pay for school.

If it’s feasible, it can also be helpful to visit and tour potential schools. This gives you a chance to get a feel for the school and student body, and get all your questions answered. For example, you may want to ask about job and career support, including job fairs and on-campus interview opportunities, so you know you will have support and be set up for success after you graduate.

Recommended: How to Pay for College

Why Get a Bachelor’s Degree?

B.A. and B.S. degrees can be very similar. What matters in most cases is simply getting a bachelor’s degree. This can open you up to a broader range of professional opportunities, allowing you to fulfill your career goals as well as earn more money.

You can choose to go directly into the workforce following graduation and have an advantage over candidates who only have a high school diploma (or less), or you could choose to go to graduate school to earn an advanced degree.

According to the National Center for Education Statistics, the employment rate for 25- to 34-year-olds with a bachelor’s or higher degree was 87% in 2022, compared to 61% for those who had not completed high school.

Those with bachelor’s degrees also tend to earn more. In 2021, the median earnings of those with a bachelor’s degree were 55% higher than the earnings of those who only completed high school.

There are a number of personal benefits as well. Many students find college to be very fulfilling because they gain valuable skills like teamwork and time management.

They also learn how to take on challenges, which can improve their self-esteem. Research suggests that people with college degrees are more likely to volunteer, donate to charitable organizations, vote, and contribute to their communities than those without college degrees. They also tend to report higher levels of happiness.
💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

The Takeaway

A B.A. and a B.S. are both four-year undergraduate degrees that often require similar general education requirements, like math, English, and history. Broadly, B.A. degrees are more focused on liberal arts subjects, while B.S. degrees usually emphasize subjects like math and science.

Some schools may offer a B.A. and B.S. in the same subject, but with slightly different degree requirements, such as a B.A. or a B.S. in chemistry or computer science. The B.S. program typically has more required courses than the B.A. program.

Once you determine what degree you want to get and where you want to get it, you’ll likely also need to figure out how you’re going to pay for it. Fortunately, you have options, including financial aid (which may include grants, scholarships, work-study, and subsidized federal loans), as well as unsubsidized federal loans and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

Photo credit: iStock/mangpor_2004

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

Apache is functioning normally

When you’re in college, you likely want to choose a major that will lead to a successful and enjoyable career. If you’re a business marketing major, you may wonder whether the education you’re getting now will pay off in terms of the type of job you’ll qualify for after you graduate, and what you can earn.

Here’s a look at what you can expect as a marketing major — both during college and after you graduate.

What Does a Marketing Major Learn?

As a marketing major, you will learn various aspects and strategies for promoting a company or product, creating brand awareness, and building relationships with customers.

You may study marketing tools like social media, content marketing, and advertising, as well as public relations, sales, marketing strategy, and consumer behavior.

Once you complete your degree, you should have a thorough understanding of how to employ these tools and tactics in the real world on behalf of your employer.
💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Who Is It Good For?

If you’re still trying to determine the best college major and are considering marketing, here’s some insight into the type of person who might thrive in a marketing career.

If you’re curious about how brands connect with customers and find yourself analyzing ads in magazines and on television, you might be a natural marketer. Marketers are typically creative and good communicators; you’ll need that ingenuity to come up with innovative marketing campaigns to compete with others in a given industry.

Depending on the job you get after college, you may work with a team on campaigns, or you may be solely in charge of doing multiple different tasks on your own. Ideally, you’ll be excited and confident about sharing your ideas for projects.

If you’ve got an analytical mind, so much the better. You’ll be able to analyze data to better understand what types of marketing efforts are working to reach your audience and which aren’t.

Recommended: 20 of the Most Popular College Majors

Why Consider Marketing?

Marketing isn’t a trendy or even industry-specific career; it’s one that every brand on earth needs. As a result, there will likely always be careers in marketing. Because marketing is what propels a company to sell products or services, it has a return on investment, and that means that companies are willing to also invest in smart marketing professionals.

Everywhere you look, there’s marketing, from the product placement in your favorite television show to the daily Instagram posts from influencers that offer “sponsored content.” Being a part of this exciting field gives you the opportunity to shape how consumers connect with brands.

Recommended: How Do You Change Your Major?

What Jobs Can a Marketing Major Get?

So you’ve majored in marketing and now you want to know your career options. What does a marketing major do after graduating? And what professional goals can you set down the road, once you’ve had more experience?

Entry-Level Marketing Jobs

Depending on your specific interest in marketing, there are several paths you could take after graduation.

If you enjoy working with advertising, you could get work as a media buyer, who is in charge of purchasing ads, both digital and print, to achieve marketing goals. Average annual salaries can be as high as $80,195.

If you enjoy dabbling in different aspects of marketing, you could be a marketing coordinator. You might be a part of planning and launching marketing campaigns and events, managing email marketing, and writing content for different platforms. The national average annual salary is $51,283.

If you lit up in your public relations coursework, a public relations assistant might be a good first job. You’ll be tasked with creating press releases and pitch letters, and connecting with the media to get interviews and media coverage for your brand. Salaries vary, but the average is around $42,642 a year.

Recommended: Return on Education for Bachelor’s Degrees

Marketing Jobs for More Experienced Professionals

Once you have a bit of experience in your entry-level marketing job, you may be eligible for a promotion or could qualify for a more advanced role with a different company like the following ones.

A public relations manager has approximately six to eight years of experience working in PR. In addition to building relationships with journalists and influencers and securing media coverage for a brand, this role may also hire and manage other PR roles as well as writers and designers. The average salary for this role is around $62,810.

A marketing director could be a good goal after you build experience as a marketing coordinator and have five to 10 years of marketing experience. This role is involved in the planning of marketing activities, building a budget, and forecasting sales. You may oversee a marketing team, including internal staff and freelancers. The average salary for this position is approximately $141,490, but can vary widely.

Another option once you have one to five years of experience, specifically in sales, is as a sales manager. This role analyzes sales data to shape sales and pricing strategy and may train or manage sales staff. The average salary for a sales manager is $107,500.

Launching Your Own Marketing Business

You’re not limited to working for someone else in your marketing career; many professionals get experience under their belt by working for companies of all sizes, then decide to open their own business. That could be a one-person content marketing business run out of your home or a PR firm with office space and staff.

Starting your own business gives you the flexibility of working when you want, and to choose exactly the marketing, advertising, or PR services you want to specialize in. It does, however, require plenty of hard work and dedication: without the stability of a regular paycheck, you aren’t guaranteed to make a certain amount of money.

Recommended: Ca$h Course: A Student’s Guide to Money

What Can a Marketing Major Earn?

Understandably, you want some reassurance that what you’ll make in your career after graduating will help you quickly pay off any student debt and help you become financially successful.

Generally, students can expect to make the least right after graduating, since they’ll have little to no work experience. Salary expectations for entry-level marketing positions can vary based on factors like where you live and the industry you want to work in. Some companies may offer hiring bonuses or commission on top of that salary.

As you build experience, your salary will generally increase. Again, this will depend on your specific experience and accomplishments as well as the industry and company you work for.
💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

The Takeaway

Only you know whether marketing is a field that you will thrive in and enjoy being a part of, but suffice it to say that there is an opportunity to learn a wide range of marketing skills and career advancement potential if you’re willing to put in the work to climb that corporate ladder.

Of course, as a student, you’re still a long way from earning a sizable salary, and coming up with enough funds to cover the high cost of college can be challenging. Fortunately, no matter what you’re thinking about majoring in, you have a range of funding options, including grants, scholarships, federal work-study programs, and both federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com