Jan
20
2026
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Student Loan APR vs Interest Rate: 5 Essential FAQs

By | Fresh Out of School, Student Loans, student_loan, Terminology | No Comments

You may have noticed when shopping around for student loans that some lenders display an interest rate, while others show an APR. What’s the difference? The main distinction is that the student loan APR (which stands for annual percentage rate) includes any fees or other charges the lender may add to the loan principal. The “interest rate” does not.

When shopping for a student loan, it’s key to know whether you’re looking at an APR or an interest rate, since this can have a significant impact on the total cost of the loan. Read on to learn more about student loan APR vs. interest rate, what each number includes, and how to compare student loan rates accurately to find the best deal.

Key Points

•   Interest rate vs. APR: Interest rate is the cost of borrowing expressed as a percentage of the loan; APR includes the interest rate plus upfront fees (like origination fees), giving a fuller picture of loan costs.

•   Federal loans publish only interest rates, not APRs; they also charge origination fees: 1.057% for Direct Subsidized/Unsubsidized loans, 4.228% for Direct PLUS loans.

•   Private loan rates vary by lender and creditworthiness; some charge origination fees while others don’t. If no fees are charged, the APR and interest rate will be the same.

•   Common fees such as origination, late payment, and insufficient funds fees can increase total repayment costs — but some private lenders may not charge any fees.

•   Best comparison metric: APR provides the most accurate “apples-to-apples” comparison across loan offers, since it reflects both interest and fees.

How Do Student Loan Interest Rates Work?

As with any loan, the interest rate represents the amount your lender is charging you to borrow money. It’s expressed as a percentage of your loan amount (or the loan principal) and doesn’t reflect any fees or other charges that might be connected to your loan. Interest rates can be fixed (the same for the life of the loan) or variable (may fluctuate over the life of the loan).

One of the factors that affect student loan interest rates is the type of student loan it is. Interest rates work differently depending on whether a student loan is federal or private. Congress sets the interest rates for federal student loans. The rate is fixed — and it’s the same for all borrowers. The federal student loan interest rate for undergraduates is 6.39% for new loans taken out for the 2025-26 school year, effective from July 1, 2025 to July 1, 2026.

The interest rate for private student loans works differently. Private lenders set their own rates, which may be higher or lower than rates for federal loans. Interest rates on private loans may be fixed or variable and typically depend on the creditworthiness of the borrower (or the student loan cosigner, if there is one). Those with higher credit scores generally qualify for lower rates, while borrowers with lower credit scores tend to get higher rates.

What Is the Student Loan APR, and How Is It Different From Interest Rate?

A loan’s annual percentage rate (APR) represents a more comprehensive view of what you’re being charged. It tells you the total cost of the loan per year, including any upfront fees, such as an origination fee, which a lender may charge for processing the loan. Because of that, a loan’s APR may be higher than its interest rate.

Looking at the APR helps you compare different loan offers and get a real picture of the overall cost you will pay for borrowing money for your education. If a loan doesn’t have any fees, the interest and the APR will be the same.

Federal student loans publish interest rates but not the APRs, so it’s important to keep in mind that the interest rate of a federal student loan is not the total cost of that loan. These loans also charge an origination fee, which is 1.057% for Direct Subsidized and Direct Unsubsidized loans, and 4.228% for Direct PLUS loans (unsubsidized loans for parents and graduate/professional students).

For private student loans, origination fees vary by lender. While some private lenders charge origination fees, it’s possible to find private loans that don’t have these fees.

However, it’s important to keep in mind that private student loans generally don’t come with the same protections as federal student loans, such as income-driven repayment plans and forgiveness programs.

What Fees / Charges Might Be Included in a Student Loan APR?

Fees that may be included in a student loan APR are upfront fees, such as origination fees. Other factors that could impact your loan balance — but are not included in the loan’s APR — are interest capitalization and late fees for missed payments.

Here’s how each of these things plays a role in student loans.

Origination Fees

The most common fee for student loans is the loan origination fee for processing the loan. Whether the loan is federal or private, this fee is typically based on a percentage of the total loan amount and will be deducted from your loan amount before the loan is dispersed. This means that if you borrow $10,000 and the origination fee is 1.057%, $105.70 will be deducted from your total loan amount — so you would actually receive $9,894.30 for the year.

While origination fees can be small, the cost can add up. Because these fees are deducted from the total loan amount, you are paying the fee with borrowed money and you’ll pay interest on the fee paid.

Capitalized Interest

Accruing interest and capitalized interest may affect the cost of your loan. Most student loans begin accruing interest daily as soon as they are disbursed. The exception is federal Direct Subsidized Loans, which the government covers the interest on until you are required to start making payments. That’s one of the major differences between subsidized vs. unsubsidized loans: For unsubsidized loans, the interest continues to accrue, increasing the amount the borrower will need to repay.

In addition, in certain situations, including deferment and during the six-month grace period after graduation, unpaid interest on your federal student loans may capitalize. That means the interest is added to your principal balance, and you’re charged interest on the new higher amount. Capitalization can increase the total balance of your loan.

Private lenders may have other or different situations when interest on student loans capitalizes, so it’s important to find this out when reviewing loan offers.

Late Payment or Returned Payment Fees

Both private and federal student loans may also have late fees and returned payment (or insufficient funds) fees, both of which add to the total amount you must repay. However, you can avoid these fees by always paying your bill on time and making sure you have enough money in your bank account to cover the payment.

Fees vary widely from one lender to the next, and some private lenders may not charge any fees.

Recommended: Average Student Loan Interest Rate

If a Loan’s Interest Rate and APR Are the Same, Does That Mean There Are No Hidden Fees?

Typically, if a student loan’s interest rate and APR are the same, it means there are no hidden fees. However, there are still a few things to watch out for that could affect the cost of your loan.

What to Look for in the Loan Agreement

Be sure to carefully read the loan agreement for your student loan. The agreement should spell out the loan’s interest rate and any upfront fees such as an origination fee.

Keep in mind that interest rates published for federal student loans are not APRs and do not include the origination fee. This fee will come out of the amount of money that is disbursed (paid out) to you while you’re in school.

The student loan APRs listed by private lenders include any additional upfront charges and fees. If the lender doesn’t charge any fees, the APR and interest rate will be the same.

Finally, check the loan agreement to see in what situations interest might capitalize and increase the overall cost of a loan.

Why Some Fees May Still Apply

A student loan may come with other fees, such as late fees for missed or late payments, and returned payment fees if a borrower doesn’t have enough money in their bank account to cover their loan payment. Other fees might include collection fees if a borrower defaults on a loan and the loan goes to collection.

When Shopping for a Loan, Should I Look at Interest Rate, APR, or Both?

As you’re shopping for a student loan, it’s important to look at the APR, if it’s available, as well as the interest rate, to get an accurate picture of what the loan will cost you.

Understanding the Full Cost of Borrowing

Because it includes interest and any fees, a loan’s APR tells the true cost of the loan, so that a borrower will know what the full cost of borrowing the money is. If you only look at the interest rate, you won’t be able to factor in any fees that the loan might come with.

Once you know what a loan will cost you in full, you can calculate student loan payments to determine what your monthly payments might be.

How to Compare Lenders Accurately

Whenever possible, you’ll want to look at the APR of a student loan, since this number allows a more apples-to-apples comparison of loan costs. The APR reflects both the loans interest rates and fees. If you just compare straight interest rates, you can miss the big picture in terms of the total cost of the loan. Sometimes those additional fees can make a big impact.

How APR and Interest Rates Affect Student Loan Repayment Over Time

A loan’s repayment amount — both the monthly payments and the total cost of the loan over time — are significantly impacted by a loan’s APR and interest rate.

Impact on Monthly Payments

A student loan’s interest rate and APR can affect student loan repayment over time in the following ways:

•   The percentage: A higher interest rate or APR means a higher monthly payment, and a lower rate means a lower payment.

•   How interest accrues: Although the interest rate is the same for federal Direct Subsidized and Direct Unsubsidized loans, the latter loan ends up costing significantly more because interest starts accruing from the time the funds are disbursed. With subsidized federal loans, the interest does not accrue while you are still in school.

For private student loans, interest typically begins to accrue as soon as the loan money is disbursed to your school. The longer interest accrues, the higher your monthly payments may be.

•   When interest capitalizes: In certain situations, unpaid interest on your student loans may capitalize and be added to your principal balance. That can increase monthly student loan payments as well as the overall cost of the loan.

Total Repayment Cost Over Loan Term

Your APR can determine the total cost of your loan over time. The higher the APY, the more interest that will accrue on the loan, and the more interest you’ll pay over time. That can lead to a higher overall cost of your loan over the term.

To reduce your payments, and potentially lower the total cost of your loan, one option some borrowers may want to consider is refinancing student loans. With student loan refinancing, you exchange your current loan for a new loan from a private lender with new rates and terms. Ideally, if you qualify, the interest rate on the new loan will be lower.

A student loan refinancing calculator can help you figure out how much refinancing might save you.

You can shop around for student loan refinancing rates to look for the best offer. Just be aware that refinancing federal student loans makes them ineligible for federal benefits like forgiveness, deferment, and income-driven repayment plans.

The Takeaway

A student loan’s interest rate is the cost of borrowing money and is expressed as a percentage of the loan amount. APR includes the interest rate as well as the additional costs and fees associated with borrowing. As a result, it gives you a more complete picture of the total cost of the loan.

Understanding APR vs. interest rate is important when you’re researching best rates for student loans. It will help you make informed decisions that may lower your cost of borrowing. Another option for potentially lowering your payments is through refinancing, if you qualify for a lower interest rate.

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

What is a good APR for a student loan?

For new loans taken out for the 2025-26 school year, the federal student loan interest rate is 6.39% for undergraduates (whether the loan is unsubsidized or subsidized). For graduate students it’s 7.94%, and for parents it’s 8.94%. Average private student loan annual percentage rates (APRs) vary by lender. They range from 3.18% to 17.99%, as of January 2026, depending on a borrower’s credit.

Is APR better than interest rate?

The annual percentage rate (APR) gives you a more accurate picture of the true cost of financing. The APR of a loan tells you how much you will pay for a loan over the course of a year after accounting for the interest rate as well as any extra costs, like origination fees. When comparing loan offers, it’s generally better to compare APRs than interest rates, since this allows you to compare loan offers apples to apples.

Can APR and interest rate be the same?

Yes. If no fees are added to your loan amount, the interest rate and the annual percentage rate (APR) will typically be the same.

Why does APR matter when refinancing student loans?

APR gives you the total cost of borrowing, including any upfront fees you’ll incur when refinancing. It provides the true and total cost of borrowing, and it gives you a way to compare loan offers accurately.

How can I lower the APR on my student loans?

One option for lowering the APR on student loans is with student loan refinancing. When you refinance, you replace your existing student loans with a new loan that has new rates and terms. If your credit is strong, you may qualify for a lower interest rate, which would lower your APR.

If you have federal loans and you want to keep them because of the federal benefits they come with, enrolling in auto pay can give you a $0.25% discount on your loan’s interest rate.

About the author

Julia Califano

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.


SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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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.

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 .

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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Jan
09
2026
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How to Recertify Your Income Based Repayment for Student Loans

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | Comments Off on How to Recertify Your Income Based Repayment for Student Loans

If you have federal student loans, you can enroll in an Income-Driven Repayment (IDR) plan, which may make your monthly payments more affordable. That’s because the amount is calculated based on your discretionary income and family size.

Income-Driven Repayment is the umbrella term for several federal repayment programs. (Income-based repayment, on the other hand, refers to one specific IDR plan.) Once you are enrolled in an IDR plan, you will need to recertify annually, by providing updated information about your income and family size — essentially reapplying for the plan. The government uses this information to calculate your payment amount and adjust it if necessary.

You can easily recertify an IDR plan. Read on to find out when to recertify income-driven repayment, how to do it, and upcoming changes to IDR plans you should be aware of.

Key Points

•   Income-driven repayment plans require annual recertification to either reconfirm or update information on income and family size to adjust payment amounts if necessary.

•   Recertifying ensures monthly student loan payments remain manageable by reflecting current income and family size.

•   Failing to recertify by the annual deadline will likely result in higher monthly payments, reverting borrowers to the amount they would pay under the 10-year Standard Repayment Plan.

•   Individuals can opt for automatic recertification by providing consent for the Education Department to access their tax information, or they can fill out a form manually.

•   Required documents for recertification typically include proof of income, such as recent tax returns or current pay stubs, for verification purposes.

What Is Income-Driven Repayment?

Income-driven repayment currently encompasses three different repayment plans. These plans are available to federal student loan borrowers to help make their payments more manageable. It’s an option to keep in mind when choosing a loan or if your current federal loan payments are high relative to your income. The program is intended to make the amount you pay on your student loan each month more affordable.

Under the “One Big Beautiful Bill” signed into law by President Trump, the options for income-driven plans will be changing over the next few years. Currently, however, the three income-driven repayment programs offered for federal student loans are:

•   Pay As You Earn (PAYE) Repayment Plan

•   Income-Based Repayment (IBR) Plan

•   Income-Contingent Repayment (ICR) Plan

For all of these plans, your monthly payment amount is based on a percentage of your discretionary income and the size of your family.

An income-driven plan also extends your loan term to 20 or 25 years. On the IBR plan, borrowers are eligible to get any remaining balance on their loan forgiven after that time.

Recommended: Guide to Student Loan Forgiveness

Which Federal Loans Are Eligible for an Income-Driven Repayment Plan?

IDR plans are available for the following types of federal loans:

•   Direct Subsidized Loans

•   Direct Unsubsidized Loans

•   Direct PLUS Loans made to graduate or professional students

•   Direct Consolidation Loans that did not repay any PLUS loans made to parents

•   Subsidized Federal Stafford Loans

•   Unsubsidized Federal Stafford Loans

•   FFEL PLUS Loans made to graduate or professional students

•   FFEL Consolidation Loans that did not repay any PLUS loans made to parents

•   Federal Perkins Loans, if these student loans are consolidated.

Private student loans are not eligible for IDR plans. For borrowers who are struggling to make their monthly payments on private loans, one option they may want to consider is student loan refinancing. With refinancing, you replace your old loans with one new loan. Ideally, the refinanced loan has a lower interest rate, which can lower monthly payments and save a borrower money.

Using a student loan refinancing calculator can be helpful to see how much refinancing might save you.

Take control of your student loans.

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How Monthly Payments Are Calculated Under IDR Plans

On an IDR plan, your monthly payment amount is generally based on a percentage of your discretionary income, which is defined by the Education Department as “the difference between your annual income and 150% of the poverty guideline for your family size and state of residence.”

Below is a look at how monthly payments are calculated under each plan. You can also use the office of Federal Student Aid’s Loan Simulator tool to see what your payments would be for each of the plans.

Also, it’s important to be aware that the PAYE and ICR plans are currently available to borrowers, but they are set to close to new enrollments on or after July 1, 2027. Borrowers already on these plans have until July 1, 2028, to switch to the IBR plan or the new Repayment Assistance Plan (RAP).

The IBR Plan

As noted above, while most of the other IDR plans will close in 2027, IBR will remain open to current borrowers.

On Income-Based Repayment, borrowers pay 10% of their discretionary income each month for a 20-year term if they first borrowed after July 1, 2014. (The monthly percentage is 15% with a 25-year repayment term for those who borrowed before that date.)

Any remaining balance owed at the end of the loan term will be forgiven on IBR. Although the PAYE and ICR plans no longer offer loan forgiveness, a borrower can get credit for their PAYE and ICR payments if they switch to IBR.

The PAYE Plan

To be eligible for PAYE, an individual must be a new borrower as of October 1, 2007, and have received a Direct loan disbursement on or after October 1, 2011. In addition, a borrower’s monthly payment on the plan must be less than what it would be on the Standard 10-year plan.

On PAYE, monthly payments are 10% of a borrower’s discretionary income, and the loan term is 20 years.

PAYE is currently open, but it’s closing down on July 1, 2027. Borrowers already on the plan will have until July 1, 2028 to switch to the IBR plan or the new plan, RAP.

The ICR Plan

The income-contingent repayment plan sets a borrower’s payments at 20% of their discretionary income and has a repayment term of 25 years. This is the only income-driven option for borrowers with Parent PLUS loans — and those loans must be consolidated first.

ICR closes to new enrollees on July 1, 2027, and those currently on the plan have until July 1, 2028 to switch to IBR or RAP. Otherwise, they will automatically be moved to RAP.

Recommended: Student Loan Repayment Calculator

Take control of your student loans.
Ditch student loan debt for good.

The New RAP Plan

The RAP program is scheduled to launch in the summer of 2026. Here are details on how the plan works.

How RAP Differs From Other IDR Plans

Unlike the existing IDR plans that use discretionary income, RAP will base a borrower’s payments on their adjusted gross income (AGI). Depending on their income, they’ll pay 1% to 10% of their AGI over a term of up to 30 years.

If they still owe money after 30 years, the rest will be forgiven. The federal government will cover unpaid interest and ensure that the loan’s principal goes down by at least $50 each month.

All borrowers are required to pay at least $10 per month on RAP. This plan may offer lower monthly payments than the current IDR options, but borrowers might also pay more interest over the life of the loan due to the longer repayment term.

Eligibility and Enrollment in the RAP Plan

To be eligible for RAP, you must have Federal Direct Loans, Federal Family Education Loans, or Grad PLUS loans (Parent PLUS borrowers are ineligible for RAP). Qualifying loans may be subsidized or unsubsidized.

As of July 1, 2026, new borrowers can enroll in RAP, if they choose. It will be the only income-driven plan available to them. Existing borrowers will be able to choose RAP or IBR.

Borrowers will enroll in RAP through StudentAid.gov. Details about the application process are not yet available; information is likely to be released closer to the July 1, 2026 launch date. Watch for updates from your loan servicer, and check the Student Aid website.

What Is Student Loan Recertification?

Since your current IDR plan is based on your income and the size of your family, you need to reconfirm or recertify these details every year.

When you apply for or recertify an income-driven repayment plan online, the Education Department will ask you for consent to access your tax information. If you give consent, they will automatically recertify your loan every year.

If you choose to recertify manually, you will need to fill out the online form and upload the requested documentation, or print out a PDF and mail it along with the documentation to your loan servicer.

If your financial situation changes ahead of your recertification date — for instance, if you lose your job — you can reach out to your loan servicer and ask them to immediately recalculate your payments.

Why Recertification Matters

Recertification is important because it ensures that your monthly student loan payments are based on your current income and family size, which may help keep your payments manageable. Also, if you fail to recertify, your payments will likely go up — see details about that below.

How to Recertify Income-Driven Repayments

You can apply for income-driven repayments and recertify your status by going online to StudentAid.gov. Filing your application online ensures that it is sent to each of your loan servicers if you have more than one. Alternatively, you may send paper applications to each of your loan servicers.

Steps for Online and Mail Recertification

To file online, go to StudentAid.gov and log in with your FSA ID. Click on “Manage Your Income-Driven Repayment Plan.”

Verify your family size, marital status, income, and spouse’s income, if applicable. If your income has changed since your last tax return, you can upload more recent pay stubs. You can also give consent for the Education Department to access your tax information, allowing automatic recertification in the future.

To recertify by mail, you can download the Income-Driven Repayment Plan Request form on the Student Aid website. Fill out the form and attach the required documents. You’ll send the request to the address provided by your loan servicer.

What Documents Are Required for Recertification

The documents required for recertification are proof of income, such as your most recent tax return or pay stubs. Unless you have chosen automatic recertification, you will need to manually upload these documents for your loan servicer.

When to Recertify Income-Driven Repayment Plans

Your IDR plan recertification deadline is the date one year after you start or renew an IDR plan. Your loan servicer will send you a notification of your upcoming recertification deadline along with the actions (if any) you need to take; you will also receive notices from StudentAid.gov.

If your income has decreased or your family status has changed, you may want to recertify before your annual deadline. You can fill out a recertification form at any time if you’re struggling to make your payments because your financial situation has changed.

What Happens If You Miss the Recertification Deadline?

If you fail to recertify your IBR plan by the annual deadline, you will remain on your current IDR plan, but your monthly payment will switch to the amount you would pay under the 10-year Standard Repayment Plan, which will likely increase your payments.

You’ll be able to make payments based on your income once again when you recertify and update your income information with your loan servicer.

The Takeaway

Income-Driven Repayment plans, which are available to many federal student loan borrowers, can be a way to help make student loan repayments work with a borrower’s budget. Recertification is a critical step borrowers need to take each year to either verify their information or inform the Education Department of changes to their situation that might affect their payment size.

Refinancing is another option some borrowers may want to consider to help manage their student loan debt, especially those with private student loans that don’t qualify for IDR plans or federal benefits and programs.

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


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

FAQ

Can you recertify student loans early?

Federal student loan borrowers who are on an income-driven repayment plan can recertify early, which you may want to do if your family has grown or your income has decreased. Otherwise, you need to recertify your loans once a year.

How do I recertify my student loans?

You can recertify your student loans online at the Federal Student Aid website (studentaid.gov), or by downloading and mailing in the Income-Driven Repayment Plan Request form with any supporting documentation. If you mail in the request, you’ll need to send a copy to each of your loan servicers. You can also opt to have your recertification happen automatically every year by giving consent for the Education Department to access your tax information.

When should I recertify my student loans?

Your recertification date is the date one year after you started or renewed your IDR plan. Your loan servicers will send you a notice in advance that it’s time to recertify your loan. The Student Aid website should also send you notices about recertification.

What documents do I need to recertify my IDR plan?

Unless you’ve opted for automatic recertification, you will need to provide proof of income, such as your most recent tax return or pay stubs, when you recertify your IDR plan. You will need to manually upload these documents for your loan servicer.

What if my income has changed since my last recertification?

If your income has changed since your last recertification, you can submit updated information, along with supporting documents such as pay stubs, so that your payments can be recalculated. You can do this at any time through your account on StudentAid.gov or directly to your loan servicer.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

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Jan
09
2026
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Strategies to Pay Back Federal Student Loans

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

If you borrowed money from the government to help pay for college, the time will come when you need to pay your student loans back. That time typically arrives six months after you graduate or drop below half-time status.

While the prospect of paying student debt may seem daunting while you’re a student with little to no income, don’t stress. The U.S. Education Department offers a number of repayment options, including plans that require you to pay only a small percentage of your monthly salary. Plus, there are steps you can take to make it easier to repay your student loans and potentially save money on interest.

Read on to learn more on how to start paying back your federal student loans.

Key Points

•   You typically begin repaying federal student loans six months after graduating or dropping below half-time enrollment, but interest may accrue during this grace period.

•   There are several repayment plans for loans disbursed before July 1, 2026, including the standard 10-year fixed plan and income-driven repayment (IDR) options tied to your income.

•   You can consolidate multiple federal loans into a single Direct Consolidation Loan to simplify payments, though it doesn’t lower your interest rate.

•   Refinancing federal loans through a private lender might lower your monthly payments or interest rate, but you’ll give up federal protections and forgiveness benefits.

•   Your repayment plan isn’t permanent — you can switch plans as your financial situation changes, and consider consolidating or refinancing later if needed.

Types of Federal Student Loans

To determine the right student loan repayment strategy, it’s important to know what type of student loans you have. Here’s a look at the main types of federal student loans.

Direct Subsidized Loans

Direct Subsidized Loans are a type of federal student loan only for undergraduates who have demonstrated financial need. With these loans, the government pays the interest on the loan while you are in school and during the grace period.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to eligible undergraduate, graduate, and professional students, and eligibility is not based upon financial need. Borrowers are responsible for all interest that accrues on the loan.

Direct PLUS Loans

Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for education expenses. These loans are unsubsidized, meaning that interest accrues throughout the life of the loan, including while the student is enrolled in school.

Starting on July 1, 2026, though, Direct Grad PLUS Loans will no longer be available. Students will instead rely on Direct Unsubsidized Loans, which will have new annual and lifetime borrowing caps. Parent PLUS Loans will still be an option, but new limits will apply starting on July 1, 2026.

Direct Consolidation Loans

Direct Consolidation Loans allow borrowers to combine multiple existing federal loans into one new loan with a single monthly payment. This simplifies repayment and can extend the repayment term, potentially lowering monthly costs. However, it won’t reduce your interest rate, since the new rate is a weighted average of the original loans rounded up to the nearest eighth of a percent.

When Do You Have to Pay Back Federal Student Loans?

You need to begin paying back most federal student loans six months after you leave college or drop below half-time enrollment.

Direct PLUS Loans enter repayment once your loan is fully disbursed. However, graduate/professional students who take out PLUS loans get an automatic deferment, which means they don’t have to make payments while they are in school at least half time and for an additional six months after they graduate.

If you’re a Parent PLUS Loan borrower, though, payments are due upon disbursement. You can, however, request a deferment (it’s not automatic). This deferment means you won’t have to pay while your child is enrolled at least half time and for an additional six months after your child leaves school or drops below half-time status.

Grace Periods and Deferment Options

A grace period is the span of time after you graduate, leave school, or drop below half-time enrollment during which you are not required to make federal student loan payments. Most federal loans, including Direct Subsidized and Unsubsidized Loans, offer a six-month grace period. Grace periods give borrowers time to find work, organize finances, and prepare for repayment.

Deferment allows borrowers to temporarily pause federal student loan payments due to qualifying circumstances such as economic hardship, unemployment, military service, or returning to school. During deferment, interest does not accrue on subsidized loans, though it typically continues to accumulate on unsubsidized loans.

Note that under the 2025 federal budget bill, loans made after July 1, 2027 are no longer eligible for deferments based on unemployment or economic hardship.

How to Pay Federal Student Loans

When you leave school, you’ll be required to complete exit counseling. This is an online program offered by the government that helps you prepare to repay your federal student loans. Once you’ve completed your exit counseling, here’s what you’ll need to do to start paying back your federal student loans.

1. Find Your Student Loan Servicer

You can find your federal student loan servicer by logging into your account at StudentAid.gov, where all federal loans and their assigned servicers are listed in your dashboard. This portal provides the servicer’s name, contact information, and details about each loan.

2. Review and Select a Repayment Plan

You’ll then have the option to pick a repayment plan. If you don’t choose a specific plan, you’ll automatically be placed on the 10-year Standard Repayment Plan. However, you can change plans at any time once you’ve begun paying down your loans.

Here’s a look at your repayment plan options, plus tips on why you might choose one plan over another.

Standard Repayment Plan

The Standard Repayment Plan is the default loan repayment plan for federal student loans. Under this plan, you pay a fixed amount every month for up to 10 years (for loans disbursed before July 1, 2026). For loans disbursed after this date, the repayment term will depend on your federal student loan balance. This can be a good option for borrowers who want to pay less interest over time.

Income-Driven Repayment Plans

With income-driven repayment plans (IDRs), the amount you pay each month on your student loans is tied to the amount of money you make, so you never need to pay more than you can reasonably afford. Generally, your payment amount under an IDR plan is a percentage of your discretionary income.

Graduated Repayment Plan

The Graduated Repayment Plan starts with lower payments that increase every two years. Payments are made for up to 10 years (between 10 and 30 years for consolidation loans). If your income is low now but you expect it to increase steadily over time, this plan might be right for you. Keep in mind that this plan is only available for loans disbursed before July 1, 2026.

Extended Repayment Plan

The Extended Repayment Plan, also only available for loans disbursed before July 1, 2026, is similar to the Standard Repayment Plan, but the term of the loan is longer. Extended Repayment Plans generally have terms of up to 25 years. The longer term allows for lower monthly payments, but you may end up paying more over the life of your loan thanks to additional interest charges.

3. Make a Payment

Once you know your servicer and your repayment plan, the next step is making your actual student loan payment. Most borrowers choose the most convenient method, but your servicer typically offers several options.

Online

Most servicers allow you to make payments directly through their online portal, where you can schedule one-time or recurring payments. Paying online is usually the fastest and most reliable method, making it easy to track your balance and payment history.

By Mail

You can also make payments by mailing a check or money order to your loan servicer. Be sure to include your account number and allow enough time for the payment to arrive and be processed before your due date.

4. Set Up Autopay and Payment Alerts

You might also consider signing up for autopay through your loan servicer. Since your payments will be automatically taken from your bank account, you won’t have to worry about missing a payment or getting hit with a late fee. Plus, you’ll receive a 0.25% interest rate deduction on your loan.

5. Explore Other Repayment Options

If your current repayment plan isn’t sustainable, there are several ways to adjust your monthly payments or overall loan strategy. You could consider loan forgiveness, refinancing to a private student loan, or student loan deferment or forbearance.

Loan Forgiveness

Federal student loan forgiveness programs can reduce or eliminate your remaining balance if you meet specific criteria, such as working in public service or teaching in underserved areas. Programs like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness reward borrowers who make consistent payments while serving their communities. These options can significantly reduce long-term loan costs for eligible borrowers.

Refinancing to Private Student Loan

When you refinance your student loans, you combine your federal and/or private loans into one private loan with a single monthly payment. This can simplify repayment and might be a smart move if your credit score and income can qualify you for lower interest rates.

With a refinance, you can also choose a shorter repayment term to pay off your loan faster. Or, you can go with a longer repayment term to lower your monthly payments (note: you may pay more interest over the life of the loan if you refinance with an extended term).

If you’re considering a refinance, keep in mind that refinancing federal loans with a private lender disqualifies you from government benefits and protections, such as IDR plans and generous forbearance and deferment programs.

Deferment or Forbearance

Deferment or forbearance can temporarily pause your student loan payments during financial hardship, unemployment, health issues, or other qualifying situations. While these options offer short-term relief, interest may continue to accrue, depending on the loan type. They should be used sparingly and strategically to avoid increasing your overall loan balance.

Again, for loans made after July 1, 2027, borrowers are no longer eligible for deferments based on unemployment or economic hardship.

Recommended: Student Loan Consolidation vs Refinance

The Takeaway

If you have federal student loans, you generally don’t need to start paying them down until six months after you graduate. At that point, you’ll have the opportunity to choose a repayment plan that fits your financial situation and goals. Whatever plan you choose, you’re never locked in. As your finances and life circumstances change, you may decide to switch to a different payment plan, consolidate, or refinance your student 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

Is there a way to get rid of federal student loans?

If you repay your loans under an income-driven repayment plan, any remaining balance on your student loans will be forgiven after you make a certain number of payments over 20 or 25 years. Other ways to pursue federal student loan forgiveness are through Public Service Loan Forgiveness and Teacher Loan Forgiveness.

What is the best option for repaying student loans?

The best federal student loan repayment plan for you will depend on your goals and financial situation. If you want to pay the least possible in interest, you might want to stick with the standard repayment plan. If, on the other hand, you want lower monthly payments and student loan forgiveness, you might be better off with an income-driven repayment plan.

What happens if you don’t pay federal student loans?

Typically, If you don’t make payments on your loan for 90 days, your loan servicer will report the delinquency to the three national credit bureaus. If you don’t make a payment for 270 days (roughly nine months), the loan will go into default. A default can cause long-term damage to your credit score. You may also see your federal tax refund withheld or some of your wages garnished.

Can you refinance federal student loans into private loans?

Yes, you can refinance federal student loans into private loans, but this means losing federal benefits like income-driven repayment plans and loan forgiveness options. Private lenders offer competitive rates, but eligibility depends on credit score and financial stability. Consider the pros and cons carefully.

How does income-driven repayment affect loan forgiveness?

For loans disbursed before July 1, 2026, income-driven repayment plans can lead to loan forgiveness after 20-25 years of on-time payments, depending on the plan. Payments are based on your income, making them more manageable. However, any forgiven balance may be taxable as income, and you must maintain eligibility throughout the repayment period.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

SOSLR-Q425-048

Read more
Jan
09
2026
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Is It Possible to Pause Student Loan Payments?

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

The average student loan borrower with federal loans graduates with $39,075 in debt. If you were to pay that amount on the Standard Repayment Plan at a rate of 5.50%, you’d have to shell out $424 per month for the next 10 years.

But depending on where life takes you after graduation, you may not be able to afford it. There are plenty of circumstances that may make repayment difficult, including going back to school, going into active military duty, and losing a job.

As such, it’s important to know how to pause student loan payments when you can’t afford them. Depending on who your lender is, though, the options can vary. Keep reading for our complete guide on pausing student loan payments.

Key Points

•   Borrowers can pause student loan payments through deferment and forbearance, though eligibility and terms vary depending on federal or private loans.

•   Federal loan deferment allows borrowers to stop payments for up to three years, with interest accruing on unsubsidized loans but not on subsidized loans.

•   Federal loan forbearance grants temporary payment relief but requires borrowers to pay all accrued interest, though interest does not capitalize for most loan types when forbearance ends.

•   Private lenders set their own deferment and forbearance policies, meaning options may be limited and approvals are not guaranteed.

•   Alternative options include enrolling in an income-driven repayment plan to lower monthly payments or refinancing to secure a lower interest rate or extended loan term.

Two Ways You Can Pause Student Loan Payments

Depending on your situation, you may be able to pause student loan payments through student loan deferment or forbearance. Each of these options has different requirements and outcomes, so it’s essential to understand how they work.

1. Student Loan Deferment

Note that under the ‘Big, Beautiful Bill,’ loans made after July 1, 2027 are no longer eligible for deferments based on unemployment or economic hardship.

Student loan deferment allows you to reduce or pause your payments for a set period of time. In the meantime, however, the deferred loan will continue to accrue interest, in most cases. For example, if you have an unsubsidized loan or a PLUS loan, you should consider making interest-only payments during the deferment, otherwise the interest will capitalize (be added to the loan balance) at the end of the deferment period.

This means that you’ll have a new, higher balance that includes the principal amount at the beginning of the deferment period plus the unpaid interest that accrued during deferment.

The exception is if you have subsidized federal loans or Perkins Loans, in which case you won’t be responsible for paying accrued interest.

2. Student Loan Forbearance

Another option is putting loans in forbearance. Like deferment, forbearance allows qualified applicants to delay payments for a set period of time.

The primary difference is that you’re responsible for paying any interest that accrues during the forbearance period, regardless of which type of loan you have.

Again, it is possible to make interest-only payments during the forbearance period. With most loans, interest will not capitalize at the end of the forbearance.

Key Differences Between Deferment and Forbearance

Student loan deferment and forbearance both pause payments, but they differ in how interest is handled and the conditions under which they’re granted.

•   Interest accrual: During deferment, subsidized federal loans typically do not accrue interest, while all loans accrue interest during forbearance.

•   Eligibility requirements: Deferment has more specific qualifications (such as unemployment, economic hardship, or returning to school), while forbearance is generally easier to qualify for.

•   Length of relief: Deferment can last longer depending on the situation, while forbearance is often granted in shorter increments.

•   Impact on total cost: Because interest usually pauses on subsidized loans during deferment, it is often less expensive long-term than forbearance.

•   Types available: Forbearance includes both general and mandatory options, while deferment is only granted when specific criteria are met.

Federal Student Loans

The U.S. Department of Education offers both deferment and forbearance on all of its student loans. Note that depending on when your loans were disbursed, the terms may vary. For loans disbursed on or after July 1, 2027, unemployment and economic hardship deferments will no longer be available. Forbearances for loans disbursed on or after this date will be capped at nine months in a 24-month period as opposed to 12 months for loans disbursed before July 1, 2027.

Both deferment and forbearance need to be applied for through your student loan servicer. Here’s what you need to know about both options.

Qualifying for Federal Loan Deferment

If you have federal loans, you may be able to defer your student loan payments for up to three years. Here’s how to know if you may be eligible:

•   You have any federal student loan, subsidized or unsubsidized.

•   You’re enrolled at least half-time at an eligible school, and you received a Direct PLUS Loan or FFEL PLUS Loan as a graduate or professional student. In this case, your loans will be deferred while you’re in school at least half-time plus six months after you leave.

•   You’re a parent who took out a Direct PLUS Loan or FFEL PLUS Loan on behalf of your child student, and they’re enrolled at least half-time at an eligible school. In this case, your loans will be deferred while your child remains in school plus six months after they leave.

•   You’re enrolled in an approved graduate fellowship program.

•   You’re enrolled in an approved rehabilitation training program for the disabled.

•   You’re unemployed and unable to find employment (for loans disbursed prior to July 1, 2027).

•   You’re experiencing economic hardship (for loans disbursed prior to July 1, 2027).

•   You’re serving in the Peace Corps.

•   You’re on active duty military service in connection with a war, military operation, or national emergency. In this case, your loans will be deferred while you’re on active duty plus 13 months afterward.

Recommended: How to Defer Student Loans When Going Back to School

Qualifying for Federal Loan Forbearance

The federal government has two types of forbearance: general and mandatory. Both can last for up to 12 months at a time before July 1, 2027, but if you still qualify once that period is up, you can request a renewal. (After July 1, 2027, forbearance is capped at nine months in a 24-month period.)

General forbearance is also sometimes called discretionary forbearance because your loan servicer gets to choose whether or not to approve your request.

You can request general forbearance if you’re unable to make your monthly payments due to:

•   Financial difficulties

•   Medical expenses

•   Change in employment

•   Other reasons your loan servicer will accept

Mandatory forbearance is not at the discretion of your loan servicer, and can be granted if you meet any of the following requirements:

•   You’re serving in a medical or dental internship or residency program and meet specific requirements.

•   The total amount you owe on all of your loans is 20% or more of your gross monthly income.

•   You’re serving in an AmeriCorps position for which you’ve received a national service award.

•   You’re a teacher and qualify for teacher loan forgiveness.

•   You qualify for partial payments on your loans through the U.S. Department of Defense Student Loan Repayment Program.

•   You’re a member of the National Guard and have been activated by a governor, but don’t qualify for the military deferment.

How Interest Accrues During Payment Pauses

During a student loan deferment, interest continues to accrue on most federal loans, including Direct Unsubsidized Loans and PLUS Loans, even though payments are temporarily paused. Only certain loans — like Direct Subsidized Loans — avoid interest buildup during deferment. If unpaid, any accumulated interest may capitalize at the end of deferment, increasing your total loan balance.

If you enter forbearance, interest will continue to accrue even though payments are paused. Once the forbearance period ends, you’ll repay that accrued interest through your regular monthly payments. For most federal loan types, this interest does not capitalize when forbearance ends.

Private Student Loans

While the options and requirements for these programs are clear on federal student loans, they can be a little trickier with private student loans. That’s because there are so many different private student lenders, and each has its own policy and criteria for determining eligibility.

How to Request Deferment or Forbearance With a Private Lender

Requesting deferment or forbearance with a private lender typically involves contacting your lender directly to explain your situation and ask about available hardship options. Unlike federal loans, private lenders do not offer standardized programs, so the process may require submitting financial documents, proof of hardship, or a formal application.

Limitations and Varying Policies by Lender

Private student loan deferment and forbearance options vary widely by lender, and not all lenders offer both. Some may grant only short-term relief, limit the number of months you can pause payments, or require continued interest payments during the pause. Interest almost always continues to accrue on private loans, which can increase your total cost over time.

Because policies differ so much, borrowers should carefully review their loan agreement, ask the lender about specific terms, and compare options before committing to any repayment pause.

How Deferment and Forbearance Can Affect You

Both deferment and forbearance can offer temporary relief when you’re struggling to make payments, but they also come with trade-offs. Understanding their potential effects on your credit and long-term repayment goals can help you decide whether they’re the right option.

Impact on Credit Score and Loan Forgiveness

Deferment and forbearance typically do not hurt your credit score as long as your loans are in good standing when you request the pause. Payment activity during these periods is usually reported as current, which helps you avoid the negative credit impact of missed or late payments.

That said, if you miss a payment while you’re waiting for your deferment or forbearance request to get approved, it may hurt your credit. At 90 days overdue, your lender can report the missed payment(s) to the credit bureaus.

These pauses can also affect your progress toward loan forgiveness. With federal programs like Public Service Loan Forgiveness (PSLF), only months in active repayment count toward the required total, meaning time spent in deferment or forbearance generally doesn’t advance you toward forgiveness. This can extend the number of years you stay in repayment.

What If You Don’t Qualify to Pause Student Loan Payments?

Depending on your lender and situation, you may not be eligible for deferment or forbearance. If this happens, there are a couple of options to consider.

Income-Driven Repayment Plans

If you have federal student loans, it may be possible to reduce your monthly payment by enrolling an income-driven repayment plan.

If you qualify, you can decrease your monthly payment to a percentage of your discretionary income. It won’t stop your loan payments altogether, but it can help make them more affordable.

Refinancing Your Student Loans

Whether you have federal or private loans, you can opt to refinance your student loans. Refinancing could help you save money by reducing your monthly payment, either by securing a lower interest rate or lengthening the repayment term. Note that you may pay more interest over the life of the loan if you refinance with an extended term.

You may also be able to switch to a different lender that offers hardship programs or other support if you’re having trouble making payments.

Keep in mind that refinancing federal loans with a private lender will cause you to lose certain benefits, including income-driven repayment options and access to federal loan forgiveness programs. Use a student loan refinancing calculator to see if a refinance could help you.

Budgeting and Financial Counseling Options

If you can’t pursue an income-driven repayment plan or student loan refinancing, take a closer look at your budget and seek financial counseling to help you stay on track. A detailed budget allows you to identify unnecessary spending, prioritize essential expenses, and free up money for loan payments.

Nonprofit credit counseling agencies can also provide personalized guidance, helping you create a manageable repayment strategy, negotiate lower interest rates on other debts, or explore hardship programs you may not know about.

Determine If Pausing Student Loan Payments Is Right for You

Before requesting a pause on your student loan payments, it’s important to evaluate whether this step supports your long-term financial goals.

•   Can I afford my monthly payments without sacrificing essential expenses like housing, food, or healthcare?

•   Am I facing a temporary financial hardship that will realistically improve in the near future?

•   Will pausing payments cause interest to grow in a way that makes repayment more expensive later?

•   Do I qualify for an income-driven repayment plan that could lower my payments without fully pausing them?

•   How will postponing payments affect my progress toward loan forgiveness (if applicable)?

•   Do I have other high-interest debts that should take priority right now?

•   Will pausing payments help relieve financial stress, or will it delay necessary budgeting changes?

•   Am I prepared for the payment amount I’ll owe when the pause ends?

Answering these questions can help you decide if pausing your student loan payments is right for you or if there’s a better alternative.

The Takeaway

Pausing student loan payments is possible through deferment and forbearance options, both for federal and private loans. While these can provide temporary relief, it’s important to understand the implications, such as the continued accrual of interest on unsubsidized federal and most private loans. As an alternative, explore income-driven repayment plans or refinancing your student 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 pausing student loan payments hurt your credit?

Pausing student loan payments through deferment or forbearance typically doesn’t hurt your credit if you arrange it properly with your lender. However, if you pause without authorization or miss payments, it can negatively impact your credit score and lead to other financial consequences.

Do interest rates increase during deferment or forbearance?

Interest rates do not increase during deferment or forbearance, but interest may continue to accrue, depending on the type of loan. For subsidized federal loans, interest is paid by the government during deferment. For unsubsidized loans and private loans, interest accrues and can capitalize, increasing the total debt.

How long can you pause student loan payments?

You can pause student loan payments for up to three years through deferment, and forbearance typically allows pauses of up to 12 months at a time, with a maximum of three years. However, interest may continue to accrue during these periods. Also, starting July 1, 2027, forbearance limits will change to nine months at a time per 24-month period.

What are alternatives to pausing student loan payments?

Alternatives to pausing student loan payments include income-driven repayment plans, which adjust your monthly payment based on your income, and student loan refinancing. Refinancing with a private lender could allow you to reduce payments or interest, but you will lose access to federal protections and benefits.

Can you pause private student loans like federal loans?

Private student loans can be paused, but the terms are set by the lender and may differ from federal loans. Some lenders offer deferment or forbearance options, but interest typically continues to accrue, and the duration and eligibility criteria vary. Check with your lender to inquire.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

SOSLR-Q425-049

Read more
Jan
09
2026
A calendar on a desk, with different dates flagged on it.

How Soon Can You Refinance Student Loans?

By | Fresh Out of School, Student Loans, student_loan | No Comments

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 get 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 how soon you can refinance student loans, and what options are available, plus the potential benefits and downsides of each.

Key Points

•   Most borrowers can refinance after graduation or when they leave school; some lenders allow earlier refinancing with strong financials.

•   Refinancing federal loans with a private lender forfeits federal benefits like income-driven repayment and forgiveness.

•   It’s possible to refinance only select loans, such as those with high rates or variable interest rates.

•   You may refinance with a cosigner if you don’t meet a lender’s eligibility criteria.

•   Alternatives include federal loan consolidation, income-driven repayment plans, or interest-only payments while still in school.

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 federal student loans to a loan servicer after they are paid out. To find your loan servicer, visit your account dashboard on StudentAid.gov, find the “My Loan Servicers” 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 Education Department

For federal loans that aren’t held by the Education Department, 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 servicer, or check your billing statements for their contact information.

•   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 emails or communication about these loans, or check your billing statements.

Private Student Loans

Private student loans are not given by the government, but rather by banks, credit unions, and online lenders. You’ll need to find your specific lender or servicer in order to find out your loan information. Your lender may also be your loan servicer, but not necessarily. Check your most recent communication, including emails, from the lender for their contact information. If they are not the servicer for your loan, ask them who is.

How to Find Out Who Services Your Loan

As noted above, you can find the servicer for your federal student loans on your account at StudentAid.gov in the “My Loan Servicers” section. For loans not owned by the Education Department (except Perkins Loans), check recent billing statements or communications about the loans for your servicer’s contact information. If you have Perkins Loans, contact your school for information about your servicer.

For private student loans, contact your lender for details. They may also be the servicer of your loan, and even if they aren’t they can tell you who is.

Can You Refinance Student Loans While Still in School?

Although it’s not common, you may be able to refinance your student loans while still in school with certain lenders. However, doing so may not make the most sense for your situation.

When you refinance student loans, you exchange your current loans with a new loan from a private lender, preferably with a lower rate. This rate is based on such factors as current market rates and your credit profile.

Pros and Cons of Refinancing Before Graduation

Some of the advantages of refinancing your student loans while still in school include potentially getting more favorable loan terms, such as a lower interest rate on your loans if you qualify, which could lower your monthly payments.

Refinancing also allows you to consolidate all your loans into one loan, which can make them easier to manage.

However, there are disadvantages to refinancing while still in school. For one thing, it can be difficult to qualify for refinancing without a job and a steady income. You may need a creditworthy cosigner in order to qualify. Not only that, many lenders require borrowers to have a bachelor’s degree to be eligible for refinancing.

It’s also important to be aware that refinancing federal loans makes them ineligible for federal benefits and programs, such as income-driven payment plans and forgiveness.

In addition, once you refinance, you will need to start making loan payments, which may be challenging while you’re still in school.

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 typically want to make sure you have a job or job offer on the table, are in or near your last year of school, and have a solid credit profile. As noted above, 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 may not exclude certain types of loan. However, it is generally 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.

Federal Loans With Active Deferment or Forgiveness Benefits

If you’re in school at least half-time, your federal loans are automatically in deferment, meaning you don’t have to make payments on them. If you refinance your loans, you lose that benefit, and you need to start making payments on your refinanced loans.

Also, if you plan to pursue student loan forgiveness like Public Service Loan Forgiveness after you graduate, refinancing student loans isn’t the best option for you. Refinancing gives you a new private loan with a new private lender, thereby forfeiting your eligibility for forgiveness and other federal benefits and protections.

Is It Worth Refinancing Only Some of Your Loans?

It may be worth refinancing only some of your loans in certain situations. Here are some instances in which you might want to consider this option.

When Partial Refinancing Might Make Sense

The student loans it may make sense to refinance might include:

•   Loans that have a variable interest rate (if you’d prefer a fixed rate)

•   Loans with a relatively high interest rate, since refinancing may save you money. A student refinance calculator can come in handy when estimating what you might save over the life of the loan.

When you might want to think twice about refinancing:

•   If you have federal loans and plan on using an income-driven repayment (IDR) plan, for example, it makes sense not to include those loans in the refinance (see more about IDR payment plans below).

•   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.

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

Some borrowers might want to refinance before earning their bachelor’s degree. Others might choose to wait until they are graduate students.

Case Studies: Undergraduate vs Graduate Borrowers

Undergraduate students may have a challenging time refinancing their student loans without a strong credit profile and a job with a steady income. They might need a cosigner in order to qualify for refinancing.

Graduate students are typically 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.

Alternatives to Refinancing

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

Income-Driven Repayment Plans

Income-driven repayment plans for federal student loans base your monthly payments on your discretionary income and family size and extend your loan term to 20 or 25 years. These plans can make your monthly payments more affordable. However, you may pay more interest overall on an IDR plan.

There are currently three IDR plans — the Income-Based Repayment (IBR) Plan, the Pay As You Earn (PAYE) Plan, and the Income-Contingent Repayment (ICR) Plan. On the IBR plan, any remaining balance on your loans is forgiven when your repayment term ends.

Due to the One Big Beautiful Bill, however, changes are coming to IDR plans in July 2027, when most of the plans, except IBR, will no longer accept new enrollees.

Federal Loan Consolidation

Another alternative to refinancing is consolidating student loans. Consolidation combines your federal student loans into one loan with one monthly payment. One of the main differences 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. Consolidating can make your loans easier to manage because you’ll have just one loan payment to make.

Weighing Perks and Interest Rates

Before deciding whether refinancing is right for you, it’s important to consider what you might gain and what you would give up.

Losing Federal Protections vs Lower Monthly Payments

Essentially, you need to consider the cost of losing federal benefits against the perk of potentially securing a lower interest rate through refinancing. Remember,if you refinance your federal student loans with a private lender, those loans will no longer be eligible for federal protections and programs like income-driven repayment plans, federal forbearance, and student loan forgiveness. If you think you might need those programs, refinancing likely doesn’t make sense for you.

But if you can qualify for a lower interest rate, refinancing may be a good fit. Your monthly payments would probably be lower in that case and you also might get a more favorable loan term. Just remember that 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 financial situation.

The Takeaway

It’s possible to refinance student loans as soon as you establish a financial foundation or bring a creditworthy cosigner aboard. You can even refinance your student loans while in school, although not all lenders offer this option 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 don’t plan on using federal benefits and protections and you can land a lower interest rate, 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.

FAQ

How soon after taking out a loan can you refinance?

You can refinance a student loan as soon as you meet a lender’s specific eligibility requirements. Many lenders prefer borrowers to have graduated before they refinance and to have a stable job and steady income. However, some lenders do allow students to refinance while they are still in school, though the student may need a creditworthy cosigner in order to qualify.

Can I refinance student loans before graduation?

It’s possible to refinance student loans before graduation, though it can be challenging. While many lenders don’t offer the option to refinance while you’re still in school, there are some that do. Keep in mind that you may need a creditworthy cosigner to qualify for refinancing.

What are the risks of refinancing federal student loans early?

Risks of refinancing federal student loans early include losing access to important federal benefits and programs such as income-driven repayment plans, deferment, and forgiveness. For example, while you’re in school, your federal loans are automatically in deferment, meaning you don’t have to make payments on them. If you refinance your loans, you lose that benefit and need to start making payments on your refinanced loans once they are disbursed.

Can I refinance just some of my student loans?

Yes, you can refinance just some of your student loans. With refinancing, you can pick and choose the specific loans you’d like to refinance. For instance, you could choose to refinance only your private student loans, and keep your federal loans to preserve access to federal benefits and protections. You might also choose to refinance only your student loans with high interest rates. It’s completely up to you.

Will refinancing affect my credit score?

Refinancing requires a hard check of your credit, which typically causes a slight dip in your credit score. However, the drop is generally just a few points and it’s temporary. Making on time loan payments may help build your credit again over time.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

SoFi 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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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

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