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Attending graduate school and securing a postgrad degree can help some students achieve their career goals, and it may even be required in some fields. While applying to grad school is similar to applying to college, there are some key differences to keep in mind. Graduate school programs also tend to be more competitive than undergraduate degree programs.

If you’re thinking about going to grad school, here are simple strategies that can help you navigate the graduate school application process, including how to create an application timeline, write an effective personal statement, and make a plan for covering the cost of tuition and expenses.

4 Tips and Strategies to Prepare for the Grad School Application Process

Below are some simple steps that can make it easier to find and apply to the right graduate school program.

Choosing the Right Graduate School

As you develop your list of both safety and reach schools, a good number of how many graduate schools to apply to is often between four and six.

If you’re still in the early stages of exploring schools and mulling over which graduate program to pursue, now’s the time to weigh your interests, skills, talents, and career goals to find a few options that may make sense to apply to.

Here are some questions to ask as you search for the right grad school:

•  Which degree path do you want to pursue?

•  Does your chosen career encourage a Ph.D. or a Master’s degree?

•  Do the schools you’re considering offer that program?

•  What is the cost of tuition?

•  Are scholarships available, either full-ride or partial?

•  Is the degree program accredited?

•  Does this school have excellent professors?

•  Will this degree facilitate your entry into the career of your choice?

Grad School Application Timeline

There’s plenty of prep work that must happen months before you start applying to graduate school. One way to alleviate some stress and make sure all of the necessary application requirements are met is to start early. Here’s a timeline to keep in mind.

Two Years Before Applying: Research Schools and Programs

Narrow down the programs of interest and your career goals about two years before you plan to apply.

One Year Before Applying

•  Prepare for any standardized tests required for admission. Some programs may require students to submit GRE scores, while others may require the GMAT (which can be especially important for MBA programs). Law students will generally need to take the LSAT and future med school attendees can anticipate taking the MCAT.

•  Start gathering application materials. This could include things like college transcripts, letters of recommendation, and prepping for any personal statements that may be required (more tips on that to follow).

Year of Grad School

Generally, graduate school applications open up about nine months before a student would be expected to start classes. Some programs may accept applications on a rolling basis. It’s generally wise to apply as soon as all of your application materials are ready to go.

Refining Your Graduate School Statement of Purpose and Personal Statement

The statement of purpose for graduate school (sometimes called a letter of intent or a research statement) is where you detail your future plans and how the school you’re applying to can help you achieve those goals.

Students who are applying to multiple schools may need to tweak their statement of purpose slightly to meet different application requirements, but in general, there are a few common threads that are included in a statement of purpose. These include:

•  What do you want to study at graduate school?

•  Why do you want to study it?

•  What experience do you have in that field? How would you add value to the existing program?

•  What do you plan to do with your degree once you have it?

To craft a successful graduate school statement, you’ll want to create an outline and make sure you highlight your relevant experience and motivation for applying to this specific graduate school and program. You want your statement to stand out and target the school you are applying to; avoid writing the same statement of purpose for each school.

A personal statement, meanwhile, lets the admissions committees see you as a person, including your goals and passions and what you are hoping to get out of the program. Personal statements are generally more biographical in nature than a statement of purpose. It may highlight things like your passion for a particular field or help you demonstrate characteristics that will help you excel in grad school.

Recommended: Graduate Student Loan Limits: How Much Can You Get?

Options for Paying for Graduate School

There are a variety of ways to pay for graduate school.

Federal Aid

As a first step, fill out the Free Application for Federal Student Aid (FAFSA), which is used to determine what federal financial assistance students may qualify for. Often, people applying for graduate school are considered independent students on the FAFSA. Independent students are not required to include their parents’ financial information on their FAFSA application.

Submitting the FAFSA allows students to apply for all federal aid, including:

•  Federal student loans

•  Grants

•  Scholarships

•  Work-study program

Scholarships and Grants from Your University

Take a look at the aid options available specific to the school you will be attending (or the schools you are applying to). It may be possible to apply for additional scholarships, grants, and fellowships depending on the program.

Universities sometimes use the FAFSA to make financial aid determinations, but some have their own application process. Again, check the graduate school website to find out relevant deadlines and procedures.

Recommended: How to Become a Graduate Assistant

Possibilities Beyond Federal or University Aid

Other possibilities include employer tuition reimbursement plans, private scholarships, and private graduate student loans.

Private student loans usually don’t have the borrower protections offered by federal student loans (things like deferment or forbearance, income-driven repayment, and Public Service Loan Forgiveness), so you may want to consider them only after you’ve exhausted other forms of aid.

After graduating, some students may consider student loan refinancing. Qualifying borrowers can often secure a competitive interest rate or preferable terms. Refinancing federal student loans, however, will mean they no longer qualify for any federal borrower protections or programs.


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

The Takeaway

Applying to graduate school doesn’t have to be overwhelming. Start by defining your career goals and determine which programs you want to apply to. From there, review the application requirements and set an application timeline. The steps involved in applying to graduate school include taking any required standardized tests, getting letters of recommendation, and writing a statement of purpose. Also consider how you will pay for the cost of graduate school. Options include federal student loans, scholarships, grants, and private student loans.

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

FAQ

What is the process for applying to graduate school?

Typically, the process for applying to graduate school involves determining which programs to apply for, taking standardized tests, getting letters of recommendation, writing your statement of purpose or personal essay, and submitting your materials. Applying for financial aid can be another important facet of applying to grad school.

Is a 3.5 GPA good enough for grad school?

What GPA you need for grad school depends on the program you are applying to and your overall application package details. A 3.5 GPA is considered good by many measures, but for some highly competitive programs, it may not be enough.

How long does it take to hear back from grad school?

The timing of receiving a graduate school acceptance decision can vary. Typically, applicants who applied during the fall application season will hear back between February and April. However, programs may have rolling admissions, meaning applicants hear back based on when they apply.

About the author

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.

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SOISL-Q325-124

College life is about getting a great education, exploring interests and activities, and forging your own adult identity. It’s also a perfect time to establish some good money habits that will set the scene for financial success today and tomorrow.

From developing a budget to opening bank accounts, there are ways you can make your money work harder for you over time so you can achieve your goals.

Read on to learn the 10 best strategies for good money management for college students.

Why Learning to Manage Your Money in College Is a Superpower

As a student, you’re at a key point in your life where you’re taking charge of your finances, perhaps for the first time ever. Learning the skills and knowledge you need to make informed decisions about your money — something known as financial literacy — is important now and in the future. It can help you save more, spend wisely, and avoid too much debt. Being financially savvy can also help manage your student loans and choose the bank accounts and credit cards that make the most sense for you.

The financial moves you make as a college student can set you up to build wealth and reach your financial goals in your twenties, thirties, and beyond. This includes buying a car, renting an apartment, putting a down payment on a house someday, and saving for retirement.

10 Essential Money Management Tips for College

Here are 10 financial tips for college students that can help you spend less and save more during and after school.

1. Create a Simple College Budget That Actually Works

Budgeting may sound complicated, but making a budget is simply a matter of figuring how much is coming into your bank account each month and how much is going out, and then making sure the latter doesn’t exceed the former.

To get started, list all of your sources of income, such as from a part-time job or family contributions.

If you are living off a fixed amount of money for each semester, say from summer earnings, you may want to divide this lump sum by the number of months you need to make the money last.

Once you know how much you have to live on monthly, make a list of regular expenses that you will be responsible for paying, such as your cell phone or a car payment, or maybe rent if you live off campus.

Next, you’ll want to subtract your fixed expenses from your monthly income. This will give you the amount you have left over to cover variable and discretionary expenses, such as eating out, buying clothes, and entertainment. You can then come up with target spending amounts for each category.

Doing your best to stay within these spending limits can help ensure that your money lasts until the end of the semester, and help you avoid running up costly credit card debt.

2. Open a Student-Friendly Bank Account (like SoFi)

You might feel like you don’t have enough income to start saving money yet, but even just putting a small amount in the bank regularly can add up over time.

You can open a checking account as a place to start saving. If you’re able to set aside $50 a month, you could soon have a decent sum. And if you have a part-time job, your paycheck can be directly deposited into your account. That way you won’t be tempted to spend it.

Being diligent about saving money each month can help cultivate a habit that will serve you later when you can afford to save more for your future goals, including retirement.

As you’re choosing a bank, you may want to look for one with an ATM near you for convenience and to avoid out-of-network fees. For example, with a SoFi checking account, you’ll have fee-free access to more than 55,000 ATMs worldwide.

3. Build Your Credit Score Responsibly With a Credit Card

When you open a bank account, you’ll likely also apply for a debit card to make managing your financial transactions easier. But don’t forget about a credit card for convenience, as a backup for emergencies and to start building a credit history.

But don’t overdo it. To manage finances in college, use your credit card only when you need it. Pay off your debt in full each month, otherwise you could end up paying a high-interest rate on the balance, which can make it even harder to pay off.

Using your credit card responsibly by making small purchases and paying off the balance in full can help you build your credit.

4. Start a Small Emergency Fund for Unexpected Costs

Life can be unpredictable and having a financial safety net can help protect you from costs that pop up — if your car breaks down or you’re facing a sudden (and costly) medical procedure, for example. That’s why it’s important to start an emergency fund or back-up savings fund as a critical part of your long-term financial health.

Having an emergency fund can help keep you from having to rely on credit cards to get through a financial challenge.

How much you should put aside for emergencies each month is up to you and your financial situation. Many financial professionals recommend saving at least three to six months’ worth of expenses. But it’s better to have a small fund than not to have a fund at all. The key is to start saving something each month, no matter how small the amount may seem.

When building your emergency fund, it’s a good idea to fund the account regularly if you can. Consider setting up an automatic transfer to your savings so you don’t have to think about it.

Ideally, your emergency fund should be in a separate savings account so you won’t be tempted to spend the money on something else.

5. Understand How Your Student Loans Work

A crucial part of money management for college students is understanding how your student loans work and what’s required to repay them. Familiarize yourself with the types of loans you have (federal and/or private), and then take a look at how the interest on each loan is handled. For example, if you have federal Direct Subsidized Loans, the interest is covered for you while you’re in school. With federal Direct Unsubsidized Loans, however, you are responsible for all the interest that accrues — even while you’re in school — and it accrues daily, meaning it can build up significantly over time. For this reason, you may want to make interest-only payments on your loans while you’re in school, if possible.

You can find information about your loans by logging into your account at StudentAid.gov. There, you’ll see the different loans you have, how much you owe, the interest rate of each, and who your loan servicer is.

While you’re at it, start exploring the different options for repayment, so you can get started without a hitch when the time comes. Many changes are coming to student loans as part of the big domestic policy bill that was signed into law in July 2025, so it’s a good idea to study up on the options now.

6. Find Ways to Earn Extra Income On Campus or Online

There are a number of side hustles for college students that can help you earn some extra cash. For instance, you could become a tutor and help other college students learn a subject in which you excel. Or you could pet-sit on evenings and weekends or do lunchtime dog walking (as long as you don’t have class). Other potentially lucrative side hustles include becoming a ride share driver or delivering food and groceries for a company like DoorDash or Instacart.

A side hustle can be flexible so you can fit it around your class schedule. You can also set your own hours for the most part, unlike a more traditional job. You can use some of the money you earn to cover your daily expenses and then put the rest into the bank to build your savings.

7. Master the Art of Saving on Everyday Expenses

Financial tips for college students include saving money on the daily expenses that can add up over time. Take eating out. You may get tired of cafeteria fare. At the same time, you don’t want to blow your budget on eating in restaurants every weekend. If you have access to a kitchen, consider purchasing ingredients from your local supermarket and putting together some simple, tasty meals, instead of eating out. This can be a good way to save money on food.

Another idea to stretch your money is to find freebies. Facebook has groups where people can post items they no longer want. You might be able to score free clothes, furniture, or room decor. Freecycle and NextDoor also have listings for things that people are giving away.

Finally, rethink some of your major expenses, like textbooks. Buying them new can be costly. Fortunately, there are a number of ways to save on college costs like this. One option is to buy up-to-date versions of used textbooks whenever you can. Getting the digital version of a book can also yield savings. You could also rent what you need from a third-party bookseller, such as Amazon or Chegg.

Sell any books that you’ve purchased (new or used) that you won’t need again in the future to recoup some of the expense.

8. Use Your Student ID for All It’s Worth

You may think of your ID card only as a form of identification and a way to get into college sporting events. But there are actually additional benefits that come with a student ID, and many can help you save money.

Some businesses, especially those near universities, offer students discounts when they show a student ID card.

Next time you go to the movies, shop for school supplies, go out to eat, or get a haircut, it’s a good idea to ask if they offer any discounts for local college students.

In addition, many national and online retailers, including major clothing, sneaker, and computer brands, offer discounts to college students.

You may also be able to use your student ID to get a better deal on your cell phone plan and streaming services. Make sure to maximize this valuable resource.

9. Protect Yourself From Financial Scams Targeting Students

College students who are on their own for the first time and learning how to manage their money can be prime targets for scammers. In fact, young adults ages 18 to 24 report the second median highest dollar loss to scams after adults 65+), according to the Better Business Bureau’s 2024 BBB Scam Tracker Risk Report.

Some common scams that target college students include:

•   Fake employment offers — students are asked to pay a fee or provide personal and financial information to fill out an “application”.

•   Student loan debt-relief scams — students are contacted by representatives who claim to be from debt relief companies and offer to reduce or eliminate their college debt for a fee.

•   Fake scholarships or grant offers — students receive notice that they’ve been awarded a grant or scholarship they never applied for and are asked to supply their Social Security number or other personal information in order to receive it.

To avoid becoming a victim of a scam, never give out personal information to anyone you don’t know. If you are contacted unsolicited by a person asking for information or a fee or a supposed service they can provide for you, hang up or don’t respond to their text or email. And beware offers that seem too good to be true. Always err on the side of caution.

10. Dip Your Toes Into Investing (Even With Small Amounts)

Investing when you’re young can potentially be one of the best ways to help your money grow over time.

That’s thanks to compound returns, which is when any returns you earn are reinvested to earn additional returns. The earlier you start investing, the more benefit you may gain from compounding.

It’s important to keep in mind, however, that all investments involve some level of risk because the market fluctuates over time.

If you’re interested in investing, you could start small by opening a traditional or Roth IRA and putting a little money from a part-time job into it, or you could opt for an online brokerage account. Either way, even if you invest just $50 a month, you’ll be saving for your future.

A Deeper Dive: How to Build Your Credit in College

Building your credit now as a college student can help you once you graduate. Without a credit history, it can be challenging to take out a loan or get a credit card, among other things. If you’ve already established credit, you’ll likely be able to get your post-college life started more easily.

To help build your credit, get a credit card while you’re in college. Use it judiciously for small purchases and then consistently pay your bill on time and in full each month. This kind of responsible credit card use can help you build your credit history. You’ll need a strong credit history if you want to get the best terms on a car loan, a mortgage, or a student loan for grad school. Your credit can even affect your job prospects and your ability to rent an apartment.

It’s also a good idea to monitor your credit report regularly to make sure it’s accurate. You can get a free credit report annually from the three major credit bureaus. If you spot any errors, be sure to report them right away.

And finally, once it’s time to start making your student loan payments, be sure to make each monthly payment on time and in full. This can help you establish a positive payment history, which can also strengthen your credit.

A Deeper Dive: Making Sense of Your Student Loans

As noted earlier, understanding your student loans and how they work is extremely important. A student loan is a legal obligation and you are responsible for paying what you borrow, plus interest. Staying on top of your loans now, while you’re still in college, can make it easier to manage them.

First, make sure you know what kind of student loans you have. There are federal and private student loans, and they each work differently. Find out the interest rate for each loan and how the interest is handled.

Keep track of how much you’re borrowing with student loans and try not to borrow more than you need. Read the terms and conditions of your loans and make sure you understand them. Keep all your loan documents so you can refer to them when you have questions. Know who your loan servicer is and contact them if you have questions.

And log into your account on StudentAid.gov to make sure all the information on your federal loans is correct and up to date.

Finally, make your monthly student loan payments in full and on time. If you are struggling to repay your loans, contact your loan servicer to see what your options are. For instance, with federal student loans, you may be able to switch to a repayment plan that bases your monthly payments on your discretionary income and family size.

The Takeaway

College can provide a great opportunity to develop the money skills you’ll need after you graduate. By learning basic money management techniques now, you can gain confidence in your ability to handle your finances well after graduation.

In 10 years, you’ll likely thank yourself for putting in the effort to learn how to set and stick to a monthly budget, use credit cards wisely, save and invest money, manage your student loans, and build your credit score.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How much money should a college student have in savings?

College students should have an emergency savings fund to help cover any unexpected expenses. While financial professionals often recommend having three to six months’ worth of living expenses in an emergency fund, that amount might be difficult for a college student with a limited income. Instead, some financial pros suggest aiming to have $500 or $1,000 in the bank as a college student. To help get there, save regularly. Even if you deposit just $20 in your emergency fund each week, it will continue to grow steadily.

How can I start a budget in college?

One method for starting a budget in college is to use the 50/30/20 rule. Here’s how it works: You allocate 50% of your income to needs (such as bills, rent, and other fixed monthly expenses), 30% to wants (such as eating out or going to the movies), and 20% to saving for your financial goals (such as a down payment on a car or a house, or for retirement). Because the formula is simple, it can be an easy way to manage your money as a college student and after graduation.

Is it a good idea to get a job during my freshman year?

Whether or not it’s a good idea to get a job during your freshman year depends on your unique circumstances and financial situation. A job can help you cover some of the costs of college, but you’ll want to make sure that it doesn’t interfere with your classwork or studies. If you need the income, you may want to consider a flexible part-time job that you can do after classes or on weekends as your schedule allows, such as pet-sitting or tutoring.

What are the most common financial mistakes students make?

Some of the most common financial mistakes students make include overspending, charging too much on credit cards, failing to put money into savings, and mismanaging student loans, including borrowing more than needed. To avoid these mistakes, make a budget so that you don’t spend too much. Also, use credit cards only for small purchases and pay your bill in full each month to avoid accumulating credit card debt. Put money into a savings account regularly. And finally, make sure you know exactly how much you need to pay for college, and don’t borrow more than that in student loans.

What percent of college students drop out because of money?

According to the most recent statistics from the Education Data Initiative, approximately 23% of college students leave school every year, and 41% of college dropouts say they left for financial reasons.

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SOBNK-Q325-002

After four (or more) years of classes, college students graduate into a new reality of employment and student loan payments. Navigating repayment may require planning and budgeting, but it’s possible to find a repayment plan that works for your personal needs.

As a general rule of thumb, the Consumer Financial Protection Bureau (CFPB) recommends limiting the total borrowed to no more than your expected starting annual salary when you leave school. But when young students are selecting colleges and evaluating costs, it can be tough to understand or predict how much they’ll earn after graduating.

Read on to learn about some potential strategies for student loan repayment to help borrowers determine what percentage of income should go to student loans.

Calculate How Much Your Loans Cost Each Month

You’ll want to understand how much your loans cost each month. If you only have one student loan, this may be easy — the total would be your monthly loan payment. If you have multiple loans with different lenders, you may have to do a bit more math to sum up the total amount you are spending on your loan payments monthly.

After calculating your monthly loan payments, if you find you are spending a much higher percentage of your income on debt payments than you have outlined, you may want to adjust your budget, or see if you can adjust how much you are paying each month to your student loans.

You can use a student loan calculator to estimate how different loan terms and interest rates may impact your total repayment. Keep in mind that lengthening the loan term on your student loans may result in lower monthly payments, but may cost more in interest over the life of the loan.

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

Determining Your Student Loan Payment as a Percentage of Income

When it comes to repaying your student loans, your first goal might be to make, at the very least, the minimum monthly payment on each of your student loans. Failing to do so means your loan could become delinquent, and after 90 days of delinquency, your loan servicer can report the late or missed payments to the credit bureaus and your credit score may be affected.

If you don’t know what your monthly payments are, you can use our student loan calculator (see link above) to get an estimate. It can give you a good idea of what you’ll pay each month. To calculate the percentage of your income, divide your total monthly loan payment by your income. For example, if your monthly loan payment was $400 and your monthly income was $5,000, your loan payment would be 8% of your monthly income.

Consider the 50/30/20 Rule and Tweak it for Debt

The 50/30/20 budgeting rule outlines spending in the following categories:

•  50% of your income is budgeted for needs

•  30% of your income goes to “wants” and discretionary expenses

•  20% of your income is allocated for savings and paying off debt like student loans

Using this general framework may help borrowers create a budget that makes sense for their lifestyle and needs, without being overly prescriptive. If you have a lot of student loan debt that you are focusing on repaying, you can adjust the percentage allocation so that you are funneling more money toward your debt.

Because on-time payments account for 35% of your FICO® score, setting up a budget that helps you make one-time student loan and other debt payments each month is one of the best tips for building credit.

Income-Driven Repayment

If you have federal student loans and are struggling to make payments on the standard 10-year repayment plan, one alternative you could consider is income-driven repayment (IDR). On an income-driven repayment plan, your monthly payments are determined as a percentage of your income.

There are currently three options for income-driven repayment. Depending on the plan you enroll in, the repayment term is extended to 20 to 25 years, and payments are capped at 10% to 20% of your income. More precisely, the payment amount is calculated as a percentage of your discretionary income.

While income-driven repayment plans might help make monthly payments more manageable, extending the length of the loan means you could end up paying more interest than you would on the standard repayment plan.

The good news is that if you still have a balance at the end of the repayment term on the Income-Based Repayment (IBR) plan, your remaining debt could be discharged (although it may be taxed). The other plans (PAYE and ICR) no longer lead to loan forgiveness, but you could get credit for your payments by switching to IBR.

Note that PAYE and ICR will close soon due to legislative changes, and a new option will be introduced called the Repayment Assistance Plan (RAP). You have until July 1, 2027 to apply for PAYE or ICR, but you’ll have to switch to IBR or RAP once those plans shut down.

Recommended: Should You Refinance Your Student Loans?

Making Extra Payments Based on Your Monthly Income

If you would like to accelerate your student loan repayment, consider paying an additional percentage of your disposable income toward student loans. For example, if you are using a 50/30/20 budget, but want to make additional overpayments, you may instead choose to do a 50/25/25 budget, where you reduce your discretionary spending by 5% each month and apply those funds as an additional student loan payment instead.

Only you can determine where you want to focus your financial energy. An online student loan payoff calculator could help determine how much your overpayment could accelerate your loan payoff and save you in interest.

Recommended: Tips to Lower Your Student Loan Payments

Additional Options for Accelerating Your Student Loan Repayment

If your budget is already lean and you don’t have the room to contribute extra income toward student loans every month, there are alternatives that could help you speed up your repayment plan.

Part-Time Job or Side Hustle

One idea is to pick up a part-time job or find a side hustle that allows you to bring in a little bit of extra cash. Then you could focus all of your side hustle income toward student loan repayment. It’s money you didn’t have before, so your budget won’t have to make any sacrifices.

Another option is to focus any unexpected or windfall money toward student loan repayment. When you receive a bonus at work or a birthday check from your aunt, you could contribute that money to your student loans instead of spending it on a splurge expense for yourself.

Student Loan Refinancing

Finally, you can also improve your existing federal or private student loan situation. Student loan refinancing could help you secure a lower interest rate, which could mean spending less money over the life of the loan.

As part of the refinancing process, you’ll be able to select a new repayment term. Shortening the repayment term could also mean you pay less in interest over the life of the loan. You also have the option to lengthen the loan term. If you do, you’ll spend more money in interest over that longer term, though it could mean a lower monthly payment if you need to free up some cash.

When you apply to refinance a student loan, lenders will review your credit history and employment history, among other factors. Refinancing student loans with bad credit, while possible, may be more challenging. Those with a low credit score or limited credit history may want to consider establishing credit before they apply for refinancing.

Another option for borrowers with a less-than-stellar credit score may be adding a cosigner to strengthen the application. A cosigner agrees to repay the loan if the primary borrower fails to do so. Refinancing without a cosigner may make sense for borrowers who have had time to establish credit.

It is important to note that if you refinance your federal loans with a private lender, you will lose access to federal benefits such as federal loan forgiveness and deferment.

To find out how student loan refinancing could impact your student loan repayment prospects, use SoFi’s student loan refinance calculator.

The Takeaway

There is no single answer for what percentage of your income should be allocated to paying off student loan debt. It’s important to make your monthly minimum payments to avoid delinquency or default. Beyond that, you may consider making overpayments to accelerate your student loan payoff.

When you refinance with SoFi, there are no origination fees or prepayment penalties and you’ll gain access to community events. You can start the application online and find out what interest rate you prequalify for in just minutes.

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 percentage of income is too much for student loans?

The percentage of income that’s too much for student loans depends on your specific financial situation and goals. However, one common rule of thumb is that student loan payments shouldn’t be more than 10% of your income.

Can you pay more than your required monthly student loan payment?

Yes, you can pay more than your required monthly student loan payment. Student loans generally have no prepayment penalties. And by putting extra money toward your loan, you may pay it off faster. Ask your loan servicer to apply the additional funds to the principal of your loan, which could help reduce the amount of interest you pay over the life of the loan.

How do income-driven repayment plans determine your monthly payment?

Current income-driven repayment plans base your monthly payments on your discretionary income and family size. Depending on the plan you enroll in, monthly payments are capped at 10% to 20% of your income for 20 to 25 years.

However, as of July 1, 2026, there will be just one income-driven plan: the Repayment Assistance Program (RAP). On RAP, payments will range from 1% to 10% of your adjusted gross income for up to 30 years.

Should I pay off student loans faster or save more for retirement?

There is no one-size-fits-all answer to this question. Whether you should pay off student loans faster or save more for retirement depends on your unique financial situation and goals. Consider what is more important to you — reducing debt or putting money toward the future. For instance, if you have high-interest debt such as credit card debt, you may want to focus on repaying that first since it can be costly, and then work on saving for retirement and/or paying off your student loans faster.

How does refinancing affect my student loan payment percentage?

Student loan refinancing gives borrowers a new interest rate and loan terms. If you qualify for a lower interest rate, your monthly payments could be reduced, with less going toward interest, thus making your monthly payments a smaller percentage of your income.

You could also choose to shorten your loan term, which could increase your monthly payments but allow you to pay off your loan faster. You can explore the different refinancing scenarios and see what you might qualify for. But be sure to keep in mind that refinancing federal student loans makes them ineligible for federal benefits.

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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