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Do Part-Time Students Have to Pay Back Student Loans?

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

One question that can come up for part-time students is whether they need to pay back student loans if they’re not attending classes full time. In short, if a student meets their school’s requirements for half-time enrollment, they are generally not required to make payments on federal student loans. Private student loans have their own terms and depending on the lender, students may be required to make payments on their loan while they are enrolled in school.

Part-time college enrollment is expected to increase 10% by 2031. Students may be part-time because of financial reasons, caregiver or parental duties, medical issues, or other reasons, but for all scenarios, balancing college with other duties and needs can be a struggle.

What Is a Part-Time College Student?

A part-time college student is someone who is not taking a full course load during any given academic quarter or semester. Individual schools set the standards for what counts as a full- or part-time student, but in general, full-time students may take about 12 credits or four classes at a time.

Part-time students may take anywhere from six to 11 credits or two to three classes per academic period.

Students may choose to attend college part-time in order to take care of family obligations, work a day job, or because of other circumstances that don’t allow them to take four classes at one time.

Repaying Student Loans as a Part-Time Student

In general, part-time students may not need to pay back their federal student loans while they are attending school as long as they don’t drop below half-time enrollment — or as long as they haven’t graduated.

What does this mean in practicality? If you’re a part-time student and you are taking at least half of the full-load credit hours, you generally won’t need to start paying off your federal student loans until you graduate, withdraw, or drop below half-time enrollment. Federal loans also come with a grace period, meaning you technically won’t be required to make payments for six months after graduating, withdrawing, or dropping below half-time enrollment.

For example, if a full course load at your school is 12 credits, and you’re taking six credits this semester, you are still enrolled at least half-time, and wouldn’t normally be required to start paying back your federal student loans.

If, however, you drop down below half-time enrollment by taking only one three-credit class, you would no longer be attending school at least half-time and may be required to start paying off your federal student loans.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

When Do I Have to Start Paying Back My Student Loans?

If you are a part-time student who graduates, withdraws, or drops below half-time enrollment, you may not need to start paying back your federal student loans right away. Many new grads, or those entering a repayment period for the first time, are given a six-month grace period, as mentioned above, before they have to start paying federal student loans back.

The exact length of any grace period depends on the type of loan you have and your specific circumstances. For example, Federal Direct Subsidized Loans and Direct Unsubsidized Loans all have a standard six-month grace period before payments are due.

Factors That May Influence the Grace Period

If you’re a member of the armed forces and are called to active duty 30 days or more before your grace period ends, you could delay the six-month grace period until after you return from active duty.

Another situation that could impact your grace period is if you re-enroll in school at least half-time before the end of the grace period. You will receive the full grace period again on your federal student loans when you graduate, withdraw, or drop below part-time enrollment.

This is because, in general, once you start attending school at least half-time again, you’re no longer obligated to start making payments on federal student loans. In this situation, you would still get a grace period after you graduate, even though you may have used part of a grace period while you were attending school less than half-time. Note that most loan types will still accrue interest during the grace period.

You may lose out on any grace period if you consolidate your federal student loans with the federal government during your grace period. In that scenario, you’ll typically need to start paying back your loan once the consolidation is disbursed (paid out).

Repayments for Private Student Loans

If you have private student loans, don’t count on getting a grace period before you start paying back your loans. Student loans taken out from private lenders don’t have the same terms and benefits as federal student loans, which means that private student loans may not offer a grace period at all or it may be a different length than the federal grace period.

Some lenders may require students make payments on private student loans while they are enrolled in school. If you have a private loan or are considering a private loan, check with the lender directly to understand the terms for repayment, including whether or not there is a grace period.

How Do I Pay Back My Student Loans?

There are things you can do to make paying back your loans as painless as possible. When you enter loan repayment on a federal student loan, you’ll be automatically enrolled in the Standard Repayment Plan, which requires you to pay off your loan within 10 years.

However, there are other types of federal student loan repayment plans available, including income-driven repayment plans like the SAVE Plan and loan forgiveness programs for public service, and it is always worth learning about the different plans so you can make an educated choice.

Recommended: Student Loan Forgiveness Guide

As mentioned, private student loans have different requirements than federal student loans. Individual lenders will determine the repayment plans available to borrowers.

Take a Look at Refinancing

One option you may want to consider is refinancing your student loans with a private lender. Refinancing your student loans allows you to combine your federal and/or private student loans into one new, private loan with a new interest rate and new terms.

It’s important to remember, however, that student loan refinancing isn’t right for everyone. If you refinance your federal loans, they will no longer be eligible for any federal repayment assistance, such as the Public Service Loan Forgiveness (PSLF) program or income-driven repayment plans.

The Takeaway

Part-time student loans who are enrolled at least half-time, based on the definition at their school, are generally not required to make payments on their federal student loans. Private student loans have terms and conditions that are set by the individual lender, and may require students make payments on their loans while they are enrolled in school.

If your student loan payments are due and you’re hoping to lower your interest rate or monthly payment, consider refinancing them with SoFi. (You may pay more interest over the life of the loan if you refinance with an extended term.) SoFi offers an easy online application, competitive rates, and no origination fees. It takes just two minutes to fill out an application and your credit score will not be impacted during the prequalification stage.

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 Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 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.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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Applying for Economic Hardship Deferment

Managing student loan payments can feel like a part-time job. It can be even more overwhelming if you’re experiencing financial trouble, whether that’s due to a job layoff, caring for a family member, or for another reason.

The good news is there are options available to those going through a rough financial patch, including the Economic Hardship Deferment program. But even then, it can be difficult to navigate all of the information on which deferment program you may be eligible to apply for based on the reason for your hardship and the type of student loans you have. So that’s what we’re going to discuss today.

Economic Hardship Deferment, also known as student loan financial hardship, is a program offered in certain cases on federal student loans for borrowers who are eligible and having an exceedingly difficult time making their student loan payments for financial reasons.

Below, we’ll discuss the Economic Hardship Deferment program and what it means for you and your loans, who qualifies to make a hardship claim for student loans, how to apply for the program, and whether it’s the right path for you. We’ll also cover alternatives to Economic Hardship Deferment.

What Is Economic Hardship Deferment?

Student loan deferment allows you to reduce or pause your student loan payments for a designated period of time. An Economic Hardship Deferment is awarded to those who are facing serious financial trouble, as determined by factors such as monthly income and family size.

Those approved for the program can take up to 36 consecutive months of deferment so long as they still meet the qualifications. All participants (except those in the Peace Corps) need to reapply each year.

An important distinction to understand is whether your loans will qualify for a deferment period where interest will accrue, or one where interest does not accrue. Generally, loans that are subsidized will not accrue interest during deferment, whereas an unsubsidized loan will.

In the event your loan qualifies for deferment but will continue to accrue interest, you’ll usually have two options: Make interest-only payments on the loan, or allow interest charges to rack up.

When you allow interest charges to accumulate on an unsubsidized loan, that interest will be tallied up and added to the balance of the loan at the end of the period. This is a process called “capitalization.”

Not only will you have a new, larger balance to pay off, but any future interest payments will be calculated on top of the new, higher balance, meaning you’re paying interest on top of interest. All else equal, the result is that your monthly payments will likely be even higher than they are now.

Which Loans Qualify for Economic Hardship Deferment?

This is a federal loan program, and not all federal loans qualify. Here are a few examples of loans that may qualify (and check the link below for a full, updated list of eligible loans):

•  National Direct Student Loans (NDSL Loans)

•  Federal Family Education Loans (FEEL Loans)

•  Federal Stafford Loans

•  Federal Perkins Loans

•  Federal Supplemental Loans for Students (SLS Loans)

•  Federal PLUS Loans

•  Federal Consolidation Loans

•  National Defense Student Loans

The Economic Hardship Deferment program is typically available for loans borrowed on or after July 1, 1993.

The Economic Hardship Deferment program is only available for federal student loans, so private loans borrowed through independent financial institutions won’t qualify. However, some private lenders offer their own hardship programs. If your lender offers such a program, they will have their own unique qualifications and application process.

It certainly doesn’t hurt to ask if you are in a difficult financial situation. Remember, lenders don’t want you to default on your loans, and are often willing to work with borrowers to find some sort of solution. With both federal and private loans, never hesitate to call the lender, discuss your situation, and explore options.

Who Qualifies for Economic Hardship Deferment?

To make a hardship claim for student loans, you will have to fill out paperwork and provide documentation proving that you are experiencing financial hardship. Some of the eligibility criteria for an Economic Hardship Deferment will depend on your income, family size, and the poverty income guidelines for your family size in the state where you live (150% of the state poverty level or less). It will also depend on what percentage your student loan payment is of your monthly adjusted gross income.

To qualify for Economic Hardship Deferment, you will need to provide personal information such as your name, Social Security number, and address. You’ll also need to know what type of loan you are requesting economic hardship deferment for.

Here are some examples of what you may need to prove to the loan servicer evaluating your eligibility for deferment:

  1. You’ve already been granted Economic Hardship Deferment on loans made under another federal student loan program.

  2. You’re receiving payments under a federal or state public assistance program during the time in which you request your loan deferment. Examples of such programs include Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps/Supplemental Nutrition Assistance Program (SNAP), or other forms of state assistance.

  3. You are serving as a Peace Corp volunteer.

  4. You work full-time (30 hours per week) and your monthly income does not exceed 150% of the poverty guideline for your family size and state.

Here’s how to tell if you meet this last guideline: First, determine your family size. This includes you, your spouse, any children who receive more than half of their support from you, any unborn children who are to be born during the deferment period, and anyone else living with you for whom you provide at least half of their support.

Next, find your family size on the following table, and compare it to your annual income (divide by 12 to get your average monthly income).

Family Size   Alaska     Hawaii     All Other States  
1 $18,210 $16,770 $14,580
2 $24,640 $22,680 $19,720
3 $31,070 $28,590 $24,860
4 $37,500 $34,500 $30,000
5 $43,930 $40,410 $35,140
6 $50,360 $46,320 $40,280
7 $56,790 $52,230 $45,420
8 $63,220 $58,140 $50,560
Each additional person, add $6,430 $5,910 $5,140

These figures are from 2023 and are subject to change annually.

You are likely to qualify for the student loan financial hardship program as long as you meet one of these prerequisites. If that is the case, and you would like to pursue the option, contact your lender or student loan servicer. Tell them you would like to apply for Economic Hardship Deferment. At this point, they typically ask you a series of questions and have you fill out an Economic Hardship Deferment Request form.

Pros and Cons of Economic Hardship Deferment

Pros

For someone who is in desperate need of reprieve from their student loan payments, the program can be a godsend. You may want to consider taking advantage of this program if the alternative is defaulting on student loans, which can have a long-lasting, detrimental effect on your credit score and history.

If your loans are subsidized, there is no cost to taking an Economic Hardship Deferment.

Periods of deferment are provided to borrowers who need time to find a job, increase their income, or recover from the many myriad of life events that could leave someone in a place of need. There is no shame in this, whatsoever, but it’s a great idea to use the deferment period to work on rebuilding.

Cons

With unsubsidized loans, taking a period of deferment will make the loans in question cost more over time. Even if you make interest payments during your deferment, you aren’t chipping away at the principal, and so all of those payments are essentially a wash. If you don’t make interest payments, the total value of those unpaid interest payments will be slapped on top of the loan balance, increasing your loan balance and the amount you’ll owe in interest, over time.

When the period of deferment ends, your monthly payment will likely be higher than it is now, which may be difficult for someone who is already experiencing financial hardship. Use the program if you need it, but know it can come with some costs in the long term.

It is also extremely difficult to qualify for Economic Hardship Deferment. The program utilizes stringent criteria to determine eligibility with income review using poverty level guidelines as noted above. (For example, a single person working full-time and earning $20,000 per year and living in California who is not already on food stamps or other forms of government assistance would probably not qualify for Economic Hardship Deferment.) This makes the program unavailable to many people who are legitimately having difficulty making their loan payments.

Alternatives to Economic Hardship Deferment

Forbearance

If you do not qualify for Economic Hardship Deferment, an option is to request forbearance. Forbearance is similar to deferment, though interest accrues in all cases, and periods of forbearance generally do not exceed 12 months (and could be shorter). You’ll need to check with your loan servicer to see if you qualify.

Income Driven Repayment Plans

There are four income-driven repayment plans, including the latest SAVE plan, that help make student loan payments more affordable by reducing them to a percentage of your discretionary income. SAVE, for example, caps your payments at 5% to 10% of your income, depending on the types of loans you have. Under other plans, your payments may be capped at anywhere from 10% to 20% of your income.

IDR plans also stretch your repayment timeline out up to 25 years. If you have any debt left over after than, it’s forgiven (though it may be subject to income taxes).

Though your monthly payments will be lower, which provides some immediate relief, you will pay significantly more in interest over time. It is possible to switch to an alternative repayment plan and back again if your financial situation improves.

Public Student Loan Forgiveness (PSLF) Program

With 10 years of on-time payments at a qualifying job (like a government worker, a teacher, a doctor, or nurse at a qualifying facility), it is possible to have student loans forgiven with the PSLF program. If you go this route, you’ll usually want to switch to an income-driven repayment plan.

Student Loan Refinancing

Another option to consider for both your federal and private student loans is student loan refinancing. Refinancing is the process of switching out your loan or multiple loans with one new loan at an (ideally) lower rate of interest.

The lower rate of interest could save you money on interest payments over the life of the loan. Use a student loan refinancing calculator to see how lower interest rates affect your monthly payments.

It’s important to know that if you refinance federal loans with a private lender, you will lose access to federal student loan programs such as Economic Hardship Deferment or PSLF.

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


SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 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.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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6 Reasons Your Student Loan Refinance Can Be Denied

If you’re struggling with student loan payments or looking for a better deal on your debt, refinancing your student loans could be a smart financial decision. Unfortunately, not everyone who applies for student loan refinancing is successful.

If you’ve had your application for refinance denied, you may feel confused and disappointed. But getting a no isn’t the end of the road.

There are some common reasons why your loan may have been denied. By understanding those factors, you can take steps to correct any gaps or weak spots in your application and possibly improve your chances of refinancing in the future. Considering the advantages of refinancing for many borrowers, the effort might be worth it.

Common Reasons that Refinance Applications Are Rejected

If you’ve had your application for student loan refinance denied, the decision can feel like a mystery. The lender might not necessarily explain the reasons behind its actions, and you may be left feeling puzzled and stuck. As with a car loan rejection or mortgage modification rejection, a common thread is that the institution feels lending you money is too much of a risk. Read on to see if one of the scenarios below applies to you.


💡 Quick Tip: Some student loan refinance lenders offer no fees, saving borrowers money.

1. You Have a Low Credit Score

Lenders want to feel confident that borrowers will pay back the debt. One of the primary ways that they measure how risky you are as a borrower is by looking at your credit score. Many factors affect your credit score, including whether you’ve missed payments on credit cards or other bills, your credit history, and how much debt you’re carrying relative to your credit limits.

You can find out your current credit score through one of the three major credit bureaus: Experian, Equifax, and TransUnion. If your score isn’t up to par, that could be enough to have your loan denied.

2. You’ve Missed Payments in the Past

For some, it’s easy to let a student loan payment slip now and then. Perhaps you ran into financial difficulties and couldn’t afford to pay, or maybe you simply forgot amid the chaos of life.

Even though it’s understandable, lenders don’t look at a history of missed payments lightly. If you’ve failed to pay in the past, they may see this as a sign that you’ll skip payments with them as well. If your loan is delinquent or in default because you’ve missed too many payments, a potential lender may be even more concerned.

3. You Don’t Make Enough Money

When deciding whether they trust you as a borrower, financial institutions want to feel confident that you can afford to repay the loan. If your salary is low compared to the monthly payment you would owe, lenders might make the call that you’re at risk of not being able to pay.


💡 Quick Tip: It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to financial advisors, networking events, and more — at no extra cost.

4. Your Debt-to-Income Ratio Is Too High

Even if you earn a decent salary, a private lender could deny your application if they think your debt-to-income ratio is too high. Your debt-to-income ratio is the ratio of your outstanding debt to how much you currently make. Debt here includes anything you owe, including a mortgage, a car loan, student loans, credit card balances, or medical bills.

If those liabilities are high compared to your salary, the lender can decide that giving you a loan is too risky because you may not be able to afford it with your existing financial obligations.

5. You Don’t Have a Solid Job History

Lenders aren’t just looking at your salary. Many also want to get a sense of how solid your job is by considering things like how long you’ve been in your current role, past gaps in employment, and how often you change jobs.

If you haven’t held onto a job long or had much work experience, a lender could fear that you are at risk of losing your current gig — and your income along with it.

6. You Have Other Financial Black Marks on Your Record

A lender is looking out for any sign that you may not be a trustworthy borrower. A significant negative financial event in your history such as a lien, judgment, foreclosure, or bankruptcy can be a red flag for the institution. There may have been a good reason for it, but the lender could decide that lending to you is too precarious.

How to Improve Your Chances

1. Try Other Lenders

If you’ve been denied by just one or two lenders, it may be worth shopping around more widely. Although they follow similar principles, lenders each have their own protocols for reviewing applications.

While one might give more weight to income, another may consider education history just as important. If one lender rejected your application to refinance your student loans due to low credit scores, you may find another lender that will approve your application but at a higher interest rate, which may mean paying more in the long run.

You never know whether a lender will see you as a trustworthy borrower until you try. If you’ve been denied by multiple institutions, you may need to take some other action to improve your prospects.

2. Build Your Credit

Because your credit score is so important to lenders, including with student loan refinancing, you can work on building it if it’s on the low side. There are many ways to potentially improve your credit score. If you have missed bills in the past, you can focus on consistently making your minimum payments on every loan, bill, and credit card you have (setting up auto-pay can help you stay on top of this).

3. Raise Your Income

If your income is relatively low, earning more money may help you qualify for refinancing. This is easier said than done, but you may have more options than you think.

Can you ask for a raise or request more hours at your current job? Can you look for a higher paying role with your employer or elsewhere? Does switching fields make sense? Can you take on another job or side hustle? It’s not always possible, but increasing your earnings could make you a more appealing candidate for refinancing.

4. Give it Time

Sometimes, it can be good to wait. If you have a bankruptcy or missed payments in your past, it’ll take time for these to disappear from your credit history. (It takes seven to 10 years for a bankruptcy to be removed from your credit history.) Even if you’re making all your payments now, a lender usually wants to see that this good behavior is consistent.

Waiting until you’ve been in a new job for a couple of years can help convince lenders that your employment is solid. If these are some of the challenges you’re dealing with, time may be the best medicine. And for those struggling to make consistent payments on their student loans, it could be worth looking into income-driven repayment plans.

These are repayment plans for federal student loans that calculate monthly payments based on your discretionary income. While an income-driven repayment plan might mean you’ll pay more interest over the life of the loan, it could also lower your monthly payments, thus making your student loan debt more manageable.

5. Get a Cosigner

If none of the above tactics are working, or if you don’t want to wait to refinance, you can try reapplying with a cosigner. If this person — perhaps a parent or family friend — has solid credit and employment history, that may help you get approved for a loan or qualify for better terms.

That’s because the cosigner, by essentially guaranteeing the loan, makes you much less of a risk for the lender. But keep in mind that the cosigner’s credit score could be affected by missed payments on the loan, and they may have to make payments on the loan if you’re unable to.

Refinancing May Still Be Possible

Even if you’ve been denied in the past, that doesn’t mean you’ll never be able to refinance your student loans. Understanding the reasons that refinancing applications frequently get rejected can help you figure out where you have room to improve.

You have lots of options for strengthening your application and reducing your riskiness as a borrower, from earning more to improving your credit score to getting a cosigner. If refinancing is a student loan debt solution you feel strongly about, consider implementing these action items before reapplying.

And remember that while refinancing has lots of benefits, you’ll lose access to federal loan benefits when refinancing with a private lender. So refinancing may lower your interest rate or get you a more favorable loan term, but it will also disqualify you from taking advantage of federal programs like income-driven repayment plans.

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 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 Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 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.

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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Can You Refinance Student Loans Without a Degree?

If you’ve dropped out of college but are still carrying student loan debt, you have a number of repayment options, depending on your income and credit profile. Some private lenders may allow you to refinance your federal student loan, but others definitely will not.

College dropout rates indicate that up to 32.9% of undergraduates do not complete their degree program, according to EducationData.org. If anyone hopes that not graduating gets them off the hook for paying back a student loan, the answer is a resounding no. The U.S. Department of Education’s Federal Student Aid (FSA) department spells it out on its website for those repaying federal student loans:

“Your federal student loans can’t be canceled or forgiven because you didn’t get the education or job you expected or you didn’t complete your education (unless you couldn’t complete your education because your school closed).”

Why is that? Lenders believe that not having a degree can pose difficulties in getting a high-earning job. College dropouts make an average of 32.6% less income than bachelor’s degree holders. And some data show that college dropouts are four times as likely to default on their loans compared to graduating counterparts.

Can You Refinance Student Loans Without a Degree?

Student loan refinancing allows you to pay off federal student loans with a private one carrying different terms. For some borrowers, this new loan might come with a lower interest rate or lower monthly payment than their existing debt, particularly if they have a strong credit and employment history.

However, many private lenders won’t allow you to refinance your student loans if you haven’t graduated. SoFi and some other lenders require that you have at least an associate degree from a Title IV accredited school in order to be eligible for refinancing.

Title IV schools are eligible to process federal student aid under the Higher Education Act. You can verify whether the institution you attended is a Title IV school on the federal student aid website.

Even though some of the most popular lenders require you to have a degree, that doesn’t mean you can’t refinance student loans if you did not graduate. There are some financial institutions that may offer refinancing to borrowers who dropped out.



💡 Quick Tip: Some student loan refinance lenders offer no fees, saving borrowers money.

Federal Student Loan Consolidation Without a Degree

There are other solutions to easing your burden. If you have more than one federal student loan, not having a degree doesn’t stop you from being able to combine them through a Direct Consolidation Loan. Doing so can be beneficial because it allows you to make just one payment every month instead of many, potentially with multiple loan servicers. That can make things simpler for you and make it more likely that you’ll remember to pay your loans on time.

Another reason to consolidate is that you could qualify for a lower monthly payment by extending the term of the loan (though you’d pay more interest over the life of the loan). Also, by consolidating, loans that wouldn’t otherwise qualify might become eligible for income-driven repayment plans or the Public Service Loan Forgiveness program.

Should I Consolidate Student Loans

Consolidation isn’t for everyone, however. As we mentioned above, extending the term of the loan means interest will have more time to stack up. Plus, if you’ve already been making payments under an income-driven repayment plan or toward Public Service Loan Forgiveness, you could lose credit for those payments and have to start over.

You can apply for a Direct Consolidation Loan as soon as you leave school or are enrolled less than half-time. You’d submit an application through StudentLoans.gov. If your loans are still in the grace period, you can ask for the consolidation to be delayed so that it’s closer to the end of that period. If you receive the loan, you’ll need to start repaying it 60 days after it’s paid out.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Repayment Options for Federal Student Loans

Federal student loan repayment was put on pause in March 2020 due to Covid-19 hardships. The pause ended in October 2023. If you are focused on dealing with your federal student loans, it’s vital to know that the Department of Education has focused on strengthening its income-driven repayment options.

Any Direct Loan borrowers can apply to the Saving on a Valuable Education (SAVE) Plan, introduced in 2023. (SAVE replaces the REPAYE program.) Your monthly payments will be 10% of discretionary income, possibly lowering to 5% in 2024 when SAVE has been fully implemented. You can learn more about SAVE, and apply through its portal, on the FSA site.

For those really struggling to make any payments, the “On-Ramp Program” is in effect through Sept. 30, 2024. This prevents the worst consequences of missed, late, or partial payments, including negative credit reporting for delinquent payments for 12 months. However, payments are still due, and interest will continue to accrue.

You can also apply for forbearance or deferment, temporarily pausing your payments and providing more predictability when you must resume repaying. Keep in mind that forbearance and deferment have financial pros and cons.

Refinancing Your Student Loans

Now or in the future, you may be able to apply for student loan refinancing. You can check your rates with several lenders (using a soft credit check, if possible) to compare rates and terms and see what you might prequalify for.

If you decide to complete a full application, the lender may ask for information like your Social Security Number, outstanding loans and repayment history, income, and employment history. They typically complete a credit check to find out your FICO® Score and look for any red flags, like a history of missed payments, student loan default, eviction, or bankruptcy.

Those who don’t initially qualify for refinancing, or get a favorable rate, can try reapplying with a cosigner — someone who guarantees to repay the loan if the primary borrower can’t.

If you feel you need a cosigner, one with strong credit history and a solid income and employment history (among other financial factors) could help you qualify. If you do use a cosigner, remember that if you default, any missed payments on your end may damage their credit.

It’s important to bear in mind with refinancing that, if approved, you would lose out on several options. These include:

•   Access to temporary loan payment relief through approved periods (deferment or forbearance) when you do not have to make payments because of financial hardship, continuing your education, or military service.

•   No interest accumulation on subsidized student loans during periods when payments are deferred.

•   Access to repayment plans based on your income that provide loan forgiveness once you have been in repayment for 20 or 25 years.

Recommended: Refinancing Student Debt With a Cosigner

Taking Control of Your Student Loans

Not completing your college degree or stopping and starting over an extended period is far from uncommon. However, It can be frustrating to carry a student loan balance for a degree you don’t have.

Unfortunately, SoFi does not offer student loan refinancing to borrowers who don’t have at least an associate degree, but some lenders do. Plus there are other options, such as applying for income-driven repayment and exploring other federal programs to help with loans.

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 get a loan without a degree?

Yes, it’s possible to get student loans without a degree — if you are currently enrolled in school. The federal student loan program offers student loans to qualifying borrowers who are attending eligible institutions. Students may also look into private student loans.

Can you refinance student loans without a job?

Refinancing student loans without a job may be more challenging than if you are able to show a record of stable employment. However, lenders evaluate a variety of factors when making lending decisions including employment history, income, credit score, among other factors. The lender is trying to evaluate whether you are able to repay the loan. If you are able to show other sources of income — outside of a traditional job — it may be possible to refinance your student loans.

Do you need to graduate to refinance student loans?

In many cases, yes, you do need to graduate before you can refinance student loans. Many private lenders won’t allow you to refinance your student loans if you haven’t graduated. Though, there are some lenders that are willing to refinance student loans for borrowers who did not graduate.


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 Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 or extended repayment plans.


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.

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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How Soon Can You Refinance Student Loans?

Typically, student loan borrowers cannot refinance their debt until they graduate or withdraw from school. At that point, federal student loans and the majority of private student loans have a grace period, so it can make sense to refinance right before the grace period ends.

Depending on your financial situation, the goal of refinancing may be to snag a lower interest rate and/or have lower monthly payments. Doing so can alleviate some of the stress you may feel when repaying your debt. In this guide, you’ll learn when you can refinance and what options are available, plus the potential benefits and downsides of each.

What Do Your Current Loans Look Like?

Before deciding whether or not to refinance your student loans, you need to know where your loans currently stand. Look at the loan servicers, loan amounts, interest rates, and terms for all loans before making a decision.

Contact Info for Most Federal Student Loans

The government assigns your loan to a loan servicer after it is paid out. To find your loan servicer, visit your account dashboard on studentaid.gov, find the “My Aid” section, and choose “View loan servicer details.” You can also call the Federal Student Aid Information Center at 800-433-3243.

Loans Not Owned by the Department of Education

Here’s how to get in touch:

•   If you have Federal Family Education Loan Program loans that are not held by the government, contact your servicer for details. Look for the most recent communication from the entity sending you bills.

•   If you have a Federal Perkins Loan that is not owned by the Education Department, contact the school where you received the loan for details. Your school may be the servicer for your loan.

•   If you have Health Education Assistance Loan Program loans and need to find your loan servicer, look for the most recent communication from the entity sending you bills.

Private Student Loans

Private student loans are not given by the government, but rather banks, credit unions, and online lenders. You’ll need to find your specific lender or servicer in order to find out your loan information.

Can You Refinance Student Loans While Still in School?

You may be able to refinance your student loans while still in school with certain lenders, but doing so may not make the most sense for your situation.

If you’re worried about interest accruing on your unsubsidized federal loans and/or private student loans while in school, you can most certainly make interest-only payments on them in order to keep the interest from capitalizing.

One important note: With federal student loans, any payments you make while still in school or during the grace period will not count as a qualifying payment toward loan forgiveness, if you plan on using that.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Which Loans Can Be Refinanced While Enrolled?

You can refinance any type of student loan while enrolled in school, assuming that the lender allows it. If you’re still in school and want to refinance, a lender will want to make sure you have a job or job offer on the table, are possibly in your last year of school, and have a solid credit profile. You could also consider refinancing your student loans with a cosigner if you do not meet the lender’s requirements on your own.

A couple of important points if you are considering refinancing federal student loans with a private lender:

•   Doing so means you will forfeit federal benefits and protections, such as forbearance and forgiveness, among others.

•   If you refinance for an extended term, you may have a lower monthly payment but pay more interest over the life of the loan. This may or may not suit your financial needs and goals, so consider your options carefully.

Which Loans Can’t Be Refinanced While Enrolled?

If you find a lender willing to refinance your student loans while still in school, they most likely won’t exclude a certain type of loan. However, it is best not to refinance federal student loans while enrolled. Federal Subsidized Loans, for example, do not start earning interest until after the grace period is over. Since you aren’t paying anything in interest, it doesn’t make sense to refinance and have to start paying interest on your loans immediately.

If you plan on using federal benefits, such as income-driven repayment plans or student loan forgiveness, refinancing student loans could be a bad idea. Refinancing gives you a new loan with a new private lender, thereby forfeiting your eligibility to federal benefits and protections, as noted above.

Is It Worth Refinancing Only Some of Your Loans?

Yes, it can be worth refinancing only some of your loans. The student loans you may want to focus on refinancing may include ones that have a variable rate (and you prefer a fixed rate), ones with a relatively high interest rate, or ones where you’ve had a less-than-ideal relationship with the servicer and are looking for a new experience.

When you might want to think twice about refinancing:

•   If you have federal loans and plan on using an income-based repayment plan, for example, it makes sense not to include those loans in the refinance.

•   If you have a low, fixed interest rate currently, you should probably keep those loans as is. The main reason to refinance is to secure a lower interest rate or a lower payment. Keep in mind, though, that by lowering your payment, you typically are extending your term. This can mean that you end up paying more in interest over the life of the loan.

Pros and Cons of Refinancing Student Loans

Pros Cons

•   Possibly lower your monthly payment

•   Possibly lower your interest rate

•   Shorten or lengthen the loan term

•   Switch from variable to fixed interest rate, or vice versa

•   Combine multiple loans into one

•   Lose access to federal benefits and protections

•   Lose access to remaining grace periods

•   May be difficult to qualify

•   May end up paying more in interest if you lengthen the term

Examples of Refinancing Before Earning a Degree

As stated above, there are some lenders that may allow you to refinance before you graduate or withdraw from school. These lenders may currently include Citizens Bank, Discover, RISLA, and Earnest.

Graduate students are also eligible to refinance their undergraduate student loans, assuming they meet the lender’s requirements or use a cosigner. Parents with Parent PLUS Loans are also typically allowed to refinance their loans prior to their child graduating. Rules will vary by lender, so make sure to do your research and choose a lender that will work with your unique situation.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Alternatives to Refinancing

If refinancing your student loans isn’t the right option for you, there are alternatives to refinancing you can explore.

•   The main alternative is student loan consolidation, which combines your federal student loans into one loan with one monthly payment. The main difference between consolidation and refinancing is the interest rate on a federal loan consolidation is the weighted average of the rates of the loans you are consolidating, rounded up to the nearest one-eighth of a percentage.

•   You typically won’t save on interest, but you can lower your monthly payment by extending the loan term. Doing this, however, means you’ll probably pay more in interest over the life of the loan.

•   Student loan refinancing refers to paying off current loans with a new loan from a private lender, preferably with a lower rate. This rate is not the weighted average of the loans, but rather is based on current market rates, your credit profile, and your debt-to-income ratio.

•   Other alternatives to refinancing include making interest-only payments while still enrolled in school or requesting a student loan forbearance if you’re struggling to make your payments. Forbearance means you can reduce or pause payments for a designated period of time.

You’ll want to know all your student loan repayment options — and the pros and cons of consolidating or refinancing your loans, prior to making a decision.

A calculator tool for student loan refinancing can come in handy when estimating savings, both monthly and over the life of your loan.

Weighing Perks and Interest Rates

Before deciding whether refinancing is right for you, it’s important to again highlight this important point: If you refinance your federal student loans with a private lender, those loans will no longer be eligible for programs like income-driven repayment plans, federal forbearance, and Public Service Loan Forgiveness.

But if you can get a lower interest rate, refinancing may be a good fit. Most refinancing lenders offer loan terms of five to 20 years. Shortening or elongating your loan term can affect your monthly payment and the total cost over the life of your loan.

For some borrowers, lengthening the term and lowering the monthly payment will be a valuable option, even though it can mean paying more interest over the life of the loan. Only you can decide if this kind of refinancing makes sense for your personal finances.

The Takeaway

When can you refinance student loans? As soon as you establish a financial foundation or bring a solid cosigner aboard. Can you refinance your student loans while in school? Yes, however, not all lenders offer this and it may not make sense for your situation. It’s also important to understand the implications of refinancing federal student loans with a private lender. If you do not plan on using federal benefits and protections and are comfortable with the possibility of paying more interest over the loan’s term, it might be a move worth considering.

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 Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 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.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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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