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If you’re considering borrowing student loans, you may be wondering whether it’s possible to get a student loan without a credit history or a credit check.

The answer is yes. Most federal student loans do not require a credit check, so you may be able to qualify even if you have no credit history. The U.S. Department of Education generally does not consider your credit score or credit history when determining eligibility for federal Direct Loans. Instead, qualifying depends on factors such as your enrollment and financial aid application.

Private student loans generally require a credit check. If you have limited or no credit history, you may need a creditworthy cosigner to qualify. Some private lenders also offer loans without a cosigner, but they may still evaluate your credit and other factors when deciding whether to approve your application and what interest rate to offer.

Below, we explore how to get a student loan with no credit, including qualification requirements for federal and private student loans and ways to start building your credit profile.

Federal vs Private Student Loans

Student loans generally fall into two categories: federal loans offered through the U.S. Department of Education and private loans offered by banks, credit unions, and other private lenders.

The two types of loans differ in how you qualify, how interest rates are determined, and what repayment protections are available. Here’s a closer look.

Types of Federal Student Loans

If you’re searching for “student loans with no credit check,” federal Direct Loans generally fit that description. Most federal student loans don’t require a credit check or a cosigner.

One type is the Direct Subsidized Loan, which is available to eligible undergraduate students with financial need. The federal government pays the interest that accrues on subsidized loans while you’re enrolled at least half-time, during the six-month grace period after you leave school, and during certain periods of deferment.

Direct Unsubsidized Loans are another type of federal student loan that doesn’t require a credit check. They are available to eligible undergraduate, graduate, and professional students, and financial need is not required. Interest begins accruing when the loan is disbursed, including while you’re in school.

Federal Direct Loans can also offer repayment options and borrower protections that private student loans generally don’t provide. Depending on the loan and your circumstances, these can include deferment, forbearance, income-driven repayment, and certain loan forgiveness programs.

Private Student Loans

If you still have funding gaps after tapping federal aid, including federal student loans, you might consider exploring private student loans. These loans are available through banks, credit unions, and other nongovernment lenders. Private lenders generally consider your credit history and credit score when evaluating an application, and those factors can affect whether you qualify and what interest rate you receive.

If you have little or no credit history, you may need a cosigner to qualify. A cosigner is someone who agrees to repay the loan if you don’t. A cosigner with a strong credit history may also help you qualify for a lower interest rate or better loan terms.

Cosigning is a significant financial responsibility. The cosigner is legally responsible for repaying the loan if the primary borrower doesn’t, and missed payments can affect both people’s credit histories. Many private student loan lenders offer a cosigner release after a consecutive string of on-time payments, but this option isn’t universal and requires meeting strict credit criteria.

No-Cosigner Private Student Loan Options

Some private lenders offer student loans without requiring a cosigner. However, “no cosigner” does not necessarily mean “no credit check.” A lender may still review your credit history and score, along with other information, when evaluating your application.

Depending on the lender, other factors may include your income, employment, school, degree program, or expected ability to repay the loan. Requirements vary, so it can be useful to compare multiple lenders before applying.

Applying for Student Loans With FAFSA^®

To apply for federal student aid, start by completing the Free Application for Federal Student Aid (FAFSA^®). The FAFSA is free and does not commit you to borrowing a federal student loan.

Schools use information from the FAFSA to determine eligibility for federal financial aid, which can include grants, work-study, and federal student loans. Your school will generally provide an aid offer explaining the types and amounts of aid available to you.

If you’re offered federal Direct Loans, you can decide whether to accept all, some or none of the amount offered.

Applying for Private Student Loans

To get a private student loan, you typically apply directly with the lender. Each lender sets its own eligibility requirements, interest rates, fees, and repayment terms.

Private student loans generally don’t offer the same borrower protections as federal student loans. For example, private lenders may offer fewer options for postponing or reducing payments if you experience financial hardship, and private loans generally don’t offer federal income-driven repayment plans or federal forgiveness programs.

For that reason, it generally makes sense to explore federal financial aid and other sources of funding before taking out a private student loan. If you do need a private loan, it’s a good idea to compare offers from multiple lenders and review the terms carefully.

Recommended: How to Ask Someone to Cosign your Private Student Loan

Parent PLUS Loans

Parents of dependent undergraduate students may be able to borrow a federal Parent PLUS Loan to help pay for their child’s education. Unlike other types of federal student loans, Parent PLUS Loans require a credit check. The Department of Education checks for an adverse credit history rather than using the same type of credit-based underwriting commonly used for private loans.

If a parent is denied a Parent PLUS Loan because of adverse credit history, there may be options to qualify with an eligible endorser or by documenting extenuating circumstances. A dependent student may also be eligible for additional Direct Unsubsidized Loan funds in some circumstances.

Tips for Building Credit

Having little or no credit history doesn’t necessarily prevent you from getting federal student loans. However, building a credit history while you’re in school could make it easier to qualify for other types of credit later, including some private student loans.

Your credit score is based on information in your credit reports. For FICO^® Scores, a score of 670 to 739 is generally considered good.

One way to begin building your credit file is to use a credit account responsibly and make payments on time. Payment history, the amount of debt you owe, the length of your credit history, new credit applications, and your mix of credit accounts can all affect your FICO Score.

Credit utilization is another factor to consider. This measures how much of your available revolving credit you’re using. Keeping balances relatively low compared with your credit limits can have a positive impact on your credit profile, although there is no specific utilization percentage that guarantees a particular credit score.

You can also check your credit reports regularly for errors. Monitoring your credit can help you understand what lenders may see when you eventually apply for credit.

The Takeaway

Most federal Direct student loans don’t require a credit check, so you can generally qualify even if you have no credit history. Direct Subsidized and Direct Unsubsidized Loans are among the federal options that don’t require a credit check or cosigner.

Private student loans generally do require a credit check. If you have little or no credit history, you may need a creditworthy cosigner, although some lenders offer no-cosigner options. Before borrowing privately, it’s wise to compare your options and consider federal student loans and other sources of financial aid first.

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

Can I get a student loan if I have no credit history?

Yes. Most federal student loans don’t require a credit check, so you can generally qualify even if you have no credit history. Direct Subsidized and Direct Unsubsidized Loans are examples. Private student loans typically require a credit check, and you may need a cosigner if you have little or no credit history. Some private lenders offer no-cosigner loans, but they may still consider your credit history, income and other factors when reviewing your application.

Do federal student loans require a credit check?

Most federal student loans don’t require a credit check. Direct Subsidized and Direct Unsubsidized Loans generally don’t require one, while Parent PLUS Loans do. For PLUS Loans, the Department of Education looks for an adverse credit history rather than using a traditional credit score-based approval process.

How can I qualify for a private student loan without a cosigner?

Some private lenders offer student loans without a cosigner. To qualify, you may need to meet the lender’s credit, income, enrollment, or other eligibility requirements on your own. If you have little or no credit history, qualifying without a cosigner can be difficult. Requirements vary by lender, so it’s a good idea to compare multiple options and review interest rates, fees, and repayment terms before choosing a loan.

Are there grants or scholarships I should apply for before borrowing with no credit?

Yes. Grants and scholarships generally don’t need to be repaid and can reduce how much you need to borrow. Start by completing the FAFSA, which can help determine your eligibility for federal grants and other financial aid. You can also look for scholarships through your school, state, employers, community organizations, and other sources. Because eligibility varies, applying for multiple opportunities may increase your chances of receiving additional aid.

Does having a cosigner affect their credit too?

Yes. A cosigned student loan generally appears on the cosigner’s credit report, so the loan can affect their credit history and potentially their credit score. If payments are made on time, the account may contribute to a positive payment history. However, missed or late payments can hurt the cosigner’s credit as well as the borrower’s. A cosigner is also legally responsible for repaying the loan if the primary borrower doesn’t.

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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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Knowing what your discretionary income is — and how discretionary income is calculated for student loans — may help you make decisions about how to best repay your federal loans. That’s because the federal government typically uses discretionary income, which is any adjusted gross income (AGI) you have above a certain percentage of the federal poverty guideline, to determine your monthly payments for some of the income-driven repayment (IDR) plans.

However, because of the One Big Beautiful Bill Act (OBBBA) that was signed into law in 2025, the options for income-driven plans — and the way monthly payments will be calculated — have changed. For example, the new Repayment Assistance Plan (RAP), which started in July 2026, doesn’t use discretionary income to calculate payments. It instead looks at total AGI, which may result in higher payments for some borrowers.

Here, we’ll discuss the different IDR plans and the ins and outs of discretionary income, as well as the changes to federal student loan repayment options, to help borrowers figure out a repayment strategy that works for them and their budget.

What Is Discretionary Income?

“Discretionary income” as defined by the Education Department (ED) is different from the standard or everyday definition of the term.

Everyday Definition of Discretionary Income

The everyday definition of discretionary income that you may be familiar with — which is the money left over after you pay for your essential expenses like rent, utilities and groceries — is not what we’re talking about when we refer to discretionary income for federal student loans.

Instead, the Education Department uses a formula that calculates discretionary income as your adjusted gross income (AGI) in excess of a protected amount defined by a federal IDR plan.

For example, under the Income-Based Repayment (IBR) plan, discretionary income is any AGI you have above 150% of the federal poverty guideline appropriate to your family size. Your monthly payment is set to 10% or 15% of your discretionary income, depending on when you borrowed your loans.

Discretionary Income vs. Disposable Income

Discretionary income as defined by the ED is different from disposable income, which is the amount of money you have available to spend or save after your income taxes have been deducted. In other words, disposable income is the money you have at your disposal to spend on whatever you like, or to save.

How Is Discretionary Income Calculated?

This is how federal student loan servicers may currently calculate your discretionary income on an income-based student loan repayment plan:

•   Discretionary income under IBR is generally calculated by subtracting 150% of the federal poverty guideline from your AGI.

•   Discretionary income under the Income-Contingent Repayment (ICR) Plan is generally calculated by subtracting 100% of the federal poverty guideline from your AGI.

If you’re filing jointly or you have dependents, that will impact your discretionary income calculations. For married couples filing together, your combined AGI is used when calculating discretionary income. Under an income-driven plan, filing with a spouse can drive up your income-driven monthly payments because of your combined AGI.

If you file separately, your student loan payments will be based on your income alone. However, you may lose some tax benefits by doing this, so it’s wise to weigh the pros and cons of this approach to determine which makes more sense for your finances.

What Income-Driven Repayment Plan Are You Eligible For?

Navigating the changes to IDR plans can be complicated. There are now four federal IDR plans that have different eligibility criteria and terms. As of July 1, 2026, three of the plans are no longer open to new borrowers, but borrowers who are already enrolled can still participate for now, though changes are coming (see more about that below). These income-driven repayment plans may reduce monthly payments for people with incomes below a certain threshold.

It should be noted that federal IDR plans don’t apply to private student loans. They’re only an option for federal student loans.

Income-Driven Repayment Plans for Federal Student Loans

For borrowers with federal loans taken out before July 1, 2026, the Education Department offers the following IDR options for eligible federal student loan borrowers:

•   Income-Based Repayment (IBR) Plan

•   Pay As You Earn (PAYE) Plan

•   Income-Contingent Repayment (ICR) Plan

All three of these plans generally use discretionary income to determine monthly payments. If there is a change in a borrower’s income or family size, their monthly payment could increase or decrease, depending on the change. Borrowers enrolled in an IDR plan are typically required to recertify their income and family size each year.

For the IBR and PAYE plans, eligibility is determined based on income and family size. As a general rule, to qualify, borrowers must not pay more under IBR or PAYE than they would under the 10-year Standard Repayment Plan. There’s no income requirement for the ICR plan.

Due to the recent legislation, the PAYE and ICR plans are now closed to new borrowers, and the plans will be eliminated completely in 2028. Borrowers on those plans will need to switch to IBR or RAP before that time (or they will be switched to a new plan automatically).

For borrowers who took out their first loans on or after July 1, 2026, there is only one income-driven plan: the Repayment Assistance Program (RAP). RAP sets borrowers’ payments at 1% to 10% of their AGI, rather than using discretionary income.

Pros and Cons of Income-Driven Repayment Plans

IDR plans come with trade-offs. While they can lower your monthly payment and help free up your cash flow now, they may extend the life of your loan. The standard student loan repayment plan is based on a 10-year repayment timeline. Current income-driven repayment plans can extend your payment timeline to up to 30 years.

This means you’ll be paying off your loans longer and possibly paying more in interest over time. If you stay on the IBR plan, the government might forgive any remaining balance after 20 or 25 years of payments. On RAP, the amount may be forgiven after 30 years.

How to Apply for an IDR Plan

To apply for an IDR plan, you can go to StudentAid.gov and log into your account using your Federal Student Aid (FSA) ID. The online application is estimated to take no more than 10 minutes to complete. (If you prefer, you can download a paper application to fill out and then send it to your loan servicer.)

To fill out the application, you’ll need to supply your address, email address, and phone number, as well as information about your family size. You will also need to provide your most recent income tax return (a tool on the site can link your tax information to the application).

Once you complete the application you will see which IDR plans you qualify for. You can select one and then sign the form and submit it. Your loan servicer should send you an email or letter confirming receipt of the application. The servicer will notify you when your application has been processed.

How Does Discretionary Income Affect Student Loan Payments?

Three of the income-driven repayment plans use your discretionary income to dictate the amount you’re required to repay each month. In the case of borrowers enrolled in the IBR Plan, payments are set at 10% of discretionary income for loans borrowed after July 1, 2014, and 15% for loans borrowed before that date. On the PAYE plan, payments are set at 10% of discretionary income. On ICR, payments are 20% of discretionary income.

When it comes to IBR vs RAP, one difference is that RAP uses your AGI to calculate your monthly payments, not discretionary income. On RAP, payments are set at 1% to 10% of your AGI, depending on your income.

Examples of Monthly Payment Calculations

To calculate your monthly payments on an IDR plan, you’ll need your adjusted gross income (plus your spouse’s if you file a joint return) and your family size, which includes the number of dependents you have, such as your children.

Next, find the federal poverty guideline for your family size and state (available at healthcare.gov), and multiply that number by 150%. Subtract this amount from your AGI to get your discretionary income. Your payment on IBR will be 10% of that amount, divided by 12.

Here’s an example:

Let’s say your AGI (plus your spouse’s) is $75,000.

Your family size is 3 (you, your spouse, and one child).

The federal poverty guideline for you is: $27,320.

Using that information, the calculation would look like this:

$27,320 x 1.50 (150%) = $40,980

$75,000 – $40,980 = $34,020

$34,020 x 0.10 (10%) = $3,402

$3,402 / 12 = $283.50

Your payments on the IBR plan would be $283.50 per month.

To get an official payment amount, you can use the Federal Student Aid Loan Simulator to determine your payments.

On the RAP plan, your monthly payment is calculated by taking a percentage of your AGI from 1% to 10% based on your income, dividing it by 12, and then subtracting $50 for every qualified dependent you claim on your federal taxes.

Annual Recertification Requirements

IDR recertification is typically required annually, and you’ll need to recertify your income-based repayment and family size. This is mandatory even if there has been no change to your situation or income. If you fail to recertify, there may be negative consequences, such as higher monthly payments.

You’ll be given a recertification deadline, and you’ll need to recertify by that date. As part of the process, you’ll include your family size as well as your most recent federal financial information. You can recertify online.

If you gave the Education Department permission to access your federal tax information when you first applied for IDR, your yearly certification will be automatic. The ED will notify you about any change to your monthly payment amount.

How Else Can Borrowers Lower Their Student Loan Payment?

Besides IDR, there are other strategies borrowers might use to help lower their monthly student loan payments. These include:

Student Loan Refinancing

Borrowers may be able to reduce their student loan payments by refinancing student loans. With student loan refinancing, you take out a new loan with new terms from a private lender. The new loan is used to pay off your existing student loans.

Depending on your credit and financial profile, refinancing may result in a lower interest rate or a lower monthly payment depending on which terms you choose. Just be aware that you may pay more interest over the life of the loan if you refinance with an extended term.

Refinancing federal student loans with a private lender forfeits your access to federal IDR plans, and forgiveness programs like Public Service Loan Forgiveness and Teacher Loan Forgiveness.

To find out how much you might be able to save with refinancing, try our student loan refinancing calculator.

Extended and Graduated Repayment Plans

Another option for existing student loan borrowers is the Extended Repayment Plan or the Graduated Repayment Plan to help lower their monthly payments.

To qualify for the Extended Repayment Plan, you must have more than $30,000 in outstanding Federal Direct Loans or Federal Family Education Loans (FFEL). Monthly payments on this plan are typically lower than payments of the standard 10-year repayment plan because borrowers have a longer period of time — up to 25 years — to pay them off. However, this means you’ll pay more in interest over the extended term.

Due to the OBBBA legislation, the Extended Repayment Plan will be closed to new borrowers as of July 1, 2026. Borrowers with loans disbursed before July 1, 2026 can still enroll in the plan. Current borrowers already on the plan will continue to make payments on their extended term.

The Graduated Plan allows borrowers to pay off their loans over 10 years. Payments typically start out relatively low and increase gradually (usually every two years). The plan may be right for borrowers whose income is low, but is expected to rise.

The Graduated Repayment Plan is eligible to most current borrowers with loans taken out before July 1, 2026. The plan is closed to new borrowers with loans that were disbursed on or after July 1, 2026. Borrowers already on the plan can continue to make payments on the graduated timetable.

Applying for Deferment or Forbearance

You might also be able to qualify for a deferment or forbearance, allowing you to temporarily stop or reduce your federal student loan payments. Reasons you can currently apply for deferment include being in school, in the military, or unemployed. However, as part of the OBBBA, economic hardship and unemployment deferments will be eliminated for student loans made on or after July 1, 2027.

If you’re in deferment and you have certain federal loans, such as Direct Subsidized Loans, you typically won’t have to pay the interest that accrues during the deferment period.

You might apply for student loan forbearance if your federal student loan payments are high in relation to your income, you’ve lost your job or seen your pay reduced, or you can’t pay because of medical bills, among other reasons. Note that interest accrues on your loans while they are in forbearance. As part of the new legislation, forbearance will be capped at nine months in any 24-month period beginning on July 1, 2027 for new borrowers.

The Takeaway

The government uses discretionary income to calculate your federal student loan monthly payments under a qualifying IDR plan. IBR and PAYE use a more generous formula to calculate discretionary income than ICR, and they offer lower monthly payments. Over the next few years, your IDR plan options will be whittled down to IBR and the new RAP plan, both of which use different income calculations.

If you’re not relying on income-driven repayment, you may want to consider options such as deferment or forbearance or student loan refinancing.

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.

FAQ

How does discretionary income impact income-driven repayment plans?

Three of the four income-driven repayment (IDR) plans (Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment) base your monthly payments on your discretionary income and family size. Typically, the higher your discretionary income, the higher your monthly student loan payments will be. On the newest IDR plan, the Repayment Assistance Plan (RAP), your monthly payments are based on a percentage of your adjusted gross income (AGI) rather than on discretionary income.

What percentage of discretionary income is used for student loans?

The percentage of discretionary income that’s used for student loan payments depends on the income-driven repayment plan a borrower is enrolled in. For instance, on the Income-Based Repayment (IBR) plan, your discretionary income is the difference between your taxable income and 150% of the poverty guideline for your family size and state. On the Income Contingent Repayment (ICR) Plan, your discretionary income is the difference between your taxable income and 100% of the poverty guideline for your family size and state.

Can refinancing affect your discretionary income calculation?

Yes, but in an indirect way. Refinancing federal student loans makes you ineligible for income-driven repayment (IDR) plans that base your payments on your discretionary income and family size. If you think you may want to apply for an IDR plan, refinancing is probably not right for you.

How do I find out my discretionary income for student loans?

To calculate your discretionary income for income-driven repayment plans, you’ll need your adjusted gross income (AGI) and your family size (you plus a spouse and any children, if applicable). Next, determine the federal poverty guideline for your family size and state (you can find this information on the Health and Human Services website) and multiply that number by 150% for the IBR plan or 100% for the ICR plan. Subtract the resulting amount from your AGI to get your discretionary income.

Is discretionary income the same as disposable income?

No, discretionary income and disposable income are not the same thing. Discretionary income as defined by the Education Department under an income-driven repayment plan is any adjusted gross income you have above 150% or 100% (depending on the plan) of the federal poverty guideline appropriate to your family size. Disposable income, by comparison, is the amount of money you have available after income taxes have been deducted.

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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

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Making extra payments toward your student loan balance can help you pay off your debt sooner and reduce the total interest you pay. But simply paying more than your required monthly amount doesn’t always mean the entire extra amount will immediately reduce your principal balance.

Student loan payments generally go first toward outstanding fees, then accrued interest, and then principal. You may also need to tell your lender or servicer how you want an extra payment applied. Otherwise, the extra money could be credited toward a future payment instead of immediately reducing your loan balance.

Here’s what a principal-only payment means, how to make extra payments work toward reducing your balance, and what to watch out for along the way.

What Is a Principal-Only Student Loan Payment?

To understand principal-only payments, it helps to understand how student loan payments work.

When you take out a student loan, you agree to repay the principal balance, which is the amount you borrowed, plus interest, which is the cost of borrowing the money. Depending on the type of student loan, there may also be fees.

Once repayment begins, you generally make at least a minimum payment each month. Your payment is typically applied first to any outstanding fees, then to accrued interest, and then to your principal balance.

A principal-only payment refers to an extra payment that is applied to the principal after any outstanding fees and accrued interest have been covered. In other words, you can’t use an extra payment to skip interest that has already accrued. But you can often ask your provider to apply any amount remaining after those charges directly to principal.

You can generally make extra payments on student loans without a prepayment penalty. However, how those payments are applied can vary. One potential issue is “paid ahead status.” If you pay more than your required amount, your servicer may apply the extra amount toward a future payment rather than immediately reducing your principal balance. You can typically ask your servicer to apply the extra amount toward your balance instead.

Recommended: Student Loans for Military Dependents

Why Making Principal-Only Payments Can Make a Difference

Paying down your principal balance can reduce the amount of interest that accrues over time. As a result, making extra payments can help you pay off your student loans faster and potentially reduce the total interest you pay.

You don’t necessarily have to make extra payments every month. If you receive a bonus, tax refund, cash gift or other windfall, you could use some of that money to make an additional payment toward your student loan balance.

Before making extra payments, though, it’s a good idea to consider your other financial priorities. You may want to build an emergency fund, pay down higher-interest debt, or take advantage of an employer retirement match before putting additional money toward a student loan.

Recommended: States That Help Pay Off Student Loans

Common Mistakes to Avoid With Principal-Only Payments

Paying more than the minimum payment can help reduce your student loan balance, but there are several potential pitfalls to watch for:

•   Forgetting the payment order: Student loan payments generally go first toward outstanding fees, then accrued interest, and then principal. So an extra payment may not go entirely toward principal if you have accrued interest or fees due.

•   Allowing the account to go into paid-ahead status: Some servicers may apply an extra payment toward a future billing period rather than immediately reducing your balance. It’s important to ask your servicer to apply extra payments toward your balance and, if available, select an option that prevents your due date from being advanced.

•   Paying extra while pursuing loan forgiveness: If you’re working toward a federal student loan forgiveness program, making extra payments may not always be the best strategy. Paying down your balance faster could reduce the amount that would otherwise be eligible for forgiveness. You’ll want to consider your forgiveness eligibility and expected timeline before making large additional payments.

•   Not specifying which loan should receive the extra payment: If you have multiple student loans, your servicer may have a default method for allocating extra payments. You may be able to direct extra money toward a specific loan, such as the one with the highest interest rate.

•   Failing to check your account afterward: After making an extra payment, it’s important to review your account or statement to confirm that the payment was applied as you intended. It’s also a good idea to keep records of payments and communications with your servicer in case you need to resolve an error.

How to Make Principal-Only Payments on Student Loans

The process for making an extra payment varies by lender and servicer. Here’s an overview of what’s typically involved.

Tell Your Lender Where to Direct Extra Payments

If you make payments through your loan provider’s website, you may be able to enter an amount above your minimum payment and specify how the extra money should be allocated. Some servicers also let you choose which individual loan should receive an extra payment.

In addition, you may see an option to prevent your due date from being advanced. If available, this can help ensure that an extra payment is treated as a prepayment toward your balance rather than simply satisfying a future bill.

If your online account doesn’t provide these options, contact your lender or servicer before making the payment. Ask how to have an additional payment applied to your principal after any outstanding interest and fees are covered.

If you want to make additional payments regularly, ask whether you can set standing payment instructions. Some servicers allow borrowers to establish payment-allocation preferences, but the options vary.

Apply Extra Payments Strategically

If you have multiple student loans, consider directing extra payments toward one loan at a time rather than spreading the money across all of your loans. Depending on your goals and loan terms, you may want to focus on the loan with the highest interest rate or the smallest balance.

Two common approaches are:

•   Debt avalanche: With this strategy, you put extra money toward the loan with the highest interest rate while continuing to make the required payments on your other loans. This approach can reduce the amount of interest you pay over time.

•   Debt snowball: Here, you put extra money toward the loan with the smallest balance. Once that loan is paid off, you move to the next-smallest balance. This can provide a sense of progress and motivation.

If your servicer allows you to choose which loan receives an extra payment, you’ll want to make sure your payment instructions are clear.

Keep a Close Eye on Your Statements

After making an extra payment, it’s wise to check your online account or loan statement to see how the payment was applied. Confirm that the payment went to the loan and balance you intended.

If the payment wasn’t applied as expected, contact your lender or servicer right away. Be sure to keep copies of your payment confirmations and any communications about how you wanted the payment applied.

Recommended: Federal Programs That Help Borrowers Pay Off Student Loans

Consider Refinancing Student Loans for Better Rates

Making extra payments isn’t the only way to potentially reduce your interest costs or pay off student loans sooner. Another option may be refinancing your student loans with a private lender, such as a bank, credit union, or online lender.

With student loan refinancing, you replace one or more existing loans with a new private loan. Depending on your credit and other factors, you may be able to qualify for a lower interest rate or choose a different repayment term. A shorter term could help you pay off the loan faster, although it generally comes with higher monthly payments.

You can refinance private student loans, and you can also refinance federal student loans with a private lender. However, refinancing federal loans means giving up federal benefits and protections, including access to federal income-driven repayment options and certain forgiveness, deferment, and forbearance programs.

Because refinancing federal loans is generally irreversible, it’s wise to compare the potential savings with the federal benefits you would give up before making a decision.

The Takeaway

Making extra payments toward your student loans can help you pay down your balance faster and reduce the amount of interest you pay over time. But an extra payment doesn’t necessarily go entirely toward principal. Outstanding fees and accrued interest generally are paid first, and your servicer may otherwise apply an extra payment toward a future bill.

If you want to make principal-focused payments, check your provider’s payment instructions and specify how you want extra money applied. If you have multiple loans, you can also consider directing extra payments toward the loan that best fits your repayment strategy.

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.

FAQ

What is a principal-only payment on a student loan?

A principal-only payment is an extra payment intended to reduce the principal balance of a student loan. However, payments generally must first cover any outstanding fees and accrued interest. Once those amounts are paid, any remaining amount can be applied to principal. Reducing your principal balance can lower the amount of interest that accrues over time and may help you pay off the loan sooner.

When is the best time to make a principal-only payment?

Generally, the best time to make a principal-only payment on a student loan is on or immediately after your regular monthly due date. Your standard monthly payment must first cover any outstanding fees and all interest accumulated since your last billing cycle before any money touches the principal balance. Because interest typically accrues daily, making your extra payment right after your regular payment can help ensure that your accrued interest is sitting at zero, allowing all of your extra funds to go directly toward reducing the principal.

How can I ensure my extra student loan payment is applied to the principal?

The first step is to make sure any required payment and accrued interest are covered. Then check whether your lender or servicer lets you specify how an extra payment should be applied. You may also be able to select the specific loan that should receive the additional amount and prevent your due date from being advanced. If these options aren’t available online, contact your lender or servicer for instructions.

Can I make principal-only payments on federal student loans?

You cannot make strictly “principal-only” payments on federal student loans. Federal regulations require payments to cover fees and accrued interest before applying to the principal, meaning you cannot skip outstanding interest.

However, you can direct extra payments toward your principal by:

•   Paying the minimum first to clear monthly interest

•   Instructing your servicer not to advance your due date (opting out of “paid ahead” status)

•   Targeting specific loans with the highest interest rates using your servicer’s online allocation tool.

This can help ensure your extra funds reduce the principal balance immediately.

How much can I save by making principal-only payments?

The amount you can save depends on your loan balance, interest rate, remaining repayment period, and how much and how often you pay extra. Generally, reducing your principal sooner means less interest can accrue over time. You can use a student loan repayment calculator to compare your expected total interest with and without additional payments.

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Student loans are considered unsecured debt. Both federal and private student loans typically do not require physical collateral, such as a car, home, or other property, to secure the funds. Private student loan approval is usually based on your creditworthiness, income, and other financial factors, and a cosigner may be required. Most federal student loans do not require a credit check or cosigner.

While student loans are technically unsecured, they are treated differently from other types of unsecured debt like credit cards or medical bills. Federal student loans, in particular, come with specific repayment options and strong debt collection powers that don’t apply to most other unsecured debts.

Understanding the difference between secured and unsecured debt can help you better understand how student loans work and what can happen if you have trouble repaying them.

What Are Secured Loans?

A secured loan is a type of debt backed by an asset of value, known as collateral. The collateral could be a home, car, savings account, or other property, depending on the type of loan and the terms of the agreement.

If you default on a secured loan, the lender may be able to take possession of the collateral and sell it to recover some or all of the unpaid debt. The specific process depends on the type of loan and state and federal laws.

Common Examples of Secured Debt

Common types of secured loans include:

•   Mortgage loans

•   Home equity loans

•   Auto loans

•   Some personal loans

Because secured loans are backed by collateral, they generally pose less risk to lenders than comparable unsecured loans. As a result, secured loans may have lower interest rates than unsecured loans. They may also be available to some borrowers who wouldn’t qualify for an unsecured loan based solely on their credit profile.

What Are Unsecured Loans?

An unsecured loan is a loan that isn’t backed by specific collateral. Instead, the lender relies on the borrower’s promise and ability to repay the debt.

For private unsecured loans, lenders may consider factors such as credit history, income, existing debt, and credit utilization when deciding whether to approve an application and what interest rate to offer. A lender may also require a cosigner if the borrower doesn’t meet its eligibility requirements.

Because there is no specific asset for the lender to take if the borrower defaults, unsecured debt can pose more risk to the lender. This can result in higher interest rates than comparable secured loans.

Credit cards, many personal loans, and both federal and private student loans are examples of unsecured debt.

Why Most Student Loans Are Unsecured

Most student loans are considered unsecured because borrowers don’t have to pledge a home, car, or other asset as collateral. This structure allows students to borrow for education even if they don’t have significant assets.

Federal student loans are unsecured and are designed to provide access to education financing without requiring collateral. Private student loans are also generally unsecured, although lenders may have stricter credit and income requirements or require a cosigner.

The lack of collateral doesn’t mean student loans are treated like every other type of unsecured debt. Federal student loans, in particular, have specialized repayment options, potential forgiveness programs, and collection tools that make them different from other unsecured debts.

Recommended: Applying for a Loan Without a Cosigner

Pros and Cons of Secured vs Unsecured Loans

Secured and unsecured loans each have advantages and drawbacks. The main difference is what happens if you can’t repay the debt.

Secured vs. Unsecured Loans

Risk to Borrower and Lender

Secured loans generally shift more direct risk to the borrower because the lender may be able to repossess or foreclose on the collateral after a default. For the lender, however, the collateral can provide a way to recover some of the unpaid balance.

Unsecured loans work differently. A borrower doesn’t pledge a specific asset, so default doesn’t automatically give the lender the right to take a particular piece of property. However, the borrower can still face serious consequences, including damage to their credit, collection activity, and potentially a lawsuit for some types of debt.

Federal student loans have additional collection powers. If a federal student loan goes into default, the federal government can use tools such as wage garnishment and Treasury offsets to collect the debt.

Interest Rate Differences

Secured loans often have lower interest rates than comparable unsecured loans because the collateral reduces the lender’s risk.

Federal student loans can have relatively competitive rates because the federal government sets their rates and backs the loans. For the 2026-27 academic year, for example, Direct Subsidized and Unsubsidized Loans for undergraduates have a fixed rate of 6.52%, while Direct Unsubsidized Loans for graduate and professional students have a fixed rate of 8.07%. Federal PLUS loans have a fixed rate of 9.07%.

Private student loans may have either fixed or variable rates, depending on the lender and loan terms. Their rates can be higher or lower than federal student loan rates depending on the borrower’s credit and other factors.

How Federal Loans Differ From Typical Debt

Both federal and private student loans are unsecured debt. However, federal student loans have rules and protections that make them different from typical unsecured debts such as credit cards.

Student Loans vs. Typical Unsecured Debt

Private student loans have different collection rules from federal loans. While federal loans have no time limits on collection, private lenders must sue in court and obtain a judgment within the applicable state time limit to legally force repayment or use wage garnishment.

Lack of Collateral but Strong Repayment Enforcement

Federal student loans don’t give the government a house or car to seize if you stop making payments. But the federal government has other ways to collect defaulted federal student loan debt.

Federal student loans generally enter default after 270 days of missed payments. If a borrower remains in default, the government may use Treasury offsets (where the government can withhold your tax refund or other federal benefits) and administrative wage garnishment to collect the debt. Federal law allows the government to garnish up to 15% of a borrower’s disposable pay in certain circumstances.

This is one reason student loans can be different from other forms of unsecured debt even though they aren’t secured by collateral.

Options for Deferment, Forbearance, and Forgiveness

Federal student loans also offer repayment relief programs that aren’t generally available with typical unsecured debt.

Deferment can temporarily pause payments when a borrower meets specific eligibility requirements. Some types of federal loans may continue accruing interest during deferment, while interest may be covered on eligible subsidized loans during certain deferment periods.

Federal student loan rules are changing, however. Beginning July 1, 2027, economic hardship and unemployment deferments will no longer be available for new federal loans disbursed on or after that date. Borrowers with loans made before July 1, 2027, generally retain access to these deferments under the existing rules.

Forbearance can also temporarily pause or reduce payments, but interest generally continues to accrue. For loans made on or after July 1, 2027, certain federal forbearances will be limited to nine months during a 24-month period.

Federal student loans may also qualify for forgiveness or discharge under certain programs and circumstances. For example, Public Service Loan Forgiveness may forgive a remaining Direct Loan balance for eligible borrowers who meet the program’s requirements. Other discharge programs may apply in situations such as total and permanent disability, certain school-related circumstances, or bankruptcy involving an undue-hardship determination.

Managing Your Student Loan Debt

Because student loans are unsecured, you don’t put a specific asset at risk when you borrow. But missed payments can still have serious financial consequences. The following strategies can help you manage your debt:

•   Consider making interest payments while you’re in school. If you can afford to, paying interest as it accrues on an unsubsidized federal or private student loan can help limit the amount that will be capitalized. Capitalized interest is added to your principal balance, after which additional interest accrues on the larger balance.

•   Track your payment due dates. It’s important to know when your payments are due and how much you owe each month. Late federal and private student loan payments can eventually be reported to the major credit bureaus, and prolonged nonpayment can lead to default.

•   See whether you qualify for forgiveness or repayment assistance. Federal programs may provide forgiveness or discharge for eligible borrowers. Some states and employers also offer student loan repayment assistance for qualifying workers.

•   Contact your servicer or lender if you’re struggling. If you can’t afford your payment, contact your federal loan servicer or private lender as soon as possible. You may have options for changing your repayment plan or temporarily reducing or pausing payments.

Choosing the Right Repayment Plan

Choosing a repayment plan can affect your monthly payment, how long you repay the debt, and the amount of interest you pay over time. The right option depends on your loan type, when the loan was first disbursed, your income, and other factors.

Federal repayment options changed on July 1, 2026. New federal borrowers generally have access to the Tiered Standard Repayment Plan and the Repayment Assistance Plan (RAP), although eligibility varies by loan type. Some borrowers with loans made before July 1, 2026 remain eligible for older repayment plans.

Private student loan repayment options vary by lender. Some lenders offer in-school deferment, interest-only payments while you’re in school, or other repayment arrangements. It’s a good idea to fully review the terms of your loan before choosing an option.

Refinancing or Consolidating Loans

Borrowers may also consider refinancing or consolidating their student loans, but these options work differently.

With student loan refinancing, you replace one or more existing loans with a new loan, typically from a private lender. The new loan may have a different interest rate, monthly payment, or repayment term. Refinancing federal student loans with a private lender means giving up federal benefits and protections, including access to federal repayment plans and potential forgiveness programs.

Federal consolidation combines eligible federal student loans into a single Direct Consolidation Loan. Consolidation generally doesn’t reduce your interest rate, although it can simplify repayment and, depending on your loan history and eligibility, affect access to certain federal repayment options.

The Takeaway

Both federal and private student loans are generally unsecured debt because they don’t require collateral such as a home or car. But unsecured doesn’t mean consequence-free. Federal student loans have specialized repayment options and powerful collection tools that set them apart from many other types of unsecured debt. Understanding those differences can help you make informed decisions about borrowing and repayment.

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

Are student loans considered secured or unsecured?

Student loans are generally considered unsecured debt because they don’t require collateral such as a home, car, or other property. This applies to both federal and private student loans. However, federal student loans have special repayment options and collection powers that distinguish them from many other types of unsecured debt.

Is it possible to get a secured student loan?

Most student loans are unsecured, so you generally won’t need to pledge an asset as collateral. However, some lenders may offer education loans that are secured by assets. These products aren’t typical student loans in the U.S. and may have different eligibility requirements and terms.

How are federal student loans different from private?

Federal student loans are provided by the federal government and generally offer more borrower protections, including access to federal repayment plans and certain forgiveness or discharge programs. Most don’t require a credit check or cosigner. Private student loans come from banks, credit unions, and other private lenders. They typically require a credit check and may require a cosigner, and their repayment options and protections vary by lender.

What happens if you default on an unsecured student loan?

Defaulting on an unsecured student loan doesn’t give the lender the automatic right to take a specific asset, such as your home or car. However, you can still face serious consequences. Depending on the type of loan, these may include damage to your credit, collection activity, wage garnishment, or legal action. Federal student loans also have special collection tools, including Treasury offsets and administrative wage garnishment.

Do student loans affect your credit like other unsecured loans?

Yes. Student loans can affect your credit in much the same way as other forms of debt. Your payment history, loan balances, and account status can be reported to the credit bureaus. Making payments on time can help maintain a positive credit history, while late or missed payments can hurt your credit. A federal or private student loan default can have more serious effects on your credit.

Photo credit: iStock/DNY59

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If you’re interested in refinancing your student loans, but you don’t think your credit history is strong enough, there are options that might help. One is to refinance student loans with a cosigner.

A cosigner may help you qualify for a refinanced loan. But is taking out a new loan with a cosigner the right choice for you? There are pros and cons to carefully consider in order to decide if student loan refinance with a cosigner makes sense for your personal situation.

What Is a Cosigner on a Loan?

A student loan cosigner is someone who legally agrees to pay your debt, such as your student loan debt, in the event that you can’t make the payments yourself. The exact terms will vary based on the loan type and lender, but in general, this person signs your loan with you and accepts responsibility for your loan if you are unable to pay your debt.

Responsibilities of a Cosigner

A cosigner on a student loan refinance agrees to take on equal responsibility for repaying the loan. Any late or missed payments or student loan default by the borrower could harm the cosigner’s credit.

How Cosigners Affect Loan Approval

When a borrower adds a creditworthy cosigner to their loan application, it may help approve their chances of qualifying for the loan and securing a lower interest rate if the cosigner has a strong credit and financial history.

Can a Cosigner Help You Refinance a Student Loan?

If you’ve decided to refinance a student loan, a cosigner might help you qualify if your own credit is not strong enough.

Lenders review a variety of factors to determine whether or not they will give someone a loan. Things like a low credit score or a credit history that’s not robust enough can serve as an indicator to lenders that an individual who is refinancing student loans without a cosigner might be a credit risk. Adding a creditworthy cosigner could make a potential borrower appear less risky, since there’s another person — one with a strong financial and credit background — to help guarantee repayment of the loan.

One important thing to note about student loan refinancing — either with or without a cosigner — is that if you are refinancing federal student loans, they will be ineligible for federal benefits like income-driven repayment and federal deferment.

Recommended: Can You Refinance Student Loans Without a Degree?

How a Cosigner Impacts Your Approval Odds and Interest Rate

If your credit is limited or your income is small, lenders may consider you a higher-risk borrower. In that case, adding a creditworthy cosigner might increase your chances of getting approved for student loan refinancing. The lender evaluates the cosigner’s credit as well as yours, which may lower the perceived risk since the cosigner will share responsibility for the loan.

Having a creditworthy cosigner may also lower the interest rate you’re offered. Even a rate that’s a few percentage points lower might make a significant difference over the life of the loan. For example, if you were approved without a cosigner for a loan of $35,000 with a rate of 9.00% and a 10-year term, your monthly loan payments would be $443, and the total cost of the loan with interest would be $53,200. If adding a cosigner helped you qualify for a refinance loan with a rate of 6.5%, your monthly payments would be $397, and the total cost of the loan with interest would be $47,700. You’d save $46 a month and $5,574 overall.

Finding a Cosigner

If a borrower can’t qualify for a loan based on their own credit history or current income, student loan refinancing with a cosigner who has a strong credit history may help improve their prospects.

Who Makes a Good Cosigner

Ideally, a cosigner for student loan refinance should have a strong credit history, steady employment, and a good income. In addition, they should be an individual who can be trusted to repay the debt in the event the primary borrower can’t. And finally, because cosigning a loan is a big commitment, it’s important for the borrower to choose someone they feel comfortable asking.

How to Ask Someone to Be Your Cosigner

Being a cosigner is a big responsibility, so how you ask someone to cosign is important. Treat the request with respect. Be open and honest about why you need to refinance student loans with a cosigner. Explain, for instance, that you are recently out of school and don’t yet have a strong credit history. By applying with a cosigner you are more likely to be approved for a refinance loan and get a lower interest rate. Also, detail your plans for repaying the loan so the other person knows you are serious about and committed to handling your debt.

Should a parent cosign a student loan, or should any relative or friend for that matter, it’s important to make them aware of the responsibilities and legal obligations involved. In addition, be sure they are prepared to repay the loan if you are not able to do so. They should also understand that anything negative regarding the loan, such as late payments, can impact their credit.

Pros and Cons of Having a Cosigner

Taking out a loan with a cosigner is a significant commitment, so it’s worth carefully considering the pros and cons. What’s right for you will depend on your personal and financial situation.

One of the most notable benefits of refinancing with a cosigner is the potential to qualify for a loan that may not have been an option otherwise. A cosigner could also possibly help you qualify for a lower student loan interest rate than what you might receive on your own. If you have little to no credit history or poor credit, refinancing student loans with a cosigner may give you an opportunity to work on strengthening your credit over time.

On the other hand, there can be drawbacks to refinancing with a cosigner. If you fail to make payments on your loan, your cosigner will be responsible for repaying your debt. As a result, missed payments will likely reflect on both of your credit histories. This could also negatively impact your personal relationship with the cosigner.

Using a Cosigner when Refinancing Your Student Loans

When you’re refinancing your student loans, enlisting a friend or family member to cosign your refinanced loan may help strengthen your loan application.

Again, keep in mind that acting as a cosigner has risks — if you don’t pay back your loans, your cosigner is on the hook. It’s a big request, so take some time to think about how you’ll make it. Here are some additional tips that may help inform your conversation:

1.    Asking respectfully. You’ll want to broach the subject thoughtfully and respectfully. You’re asking the person for a serious commitment, so asking with tact to show you understand the gravity of your request is crucial.

2.    Showing your dedication. As noted, it’s also important to make it clear to your cosigner that you’re going to be making timely payments on the loan. One simple way to do so is by providing them with regular updates.

3.    Illustrating to your cosigner that you understand the intricacies of your loan. They’ll be responsible for the loan if you fail to make payments, so they’ll likely want to make sure you understand the responsibility you’re taking on — and asking them to take on.

Steps to Refinance a Student Loan With a Cosigner

When you’re ready to move forward with a student loan refinance with a cosigner and the cosigner has agreed, these are the steps to take:

1.    Shop around for lenders that allow cosigners on student loans. Once you have a list of these lenders, compare their rates and terms. You can typically prequalify for loans with several lenders without an impact on your credit.

2.    Once you’ve chosen a lender, pull together the documents you’ll need for yourself and your cosigner. This generally includes your identification, loan statements, and financial documents such as proof of income.

3.    Apply for the loan by filling out and submitting a formal application with your cosigner. This will entail a hard credit check for both you and the cosigner that may temporarily lower your credit scores by a few points.

4.    Once the loan is approved, you and the cosigner will both sign a loan agreement to formalize the loan.

Things to Consider if You’re Asked to Cosign a Loan

If you’ve been asked to cosign a loan, be aware that serving as a cosigner can come with consequences for your finances if the primary borrower fails to make payments. If you’re a family member or friend with excellent credit and a well-paying job, you could be a candidate as a cosigner. But if you have some hesitation, here are a few steps you can take:

1.    Talking it out with the borrower. The borrower is going to use your name and credit history to take out a loan. It can be helpful to understand why they feel they need a cosigner while making sure they have the means to repay the loan.

2.    Following up often. Keeping the lines of communication open so you are aware of any issues can be helpful for both parties. If need be, you could discuss making payments on their behalf to avoid the impact of a late or missed payment on your own credit score.

3.    Accepting negative outcomes. Even if you’ve done everything you can to ensure the borrower is trustworthy, something might come up where they let you down. Your credit score might take a hit and you might be responsible for making payments yourself. Remember that this could happen, so accepting it as a possibility may be helpful.

Cosigning a loan is a big responsibility that can have implications on your financial future, so take some time to consider the idea.

If you decide not to cosign, you can let the requester down gently by trying to help them think of some alternative options to secure the loan or money they need.

How to Remove a Cosigner After Refinancing

Some lenders allow cosigners to be removed from a loan through a cosigner release. This allows the cosigner to be officially released from the loan and all the responsibilities that come with it. Typically, the primary borrower has to apply for a cosigner release with the lender.

Depending on the terms of the loan, the cosigner may be able to be released if the primary borrower has graduated from college and meets certain requirements as stipulated by the lender. Typically these requirements include such things as the primary borrower making one to two years of on time payments, having a good credit report and no loans in default, and being in a stable job with a steady income.

If your lender doesn’t offer a cosigner release, another way to take a cosigner off your loan is to refinance your student loans again. When you refinance, you replace your old loans with a new loan that has new terms. If you can qualify for the refinance on your own, you won’t need to include the cosigner on the new loan.

Refinancing Student Loans With SoFi

If you’re interested in refinancing student loans but your credit isn’t strong enough, enlisting a trusted person with a strong financial background as a cosigner may help you qualify for a loan and/or get a lower interest rate. Or, if your credit has strengthened over time, and you can qualify on your own, you might consider refinancing without a cosigner.

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.

FAQ

How does adding a cosigner affect my interest rate?

A cosigner with strong credit and a solid financial background may help a borrower qualify for a lower interest rate when refinancing a student loan. Generally, the more creditworthy the cosigner is, the better a borrower’s chances of getting a lower rate may be.

What credit score does my cosigner need?

The credit score a cosigner needs for a student loan refinance depends on the lender’s specific criteria. Typically, many lenders look for a credit score of 670 or higher. The higher the cosigner’s score, the lower the interest rates you may be offered.

How long will my cosigner be responsible for my loan?

A cosigner is generally responsible for a loan until the loan is repaid in full. However, a cosigner may be able to be released from a loan through a cosigner release option — if a lender offers it and the primary borrower meets specific criteria set by the lender. Another option is for the primary borrower to refinance the loan again in their own name only, without the cosigner.

Do I need a cosigner for student loan refinance?

The specific requirements for refinancing a loan with a cosigner will depend on your credit history and income (among other factors) and the eligibility requirements of the lender. Borrowers who have a less than stellar credit history may find that adding a cosigner to their application allows them to qualify for a student loan refinance and a more competitive interest rate.

Can a cosigner refinance a student loan on their own?

It’s possible. Although many lenders require the primary borrower to refinance a student loan, some lenders do allow a cosigner to refinance the loan in their own name. The cosigner would apply for a new refinancing loan in their own name, and that loan would pay off the old loan. This would legally remove the primary borrower from the loan and relieve them of the debt.

Can a cosigner become the primary borrower?

In order for a cosigner to become the primary borrower of a student loan, the loan would generally need to be refinanced in the cosigner’s name.

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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

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 .

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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