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If you already have student loan debt — or you’re considering taking out loans to pay for school — it can help to understand what the student loan landscape looks like in 2026. The federal student loan system has undergone significant changes in recent years, with pandemic-era relief fully phased out and new repayment rules reshaping how and when borrowers pay back what they owe.

For many Americans, student loans represent more than just a monthly bill. Education debt can influence career choices, housing decisions, and long-term financial goals like saving for retirement. Below, we break down the latest student loan debt statistics to provide a clearer picture of how much borrowers owe today, how repayment is going, and what these numbers mean for both current and future borrowers.

Overview of Student Loan Debt in America

While national averages provide a useful snapshot of student debt, individual borrowing experiences vary widely. How much debt a student takes on depends on several factors, including the type of school they attend (public vs. private), living arrangements, financial aid received, and whether they use federal or private student loans.

With that context in mind, the following statistics offer a broad overview of student debt debt in the U.S.

Total Outstanding Student Loan Balance

Student loan debt — including both federal and private student loans — totaled approximately $1.83 trillion as of November 2025, according to the Federal Reserve. This figure reflects the cumulative burden carried by tens of millions of Americans who borrow to finance college, graduate school, and other credential programs.

Average Student Loan Debt per Borrower

The average federal student loan debt is $39,075 per borrower. When private loans are included, the total average student loan debt rises to an estimated $42,673.

Borrowing amounts also vary significantly by institution type. Students who attend public universities typically borrow less than those enrolled in private schools. On average, borrowers who attend public institutions take out $33,910 to complete a bachelor’s degree, while those attending private colleges borrow around $40,970.

Across all borrowers, the average monthly student payment generally falls between $200 and $299, though payments can be substantially higher for borrowers with graduate or professional degrees.

Federal vs Private Student Loan Debt Breakdown

Federal student loans make up the overwhelming majority of outstanding student loan debt. According to the Education Data Initiative, 91.6% of all student loan debt is federal, while private loans account for just 8.43%.

Federal loans are issued by the U.S. government and typically offer borrower protections such as income-driven repayment, deferment options. and forgiveness programs. Private student loans, which are issued by banks, credit unions, and online lenders, may allow for higher borrowing limits but generally lack the same safety nets and flexibility.

Bachelor’s Degree Debt Statistics

Undergraduate borrowers represent a large share of student loan holders. Students attending public colleges often graduate with less debt due to lower tuition and fees.

On average, borrowers who earn a bachelor’s degree from a public institution take out $31,835 in total student loans (including federal and private loans). Those who attend private universities borrow an average of $39,548 to complete their degree.

Master’s Degree Debt Statistics

Graduate and professional programs typically involve higher borrowing levels due to increased tuition costs and longer periods of enrollment without full-time income.

On average, borrowers with a master’s degree owe $81,870 in total student loans, with $64,440 attributable to graduate school alone. Debt levels also vary by institution type:

•   Master’s degree holders who attended public universities carry an average total debt of $69,624, with $47,560 coming from graduate studies.

•   Those who attended private graduate schools owe an average of $95,381, including $79,329 from graduate school alone.

Doctoral Degree Debt Statistics

Doctoral and professional degree holders — such as those earning Ph.D.s, M.D.s, or J.D.s — generally carry the highest student loan balances. These elevated debt levels often reflect lengthy programs, high tuition, and years spent out of the full-time workforce.

Borrowers pursuing a research doctorate or Ph.D. can expect to graduate with $70,000 or more in student loan debt. The average debt among Ph.D. holders is $77,331, including undergraduate loans.

Professional doctorate programs are typically the most expensive. Medical and law school graduates owe an average of $279,881 in graduate school debt alone.

The financial return on doctoral degrees varies widely by field, making student loan debt more manageable in high-earning professions like medicine and law, but potentially more burdensome in fields with lower post-graduate salaries.

Associate Degree and Certificate Program Debt

Associate degrees and certificate programs generally have lower tuition costs and shorter completion times, resulting in smaller student loan balances. Many students in these programs also work while enrolled or live at home, reducing their reliance on borrowing.

Student loan balances for associate degree holders typically range from $10,000 to $15,000. Among students attending public two-year institutions, only about 31% use student loans to pay for school.

Repayment Challenges and Delinquency Rates

Given the current debt levels, it’s not surprising that many borrowers struggle to stay current on their student loan payments.

Federal student loans become delinquent the day after a missed payment. If a borrower is delinquent for 90 days or more, it can potentially damage the borrower’s credit score. After 270 days of nonpayment, federal loans typically enter default, which can trigger serious consequences such as wage garnishment, tax refund seizure, and loss of access to federal repayment options.

Percentage of Borrowers in Delinquency

According to a November 2025 report from the Urban Institute, approximately 16% of student loan borrowers nationwide are at least 60 days behind on their payments — representing nearly 6 million Americans.

Delinquency rates now exceed prepandemic levels and are particularly high in several Southern states. In Louisiana, Mississippi, and Georgia, more than one in five borrowers is past due on student loan payments.

Factors Contributing to Delinquency

Several factors contribute to elevated delinquency rates, including:

•   End of pandemic protections: After years of paused payments and the temporary “on-ramp” period that shielded borrowers from negative credit reporting, many borrowers lost (or never developed) the habit of budgeting for monthly student loan payments.

•   High-interest consumer debt: Borrowers are increasingly juggling high-interest credit card and auto loan payments, often prioritizing these over student loans to manage overall financial stress.

•   High cost of living: Inflation has increased the cost of housing, groceries, and utilities, leaving borrowers with less disposable income to allocate toward loan payments.

Recommended: How Much of My Income Should Go to Student Loans?

Impact of Student Loan Debt on Life Milestones

Student loan debt doesn’t just affect monthly budgets — it can also shape major life decisions and long-term financial well-being.

Homeownership Rates

High student loan balances can delay homeownership by limiting borrowers’ ability to save for down payments or qualify for a mortgage. Delinquent student loans further reduce access to credit by lowering credit scores.

According to the Education Data Initiative, borrowers with more than $35,000 in student loan debt are 27% less likely to be homeowners. In addition, since 2005, every $1,000 increase in student loan debt has been associated with a 1.8% decline in homeownership rates among college graduates under 35.

Delayed Marriage and Children

Education debt is also linked to delays in marriage and parenthood. Finance strain can lead young adults to postpone these milestones until they feel more financially secure.

A March 2025 literature review by the Council on Contemporary Families found that adults with student debt are less likely to marry or have children compared to their peers who left college without any debt. The review also noted that rising student debt increasingly leads young adults to delay marriage and choose cohabitation as an alternative or precursor to marriage.

Career Choices and Job Mobility

High levels of student debt can limit career flexibility, pushing graduates to prioritize higher-paying roles over jobs aligned with their interests or values. A February 2025 study by the MissionSquare Research Institute found that student debt influences job-acceptance decisions for 56% of public-sector employees and 62% of private-sector workers.

Debt can also limit geographic mobility. Steep loan payments make it harder to relocate to cities with higher costs of living — even when those cities offer better long-term career opportunities.

For some borrowers, refinancing student loans may help reduce interest rates or monthly payments, creating more financial breathing room. However, refinancing federal student loans with a private lender permanently eliminates access to federal protections such as income-driven repayment and loan forgiveness programs. Also, extending your loan term can increase the total interest paid over the life of the loan.

Recommended: Student Loan Refinancing Calculator

Trends in Student Loan Forgiveness and Relief Programs

Recent policy changes have reshaped student loan repayment plans and forgiveness options, signaling a shift toward longer repayment horizons and stricter eligibility requirements for some programs.

Income-Driven Repayment and PSLF Participation

Federal policy is moving toward consolidating and updating income-driven repayment (IDR) plans. Beginning in July 2026, a new repayment option called the Repayment Assistance Program (RAP) will be introduced and will fully replace previous IDR plans by 2028. RAP caps monthly loan payments at a percentage of a borrower’s income over a 30-year term, after which any remaining balance is forgiven. Early analysis suggests, however, that RAP could result in higher total repayment costs for some low-income borrowers compared to previous IDR options.

Public Service Loan Forgiveness (PSLF) — which forgives remaining federal loan balances after 10 years of qualifying payments for borrowers working full-time in public service — remains available. That said, new regulations proposed by the Trump administration could narrow which employers qualify for PSLF and potentially exclude certain nonprofit or advocacy organizations. These rules are scheduled to take effect July 2026, though ongoing legal challenges may delay that timeline.

Recommended: Guide to Student Loan Forgiveness

The Takeaway

The student loan landscape is complex and evolving, but understanding these statistics can help borrowers make more informed financial decisions. With average debt levels high, student loans often represent an investment in education and future earning potential.

Whether you’re considering taking out student loans, refinancing existing student debt, enrolling in the new RAP program, or working towards Public Service Loan Forgiveness, the key is to plan ahead and understand your options. With the right strategy, borrowers can better manage their debt while building toward long-term financial stability.

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.

FAQ

What is the average student loan debt for bachelor’s degree holders?

The average student loan debt for bachelor’s degree holders varies by institution type. On average, borrowers who graduate from a public university take out approximately $31,835 in total student loans, while those who attend a private university borrow a higher average of $39,548 to complete their bachelor degree.

Which degree level tends to have the highest student loan debt?

Doctoral and professional degree holders generally carry the highest student loan balances. Those who earn Ph.D.s, M.D.s, or J.D.s have the most debt because these programs are often lengthy and have high tuition costs.

Specifically, professional programs like medical and law school result in the largest amounts, with graduates owing an average of $279,881 in graduate school debt alone. The average debt for Ph.D. holders, including undergraduate loans, is $77,331.

How do student loan debt statistics vary by region or state?

Student loan statistics in the U.S. vary significantly by state, driven by factors such as the cost of living, tuition rates, regional income disparities, and the availability of state-level grant programs. As of 2025, average federal student loan debt per borrower ranges from just over $29,000 to over $54,000, depending on the state.

The District of Columbia consistently ranks highest in average federal student loan debt, with residents averaging roughly $54,561 per borrower. Other states with high average debt include Maryland, Georgia, Virginia, and Florida.

North Dakota and Wyoming often report the lowest average student loan debt per borrower, with figures for around $29,115 and $30,631 respectively.

What percentage of student loan borrowers are still in repayment?

Approximately 20% of adults with undergraduate degrees have outstanding student debt. Among those who hold postgraduate degrees, roughly 24% report outstanding student loans.

How has the student loan debt total changed over the past decade?

The total outstanding student loan balance in the U.S. has increased significantly over the last decade, reflecting rising tuition costs and greater reliance on borrowing for higher education. As of November 2025, the total student loan debt (federal and private) reached approximately $1.83 trillion, up from about $1.016 trillion in 2015. This represents an increase of around 80% over ten years, making student loans the second-largest category of consumer debt after mortgages.

Photo credit: iStock/Visions

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

SOISL-Q126-007

A Master of Business Administration (MBA) is a highly valued degree in the business world and can put you on a path to a successful and high-paying career. However, these degrees don’t come cheap. In fact, the total cost of an MBA in the U.S. can range from around $78,000 (for in-state students at a public school) to $270,000 (for a private top tier university), including full-time tuition, mandatory fees, textbooks, supplies, technology costs, and living expenses.

Is it worth it? The answer depends on myriad factors, including what school you go to, what financial aid you qualify for, and your future career goals. Read on for a closer look at the real costs and benefits of getting an MBA.

MBA School Requirements

To be accepted into an MBA program, students typically need to submit proof of a bachelor’s degree from an accredited institution, a personal statement, letters of recommendation, and a resume. Many business schools also require a standardized test score such as the GMAT or GRE.

Once enrolled, full-time MBA students generally need to complete 60 credits over two years. Some accelerated MBA programs may be finished in as little as one year. A part-time MBA program is designed to accommodate working students and generally takes three to five years to complete.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

MBA School Costs

How much an MBA costs will depend on a variety of factors, including school prestige, location, whether the school is public or private, and the program format (e.g., full-time, part-time, or online). MBA costs are also influenced by a student’s ability to qualify for financial aid, scholarships, and employer assistance.

Private and Public MBA Tuition

Going to a public university as an in-state student is often the most cost-effective way to get an MBA. For example, 2025-26 tuition at the University of Michigan’s Ross School of Business was $18,962 for first-year in-state students, compared to $64,556 for nonresidents. Private business schools typically run even higher. For example, the tuition at Columbia Business School was $91,172 for first-year MBA students in 2025-26.

Total Cost of an MBA

The total cost of an MBA degree means more than just tuition expenses. Many MBA students will have to pay for living expenses, textbooks, transportation, and extracurricular activities. This more comprehensive expense list is used to calculate the total cost of attendance.

Additional Expenses (Fees, Books, Housing)

Here’s a breakdown of other approximate costs you can expect to pay per year when pursuing an MBA degree:

•   Fees: $240-$6,470

•   Books & Supplies: $1,200

•   Food and Housing: $16,250-$28,500

•   Loan Fees: $64

•   Opportunity Costs: $160,000 or two years of missed salary

Recommended: Is Getting an MBA Worth It?

How Much Does an Online MBA Cost?

Relocating or commuting may not be feasible for all prospective MBA students. Choosing an online MBA program can offer more flexibility and a lower overall cost for some students. Tuition for an online MBA degree varies widely, ranging anywhere from $11,000 to $126,000 per year depending on the school.

Recommended: The 14 Best Jobs for MBA Graduates

Cost-Benefit Analysis of Getting an MBA

At the lower end, tuition costs for business schools may come in around $16,400 (for an in-state student at a public university). At the higher end, it can run around $90,000 a year. Total cost of attendance, including food and housing, books, supplies, and other living expenses put the price tag even higher.

Even considering the increase in salary for those who graduate prestigious programs — Yale graduates make a median base salary of $175,000 a year — those upfront costs of tuition can be intimidating.

When weighing costs and benefits, you’ll want to also consider that many MBA programs offer scholarships, based on merit or need. NYU reports awarding merit-based scholarships to 20% to 25% of students, while around 50% of MBA students at Stanford receive need-based aid averaging $50,000 per year.

Average Salary Boost After Graduation

Generally, you can expect a nearly 70% increase in your salary after completing an MBA. Research suggests that MBA graduates earn around $120,000 per year on average, which is $50,000 higher than the average salary of graduates with only a bachelor’s degree.

Keep in mind that a number of things can influence your salary after graduating with an MBA, including the school you attended, the industry you work in, your location, and your pre-MBA salary. Plus, your salary is typically only your base pay. Many jobs for MBA graduates also offer a hiring bonus, stock options, relocation funds, and other high-value benefits, which can significantly boost your earnings.

Time to Break Even on Investment

How long it will take you to break even on your investment in an MBA will depend on the cost of your program and the career you choose after graduation. On average, MBA graduates start seeing a return on their investment (ROI) in five to six years.

Ways to Pay for Your MBA

Assuming you don’t have six figures in savings you can tap to pay for business school, you may need to get creative to cover the costs. Here are some ways to pay for your MBA.

Employer Sponsorship

Employer sponsorship for an MBA involves companies partially or fully funding an employee’s degree in exchange for continued service, typically for one to three years post-graduation. Some employers may require you to sign an agreement that you will repay funds if certain conditions aren’t met.

Student Loans

Depending on your financial situation, you may want to consider applying for a student loan, whether private or federal, to pay for your MBA.

Federal Student Loans

MBA students may borrow up to $20,500 per year in Direct Unsubsidized Loans from the Federal government. The interest rate is currently fixed at 7.94% for loans dispersed by July 1, 2026.

While Federal Grad PLUS Loans will no longer be available as of July 1, 2026, borrowers who already received a Grad PLUS loan before June 30, 2026, can continue borrowing under current terms through the 2028-29 academic year.

To apply for federal student loans for graduate school, you need to complete the Free Application for Federal Student Aid (FAFSA®) form.

Private Student Loans

Private student loans — available through banks, credit unions, and online lenders — can be a key resource for bridging the gap when federal aid, scholarships, and grants fall short. Unlike federal loan options, these loans generally require a credit check and often a cosigner. While terms vary by lender, students can typically borrow up to the full cost of attendance for an MBA program. In addition, some lenders offer specialized MBA loans with tailored repayment terms. Just keep in mind that private student loans generally don’t offer the same borrower protections as federal student loans (such as income-driven repayment plans or loan forgiveness options).

💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

Scholarships and Fellowships

Many business schools automatically consider applicants for merit scholarships based on GMAT/GRE scores, previous educational achievements ,and professional experience. A number of top schools also offer sizable need-based fellowships, which can significantly reduce your out-of-pocket expenses.

MBA scholarships are also available through private organizations and foundations. This type of funding may be awarded based on identity or affinity (such as being a woman or a Native American). Some business schools publish a list of scholarships awarded by external sources, including the amounts and requirements.

Graduate Assistantships or Part-Time Work

Getting a graduate assistant position can also help you pay for business school. These positions typically involve assisting faculty with research or administrative activities and may offer a stipend or hourly wage. Alternatively, you might be able to work as a teaching assistant (TA) or pick up a side gig or part-time job while studying to help you pay for MBA school.

Factors to Consider When Choosing an MBA Program

If you’re trying to decide which MBA program is right for you, here are two key factors to consider:

ROI by Program Type and School Ranking

When comparing business schools, it can be helpful to research the average ROI. This is typically calculated by dividing the average earnings of recent graduates by the average student debt incurred. According to a July 2025 U.S News analysis, these schools offer some of the best ROIs:

Recommended: Student Loan Payment Calculator

Program Format: Full-Time, Part-Time, or Executive MBA

You’ll also need to decide whether you want a full-time, part-time, or Executive MBA program. Here’s a closer look at each option:

•   Full-Time MBA: This can be a good choice for any student looking for full immersion in the student experience. It can also be ideal for early-career professionals looking for a significant career pivot (such as switching from engineering to investment banking or consulting). Full-time enrollment often provides greater access to scholarships, summer internships, and on-campus recruiting opportunities. However, it requires two years of lost income and often comes with high tuition fees.

•   Part-Time MBA: Studying part-time can be a good choice for mid-career professionals who want to move into management or get a promotion within their current field without losing income. Part-time programs offer flexibility scheduling, allow you to keep your salary, and may give you access to tuition assistance. On the downside, it can take three to five years to complete your degree. Plus networking/internship opportunities are typically more limited compared to full-time tracks.

•   Executive MBA (EMBA): An EMBA is specifically designed for mid-to-senior-level working professionals. It offers you a chance to advance your leadership skills without quitting your job, typically through a part-time, flexible format (such as every other weekend). While graduates receive the same Master of Business Administration credential as traditional MBA students, the program’s structure and focus are tailored to working executives. Tuition is often higher than a traditional MBA but is sometimes employer-sponsored.

The Takeaway

The true cost of an MBA degree extends beyond tuition to include fees, living expenses, and the opportunity cost of lost income. While the price tag can be significant, ranging from $78,000 to $270,000 for two years of full-time study including living expenses, the investment often yields a substantial return, with graduates seeing an average salary boost of nearly 70%.

By carefully evaluating the cost of attendance, exploring funding options like scholarships and loans, and considering the program’s potential ROI, prospective students can maximize their investment and make an informed decision about pursuing an MBA.

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.

FAQ

How much does it cost to get an MBA?

How much an MBA costs depends on factors like school prestige, program format (e.g., full-time, part-time, or online), and location. The average total cost in the U.S. generally ranges from $78,000 to $270,000, which includes two years of tuition, mandatory fees, and living expenses. You can save money by choosing an online or part-time program from a public university. These avoid expensive living costs and often have lower tuition rates than full-time, on-campus programs, while allowing you to keep working.

Is an MBA worth it?

An MBA can be worth it if it aligns with your career goals, provides valuable skills, and offers strong networking opportunities. It often leads to higher salaries and better job prospects, but the return on investment depends on the program’s reputation and your personal career trajectory.

Is an MBA worth it after 40?

Yes, an MBA can still be a valuable investment after age 40, especially if you are a mid-to-senior-level professional targeting an Executive MBA (EMBA) to advance into leadership roles. An EMBA is specifically designed for working executives and can boost your salary and broaden your network without requiring you to take a career break. The key is to choose a program that aligns with your specific career goals and offers a strong return on investment (ROI) for your current stage in life.

What’s the average student loan debt for MBA graduates?

The average debt for an MBA graduate is $76,996, according to the Education Data Initiative. Roughly 58% of MBA holders have student loan debt.

Do online MBA programs offer the same ROI as in-person programs?

Online MBA programs can offer a comparable, and sometimes even better, return on investment (ROI) compared to in-person programs. While in-person MBAs from top-tier schools often lead to higher immediate post-graduation salaries, online MBAs often provide a faster break-even point by minimizing upfront expenses and allowing students to remain employed while studying.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

SOISL-Q126-006

Paying for college often requires some form of student borrowing, but not all student loans work the same way. One of the biggest distinctions in the student loan system is between undergraduate and graduate borrowing. While both types of students may rely on federal and private loans, the rules, limits, and interest rates can vary significantly depending on your academic level.

Understanding these differences is especially important for student planning to move from an undergraduate program into graduate or professional school. Policy changes, borrowing caps, and eligibility requirements can dramatically alter how much aid you can access and how much debt you may be able to carry. With recent changes eliminating federal Grad PLUS loans starting in the 2026-27 academic year, graduate students will face a different borrowing landscape than in the past.

What follows is a comprehensive look at grad vs. undergrad loans and how students can plan strategically for higher education costs.

What Does Undergraduate Mean?

An undergraduate student is typically someone pursuing their first college degree beyond high school. This includes associate degrees (usually two years) and bachelor’s degrees (generally four years).

Undergraduates typically attend school full-time, though some choose to enroll part-time. Many are considered financially dependent on their parents, particularly for federal finance aid purposes. This dependency status influences how much aid they can receive and which loans are available to them.

💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

What Does Graduate Mean?

A graduate student is someone who has already earned a bachelor’s degree and is pursuing advanced education, such as a master’s degree, doctoral degree, or professional degree (such as law or medicine). Graduate programs are typically more specialized and academically demanding than undergraduate programs. They also tend to be more expensive, though scholarships and assistantships can offset costs.

Differences Between Undergraduate and Graduate Programs

Undergraduate and graduate programs not only differ academically, but also financially. Below are key differences between student loans for undergraduates and graduates.

1. Dependency Status

One of the biggest differences between undergraduate loans and loans for graduate students is dependency status. Undergraduate students may be classified as either dependent or independent, depending on factors such as age, marital status, and whether they have dependents of their own.

Dependent undergraduates must report parent income and assets on the Free Application for Federal Student Aid (FAFSA®), which can affect their eligibility for need-based aid. Independent undergraduates do not need to include parental financial information.

Graduate students, by contrast, are always considered independent students for federal aid purposes. This means they do not need to provide parents’ financial information, and only the student’s income and assets are considered when determining eligibility.

2. Interest Rates on Federal Student Loans

Federal student loan interest rates differ depending on whether the borrower is an undergraduate or graduate student. Undergraduate students qualify for lower interest rates on federal loans than graduate students. For loans disbursed between July 1, 2025 and July 1, 2026, undergraduates borrowers pay 6.39% on Direct Subsidized Loans and Direct Unsubsidized Loans, whereas graduate or professional students pay 7.94% for Direct Unsubsidized Loans (they don’t have access to Unsubsidized Loans).

Because graduate students no longer qualify for subsidized loans, interest begins accruing immediately upon disbursement, increasing the total cost of borrowing.

3. Loan Type

Undergraduate students have access to both Direct Subsidized and Direct Unsubsidized Loans. Subsidized loans are especially valuable because the federal government covers the interest while the student is enrolled at least half-time and for six months post graduation.

Graduate students, on the other hand, are only eligible for Direct Unsubsidized Loans. Starting July 1, 2026, federal Grad PLUS loans will no longer be available, removing a major borrowing option that previously allowed graduate students to cover remaining education costs beyond unsubsidized loans loan limits. Borrowers who already received a Grad PLUS loan before June 30, 2026, however, can continue borrowing under current terms through the 2028-29 academic year.

4. Borrowing Limits

Borrowing limits are another major difference between undergraduate vs. graduate school loans. Undergraduate students face relatively low annual lifetime loan caps, especially if they are classified as dependent students. These limits are designed to prevent excessive debt early in a student’s academic career.

Undergraduate students can borrow between $5,500 and $12,500 annually in federal Direct Subsidized/Unsubsidized Loans, depending on their year in school and dependency status, with total aggregate limits of $31,000 for dependent students and $57,500 for independent students.

Graduate students can access $20,500 per year in Unsubsidized Loans with an aggregate limit of $138,500 (including all federal loans received for undergraduate study). Effective July 1, 2026, students in graduate programs (master’s, PhD, etc.) will have the same annual borrowing limit ($20,500) but face an aggregate limit of $100,000 (not including loans borrowed as an undergraduate); students in professional programs (medical, dental, law, pharmacy, etc.) will have a $50,000 annual borrowing limit and a $200,000 lifetime borrowing limit (not including loans borrowed as an undergraduate).

Without access to Grad PLUS loans (which cover the full cost of attendance), new graduate student borrowers may find that federal loans alone are not sufficient to cover the full cost of attendance, particularly at more expensive private universities and professional schools.

Recommended: Student Loan Payment Calculator

5. Interest Rates on Private Student Loans

Private student loan interest rates are determined by the lender and are based on factors such as credit score, income, and debt-to-income ratio. Undergraduate students often need a cosigner — typically a parent — to qualify for competitive private loan rates due to limited credit history. Rates on private student loans can sometimes be lower than federal rates, but you generally need excellent credit to qualify for the lowest rates.

Graduate students may qualify for private graduate loans on their own, especially if they have established credit or stable income.

Interest starts accruing immediately after loan disbursement, and you may have to start making payments while you’re still in school (policies vary by lender). In addition, private student loans lack the same borrower protections that come with federal student loans, such as income-driven repayment and federal forgiveness programs.

6. Student Loan Refinancing

Student loan refinancing allows borrowers to replace one or more existing loans with a new loan, ideally at a lower interest rate. Both undergraduate and graduate borrowers can refinance. Eligibility and terms depend on lenders’ criteria, which may include credit, income, and loan details.

Undergraduates may choose to refinance after graduation once they have steady income and good credit. Graduate borrowers, who often accumulate larger balances, may refinance to reduce monthly payments or interest costs. However, refinancing federal loans into private loans eliminates access to federal benefits, which may be particularly risky for graduate student borrowers with high debt and uncertain income.

7. Federal Grants

Federal grants are far more accessible to undergraduate students than to graduate students. Programs like the Pell Grant are designed specifically for undergraduates with significant financial need and do not require repayment.

Graduate students generally do not qualify for federal grants, with limited exceptions for specific programs or fields of study. As a result, graduate funding relies more heavily on loans, assistantships, and employer support.

8. Eligibility for Income-Driven Repayment Plans

Both undergraduate and graduate federal student loan borrowers are eligible for income-driven repayment (IDR), which caps monthly payments based on income and family size. An income-driven plan also extends your loan term to 20 or 25 years. If your federal student loans aren’t fully repaid at the end of the repayment period, any remaining loan balance may be forgiven.

There are currently three IDR plans, but borrowers who take out loans on or after July 1, 2026 will only have access to one income-based repayment plan — the Repayment Assistance Plan (RAP). Under RAP, monthly payments will be calculated as a percentage of the borrower’s adjusted gross income minus $50 per month per dependent. RAP provides loan forgiveness after 30 years of qualifying payments.

While IDR plans can provide relief, they may result in higher total interest costs over time. Borrowers should carefully weigh the long-term implications, especially if they expect income growth after completing a graduate degree.

9. Availability of Parent PLUS vs. Grad PLUS Loans

Another important distinction is who can take out loans on a student’s behalf. Parents of dependent undergraduate students may access Parent PLUS loans to help cover education costs not met by other aid. Parent PLUS loans are not available to parents of dependent graduate students.

Graduate students previously had access to Grad PLUS loans, which allowed them to borrow up to the full cost of attendance. However, Grad PLUS loans will no longer be available starting on July 1, 2026. This policy change significantly limits federal borrowing options for graduate and professional students and increases the importance of alternative funding strategies.

💡 Quick Tip: Parents and sponsors with strong credit and income may find more-competitive rates on no-fees-required private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Thinking Outside the Box: Paying for Graduate School

With fewer federal loan options available, graduate students may need to be more creative in financing their education.

Becoming a Teaching or Research Assistant

Many graduate programs offer teaching assistantships (TAs) or research assistantships. These positions often provide an hourly or monthly salary, tuition waiver, and/or stipend. In exchange, students assist with teaching undergraduate courses or conducting research alongside faculty members.

Assistantships can significantly reduce the need for student loans while also providing valuable academic and professional experience.

Working Full-Time as a Grad Student

Some students choose to work full-time while pursuing graduate school part-time or through flexible programs. While demanding, this approach allows students to pay tuition as they go and minimize borrowing.

Online and evening programs have made this option more feasible, particularly for working professionals seeking career advancement rather than a complete career change.

Finding Scholarships

Scholarships are not just for undergraduates. Many organizations, professional associations, and universities offer scholarships specifically for graduate students. These awards may be merit-based, need-based, or tied to a specific field of study.

Although scholarships may not cover the full cost of graduate school, stacking multiple smaller awards can significantly reduce a student’s dependence on loans.

Utilizing Employer Tuition Assistance Programs

Employer tuition assistance is an often-overlooked benefit. Many employers offer tuition reimbursement or direct tuition payments for employees pursuing advanced degrees related to their job.

This benefit can significantly offset graduate school costs and may come with the added advantage of continued employment and income while studying.

Attending School Part-Time to Reduce Debt Load

Attending graduate school part-time can lower annual tuition costs and allow students to spread expenses over a longer period. While it may extend the time to degree completion, it can reduce reliance on loans and improve long-term financial stability.

The Takeaway

Undergraduate and graduate student loans differ in key ways, including loan types, interest rates, and borrowing limits. Undergraduate students generally benefit from lower interest rates, access to subsidized loans, and federal grants, while graduate students often face higher costs and fewer aid options.

With the elimination of federal Grad PLUS loans beginning in July 2026, graduate students will need to plan even more carefully. Understanding these differences — and exploring alternatives like assistantships, employer benefits, and scholarships — can help students make informed decisions and avoid unnecessary debt.

Whether you’re just starting college or considering graduate school, knowing how student loans change at each stage can help you plan more effectively for the years ahead.

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.

FAQ

Do graduate students borrow more money than undergraduate students?

Generally, yes. Graduate and professional students tend to borrow significantly more than undergraduates. This is due to several factors, including higher tuition costs for advanced degrees, the fact that graduate students typically have fewer grant options, and higher federal borrowing limits. While undergraduate federal aggregate limits are relatively low ($31,000 to $57,500), graduate students have much higher limits on federal Unsubsidized Loans, and previously had access to Grad PLUS loans to cover the full cost of attendance.

Do graduate student loans have higher interest rates?

Yes, federal graduate student loans have higher interest rates than federal undergraduate student loans. For loans disbursed between July 1, 2025 and July 1, 2026, the rate for federal Direct Unsubsidized Loans for graduate students is 7.94%, while the rate for undergraduates is 6.39% for both subsidized and unsubsidized loans. Private loan rates vary based on creditworthiness, but some lenders may charge higher rates for graduate-level borrowing.

What is considered an undergraduate loan?

Undergraduate federal loans are financial aid options available to students pursuing an associate’s or bachelor’s degree. They primarily consist of federal Direct Subsidized and Direct Unsubsidized Loans, which offer lower interest rates and lower annual and aggregate borrowing limits than graduate loans. Private student loans are also available for undergraduates, often requiring a cosigner due to the borrower’s limited credit history.

Can graduate students get federal grants?

Generally, no. Federal grants, like the Pell Grant, are largely reserved for undergraduate students who demonstrate significant financial need. Graduate students rarely qualify for federal grants, with some exceptions for specific fields of study (like education). Graduate students typically rely on federal and private loans, as well as institutional funding like scholarships, fellowships, and assistantships, to finance their advanced education.

Are graduate student loans eligible for forgiveness programs?

Yes, graduate student federal loans are eligible for forgiveness programs, primarily through Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF). IDR plans cap your monthly payments based on income and family size, with any remaining balance forgiven after 20, 25, or 30 years of qualifying payments. PSLF is an option for borrowers working full-time for a qualifying government or nonprofit organization, offering forgiveness after 10 years of payments. Refinancing federal loans into private loans, however, eliminates access to these federal forgiveness options.

SoFi Private Student Loans
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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SOISL-Q126-005

You may have heard that consolidating your debts can hurt your credit score. So, if you’re considering this financial strategy to free up cash flow and otherwise streamline debts, it’s natural to wonder if that’s true. And like so many questions related to finances, the answer depends upon your specific situation.

It’s important to remember that a combination of many factors can affect credit scores and to understand how those factors are considered in credit score algorithms. We’ll use FICO® as an example—according to them, the high-level breakdown of credit scores is as follows:

•  Payment history (35%): This includes delinquent payments and information found in public records.

•  Amount currently owed (30%): This includes money you owe on your accounts, as well as how much of your available credit on revolving accounts is currently used up.

•  Credit history length (15%): This includes when you opened your accounts and the amount of time since you used each account.

•  Credit types used (10%): What is your mix? For example, how much is revolving credit, like credit cards? How much is installment debt, such as car loans and personal loans?

•  New credit (10%): How much new credit are you pursuing?

Now, here is information to help you make the right debt consolidation decision.

Benefits of Debt Consolidation

When you’re juggling, say, multiple credit cards, it can be easy to accidentally miss a payment. Depending on the severity of the mistake, that can have a negative impact on your credit score. This, in turn, can make it more challenging to get loans when you need them, or prevent you from getting favorable loan terms, like low interest rates. Plus, even if you don’t miss a payment, when you have numerous credit card bills to juggle, you probably worry that one will get missed.

Plus, it’s not uncommon for credit cards to have high interest rates, and when you only make the minimum payments on each of them, you very well may be paying a significant amount of money each month without seeing balances drop very much at all.

So, when you combine multiple credit cards into one loan, preferably one with a lower interest rate, it’s much more convenient, making it less likely that you’ll accidentally miss a payment. And paying less in interest will likely make it easier to pay down your debt.

How you handle your debt consolidation, though, and the way in which you manage your finances after the consolidation each play significant roles in whether this strategy will ultimately help you.

Steps to Take: Before the Debt Consolidation Loan

Debt accumulates for different reasons for different people. For some, unexpected medical bills or emergency home repairs have served as culprits. For others, being underemployed for a period of time may have caused them to start carrying a credit card debt balance. For still others, it may be about learning how to budget more effectively.

No matter why credit card debt has built up, it can help to re-envision a debt consolidation strategy as something bigger and better than just combining your bills. As part of your plan, analyze why your debt accumulated and be honest about which ones were under your control and which were true emergencies.

And if you end up using a lower-cost loan to consolidate your bills, consider using any money saved to build up an emergency savings fund to help prevent the accumulation of credit card balances in the future.

The reality is that, if you consolidate your debts in conjunction with a carefully crafted budgeting and savings plan, then debt consolidation can be a wonderful first step in your brand-new financial strategy.

Debt Consolidation: When It Can Help Your Credit Score

Based on the factors used by FICO, here are ways in which a consolidation loan can help credit scores:

Payment history (35%)

Because making payments on time is the largest factor in FICO credit scores, a debt consolidation loan can help your credit if you make all of your payments on time.

Amount currently owed (30%)

Although you may not instantly reduce the amount you owe by, say, consolidating all of your credit card balances into a personal loan, there can be a benefit to your credit score here. That’s because the credit score algorithm looks at credit limits on your cards, as well as your outstanding balances, and creates a formula that calculates your credit card utilization.

Here is more information about credit card utilization, including how to calculate and manage yours.

Credit types used (10%)

As you may know, there are several different types of credit, such as credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. According to myFICO , responsibly using a mix of these, such as credit cards and installment loans, may help your credit score.

However, it’s certainly not necessary to have one of each, and it’s not a good idea to open credit accounts you don’t intend to use.

Debt Consolidation: When It Can Hurt Your Credit Score

Now, here are ways that the same initial step—taking out a debt consolidation loan—may hurt your credit.

Payment history (35%)

As is the case with most loans, making late payments on a consolidation loan can hurt your credit score (depending on the severity of the situation). Loans in a delinquent status are mostly likely to have a negative impact on your credit, depending on the lenders’ policies.

Learn more about payment history .

Amount currently owed (30%)

Now, let’s say that you pay off all your credit cards with a personal loan and then you begin using them again to the degree that you can’t pay them off monthly. Any gain that you saw in your credit score will likely disappear as your credit utilization numbers rise again.

Another way that credit consolidation can harm your score is if you combine all of your credit card balances to just one credit card, resulting in a high utilization rate. But if you are able to keep it relatively low, it is less likely to negatively affect your score.

Learn more about amounts owed .

Credit history length (15%)

If you close credit cards that you pay off, you’ll reduce the age of your accounts, overall, and this can hurt your credit score.

Learn more about length of credit history .

Credit types used (10%)

If you combine all of your credit card balances into just one credit card, as described above, you won’t have opened an installment (personal) loan, so that won’t help with diversifying credit types.

Learn more about credit mix .

New credit (10%)

If you apply for a personal loan or a balance-transfer credit card and are rejected, this can cause your credit score to decrease. And if you apply for multiple loans or credit cards, looking for a lender that will accept your application, this can also hurt your score. Multiple requests for your credit report information (known as “inquiries”) in a short period of time can decrease your score, though not by much.

Learn more about new credit .

Concerned about building or rebuilding credit? Check out a few tips SoFi put together on how to strategically boost your credit score.

Investigating a Personal Loan for Debt Consolidation

When it’s time to apply for the personal loan, you’ll want to get a low rate. In February 2019, the average credit card interest rate was reported as 17.67%; this means that, by not consolidating your credit cards into a personal loan with a lower interest rate, you could be paying more interest than if you did.

When choosing a lender, ask about the fees associated with the loan. Some lenders charge fees; others,like SoFi, don’t. You can always use a lender’s annual percentage rates (APRs) as a way to understand the true cost of financing.

Also, you may consider calculating the shortest loan term that your budget can comfortably accommodate because, the more quickly you pay off the debt, the more money you’ll save over the life of the loan because you’re paying less in interest.

You can find more information about saving money as you consolidate your debts, and you can also calculate payments using our personal loan calculator.

Consolidate Your Debt with a SoFi Personal Loan

If you’re ready to say goodbye to high-interest credit cards and to juggling multiple payments each month, a SoFi personal loan may be a good option.

Benefits of our personal loans include:

•  Fast, easy, and convenient online application process

•  Low interest rates

•  No origination fees required

•  No prepayment fees required

•  Fixed rate loan

You deserve peace of mind. And by taking out a personal loan to consolidate debt, the stress of juggling multiple credit card payments can be history. Ready for your fresh start?

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 .

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.
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.

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