Apr
08
2020

Should You Take Advantage of Your Student Loan Grace Period?

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

With graduation comes a fair share of celebration and changes. From grad parties to finding your first job to possibly a major move, life moves pretty fast during that first year out of school. While you’re busy setting up a new life, you may not even have time to think about those student loans you might’ve taken out for school.

When it comes to student loans, however, it’s not as easy as out of sight, out of mind. You might be busy setting up the next phase of your life, but don’t forget that your loan repayment will come calling, and likely sooner than you think.

Graduate students and undergrads currently leave school owing $29,200 on average, but the total amount you’ll pay back will depend on things like the interest rates on your student loans, the length of the loan term, and any loan forgiveness you may be eligible for. If you used student loans to get through college, you’re one of the 45 million Americans sharing the load of the country’s $1.6 trillion-plus student loan debt.

These figures are certainly daunting, especially for students who may face uncertainty about job prospects or find themselves having to leave school unfinished due to financial hardships or other reasons.

But one possible avenue for debt relief is that many student loans come with a grace period. A grace period is the length of time before you have to start student loan repayment, and the clock typically starts six months after you:

•   graduate
•   leave school
•   drop below part-time credit hours

Typically, you can use a grace period once per loan. During the grace period, you’re not required to make payments on your student loans. Most federal student loan grace periods are six months, but the Federal Perkins loan has a grace period of nine months. Some federal student loan grace periods can be extended even longer, for active duty military for instance. PLUS loans do not offer a grace period.

A grace period is different from other loan payment delays, such as deferments or forbearance, which have to be requested (grace periods typically begin automatically for those loans that have them)..

One important note: Grace periods are usually only available on federal student loans, and not all federal student loans have grace periods.

If you take out a private student loan some lenders, such as SoFi, may allow those with existing student loans in pre-repayment grace period status to align their first payment date with the soonest scheduled first payment date of those existing loans (up to a maximum of 180 days from the date of approval). In other cases, you may have to start repayment as soon as you graduate or leave school.

Theoretically, the grace period is there to give you time to get yourself financially settled and solidly employed, and for many students who are just leaving the campus life, a grace period feels like a no-brainer.

That said, there are other options during your grace period: You can get a jumpstart on your student loans and start paying them immediately, or start saving up to pay them. As with any financial decision, though, there are pros and cons to consider.

Here are some questions to consider during your grace period.

Some Advantages of Student Loan Grace Periods

The biggest advantage of the grace period is that you have a cushion of time before you have to start making loan payments, usually around six months after graduation/leaving school/dropping to part-time enrollment. Under certain circumstances, you may qualify for an extension.

Exceptions for most federal student loans include:

•   Active military duty. If you’re called for duty more than a month before the end of your grace period, you’ll have a full six-month grace period when you return.

•   Going back to school. If you go back to school before the end of your grace period, even just part-time, your grace period will reset to six months after you stop attending school.

•   Consolidating the loan. If you choose to consolidate your eligible federal student loans before your grace period ends, you’ll forfeit the rest of your grace period. In that situation, your payments will begin in about two months after the consolidation loan is disbursed.

Federal loans that have a six-month grace period include:

•   Direct Subsidized Loans
•   Direct Unsubsidized Loans
•   Subsidized Federal Stafford Loans
•   Unsubsidized Federal Stafford Loans

If you received a Federal Perkins Loan before the program expired, the average grace period is around nine months. You may want to check with your school to be certain.

The only federal loans that don’t offer a grace period are PLUS loans, which are reserved for:

•   graduate students
•   professional students
•   parents of dependent undergraduates

PLUS repayment begins immediately, but borrowers may be eligible for deferment. (Not sure what type of loan you have? Check the National Student Loan Data System .)

Used wisely, the grace period can serve its intended purpose — to give you some breathing room to find your first job, get settled, and build up a bit of income.

The bills come quickly during that first foray into post-college life, including moving costs, rental deposits, utility setup, groceries, decorations, and business attire. The grace period may give you adequate time to take care of all those necessities and get a few paychecks into your bank account before starting to pay back your loans.

Some Disadvantages of Student Loan Grace Periods

Even when you’re not required to make payments during your grace period, you’ll likely still accrue interest on your federal student loans. If your loan was large to begin with, this accumulation of interest could put you at even more of a disadvantage right out of the gate.

The exception to this rule is if you have federal Direct Subsidized Loans—these will not accrue interest during the grace period.

To make matters even more complicated, some loans simply accrue interest, while others capitalize unpaid interest into the principal balance of the loan, which means you effectively pay interest twice. Making interest payments on a student loan, even if you decide to use the grace period, may help you avoid any unpleasant surprises.

On top of that, graduation, moving, and getting a job can come with a bunch of unexpected spending. While emergencies and unanticipated bills come up, especially during your first year out of school, it’s encouraged to keep expenses down.

Remember when the grace period is up, you’ll have to start making monthly payments, or risk penalties such as delinquent marks on your credit report and late fees.

Choosing How to Handle Your Grace Period

If you decide that the pros of the student loan grace period outweigh the cons, you could use that payment-free time to start setting aside funds for later. During your grace period you can:

•   Use a student loan calculator to determine your monthly payments.
•   Work with your lender/servicer to see what your payments will be.
•   Make it a goal to try and put away at least a partial amount each month.

If you get used to living on a budget that doesn’t include your student loan payment, you may be setting yourself up for future stress. Instead, you could consider:

•   Waiving the grace period and starting student loan payments immediately. If you have enough wiggle room in your budget, you can start paying your loans down immediately. Since your loan wouldn’t be accruing unpaid interest during the grace period, it could lead to savings in the long term.

•   Setting aside a part of your monthly paycheck to start paying down the interest. If your budget doesn’t allow for monthly payments yet, you could try saving what you can to pay off some of the interest on your student loans during the grace period. Even a small contribution can make a difference.

But if your budget doesn’t allow for any payments during your grace period, don’t sweat it. Your grace period is there for a reason, to give you some breathing room while you sort things out financially.

Some Ways Refinancing Can Help

Although you might be stuck with the debt, you aren’t necessarily stuck with the terms of the original loan you took out. It may be possible to refinance your student loans to terms that work better for you. Refinancing lets you take out a brand-new loan with a new interest rate and new loan terms.

When refinancing, you may be able to qualify for a lower interest rate than the one you are currently paying. Refinancing student loan debt could also offer you the opportunity to shorten your term length or lower your monthly payment (possibly by extending your term).

If you are managing a number of student loans, refinancing may help to simplify your life by giving you one loan to pay, instead of multiple loans to remember.

Keep in mind that if and when you refinance your federal student loans, you will be losing out on potential benefits that come with them.

These benefits, like Public Service Loan Forgiveness (PSLF), income-driven repayment plans, or deferment or forbearance, can also save you money and stress, so make sure to do your research before deciding to refinance.

If you choose to refinance your student loan, you might consider doing it with SoFi. With flexible terms and low- or fixed-variable rates, SoFi can make it easy to save while repaying your student loans. There are no application or origination fees, and you can do it all online.

Don’t let your grace period’s end catch you off guard. If you plan ahead, and plan for future payments, you could end up on more solid financial footing.

About SoFi

SoFi offers student loan refinancing which may help you lower your monthly payments or shorten your loan term. Discover the different student loan refinancing options to see if refinancing could be a good option for you.

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).

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
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).

SLR18175

Read more
Apr
08
2020

The Rising Cost of Grad School Debt

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

Despite all of the conversation the student loan crisis has inspired in recent years, one important piece of the puzzle is often missing from the dialogue. While most headlines have focused on undergraduate borrowers and their student debt, the percentage of graduate student loan debt has been steadily increasing.

Today people take on a larger amount of debt for master’s, MBA, law, and medical programs than ever before. So what do borrowers need to know about the current state of graduate student loans? Here are some essentials:

The Increase in Graduate Borrowing

According to a 2018 report from the New America Foundation, debt for students who earned a range of master’s and professional degrees has surged in recent years. There isn’t one specific reason for this, of course, but one impetus for going back to school seems to be that some regard a master’s degree as the new bachelor’s degree.

It should come as no shock then that the average graduate student loan debt has skyrocketed. In the 2017 to 2018 school year, graduate school loan disbursements accounted for more than a third of the total federal loan program. In fact, more than $37 billion was disbursed to grad students that school year.

And for those pursuing professional degrees, including those studying law or medicine, the current average debt load was around $145,000 (for law) and around $196,000 per student in 2018. But the increase in graduate student debt isn’t necessarily due to a higher number of borrowers—it’s that students are borrowing more for graduate school.

And while people with graduate degrees tend to earn higher salaries and experience lower unemployment rates than their counterparts with undergraduate degrees, the earning potential for each type of degree can vary widely.

As with any investment, borrowers may want to consider their likely return on investment (in the form of future salary potential) when choosing how much debt to take on for higher education.

Grad Students Are Taking on More Debt than Undergrads

While undergrads have limits on how much they can borrow in federal loans, qualifying students pursuing graduate or professional degrees can use federal Grad PLUS loans to cover the entire cost of attendance (determined by the school), minus any other financial assistance received.

Students in professional degree programs have the “highest rates of annual borrowing, taking on an average of $40,624 from all sources for a single academic year.”

Graduate Loans Come with Higher Interest Rates

According to Sallie Mae’s report, “How America Pays for Graduate School,” 53% of graduate students borrow money to help cover graduate school costs. Graduate students have two options available to them through the federal Direct Loan program.

Graduate or professional Direct Unsubsidized loans have a 6.08% interest rate for the 2019-2020 school year. Direct PLUS loans currently available to graduate students through the federal government carry a 7.08% interest rate for the 2019-2020 school year. (There are also loan fees to factor in.)

Beyond this, some students may dip into higher-interest private loans. That’s compared with undergraduate federal loans, which are currently at 4.53% (until June 30, 2020).

The Cost of Going Back to School

Even with the staggering costs associated with graduate school, for some individuals it can be a beneficial step toward future success. Everyone’s situation is different, so whether or not you choose to pursue a graduate degree is a personal decision.

There are a number of different factors to sort through and evaluate as you determine if going back to school is worth the cost. Here are a few questions to help you navigate your decision making process.

Is the investment in this degree worth the cost?

One way to determine this is to calculate the financial return on education (ROE). An initial step might be to calculate the average lifetime earning potential for graduates in your chosen field of study.

If a graduate degree can lead to strong career growth, it can be well worth it. But that the market for graduate degrees can be inconsistent.

Programs can vary widely by cost, and schools have a lot of leeway to develop programs and price them with little oversight. So doing your due diligence on your school or schools of choice before going full steam ahead towards a graduate degree is probably wise.

Could the degree help your career path?

How will graduate school fit into your overall career goals? Sometimes it can further your current career. In other cases, a graduate degree can help you pivot into a related field.

There are a few ways to gather intel on this, such as talking to trusted friends and mentors in your desired field of study. Do they have any insight to share?

Another resource to check out is LinkedIn, where you can look at individual profiles of people who work for companies you admire. What was their career path?

While everyone’s journey is different, you may glean some valuable information about the type of experience and degrees those in positions you aspire to hold.

In some cases, a graduate degree will be required for a career in a certain field. Careers in medicine, law, and others may require some form of additional education.

Could a graduate degree improve overall life satisfaction?

If you’re interested in getting a graduate degree, you probably have some outcomes and goals in mind. Perhaps you want to improve your earning potential or get a promotion. Beyond financials, consider how an advanced degree might improve your overall happiness.

Much of what makes people happy at work is made up of intangibles—corporate culture, coworkers you enjoy, a boss you work well with and can learn from, work-life balance, and a sense of self-worth, which differs from person to person.

Will a degree move you toward a career that you’ll find more rewarding? These are all extremely personal factors that could influence your decision to pursue a graduate degree.

Financing Your Graduate Degree

If ultimately, you decide to go back to school to get a master’s or other professional degree, you’ll likely have to find a way to pay for it. Graduate degrees can be expensive—as we’ve shown above—here are a few ideas for financing your degree.

Looking for Scholarships and Grants

It may be worth searching for potential graduate school scholarships or grants available for grad students. Typically you can search by field, demographic, location, or even by school.

There are a variety of databases that aggregate scholarships online that can provide a starting point for your search. A good rule of thumb is to track your scholarship applications so you can streamline the process.

Keeping track of questions you’ve already answered so you can repurpose them for future applications may be helpful, since it could cut down the time it takes to apply. Tracking each application can help you easily keep tabs on where you’ve applied and who you’ve heard back from.

There are fewer scholarships available for graduate school than there are for undergrad degrees, covering just 15% of total grad school costs, according to Sallie Mae.

But since scholarships and grants don’t need to be repaid, even just a small sum can be helpful in making ends meet as you find a way to pay for grad school. Hey, $1,000 in scholarships is $1,000 less you’d need to borrow in loans.

Searching for Fellowships or Assistantships

Many schools offer fellowships or assistantships to graduate students. These are typically merit-based—things like a high GPA in college could help you qualify.

Graduate student assistantships are usually either research-based or teaching-based. The benefits may vary by school but could include help with tuition, a living stipend, or both. The assistantship typically requires students to work for 15 to 20 hours a week in their specified role.

Some schools also have graduate resident assistants. In this role, students generally work in an on-campus residence hall (often helping undergrads). In return, they might get free room and board or a stipend. Specifics will vary by school.

Fellowships are similar to assistantships but generally don’t require a set number of work hours on-campus.

Assistantship and fellowship opportunities vary by school and there are usually different application processes. You may want to review the websites of the schools you are planning on applying to for more information.

Taking Advantage of Employer Programs

Some employers offer education benefits to their employees. If available to you, this could be a valuable tool to help you pay for your graduate degree.

Tuition reimbursement programs will vary by lender, so you may want to check in with HR or the program administrator to get the details on the application process and how much you might qualify for.

Also, it may be worth finding out if there are any contingencies associated with the reimbursement. For example, some companies may require you to stay with the company for a certain period of time after graduation. Others may only provide assistance for select programs.

Borrowing Student Loans

When the above options aren’t enough, student loans can come into play. A good way to get started is to fill out the Free Application for Federal Student Aid (FAFSA®). This is how you can apply for federal aid including work-study and federal student loans. Federal student loans are the most common source of funding for graduate students.

In the case that federal student loans aren’t enough, private loans may be an option. Private lenders will review personal information like your credit history and more in order to determine the terms and interest rates you may qualify for. Borrowers with a strong credit history (among other financial metrics that vary by lender) could qualify for competitive rates.

How Refinancing Can Help

Many borrowers are aware that they can refinance private student loans, but it may come as a surprise to many that they may also be able to refinance federal student loans with a private lender.

Even a small change in interest rate can make a big difference in the long run. Refinancing student loans at a lower rate may allow borrowers to save money on interest or free up some cash flow by extending their loan term to lower their monthly payments.

Since federal loan benefits (like forbearance, income-driven repayment plans, and loan forgiveness) don’t transfer to private lenders, borrowers would be wise to first check to see if they’re eligible for one of the government’s loan benefits (should they want to take advantage) before deciding to refinance.

But for borrowers who are looking for a potentially lower interest rate and have improved their financial situations since leaving school, refinancing can be a great option.

For many grad school borrowers, student loans can be a powerful investment in their career and financial future. But a big loan balance means big responsibility, making it important to balance the cost of an advanced degree program with its related earning potential.

If and when the time comes, refinancing can help borrowers knock out more of their loans and move on to bigger and better things.

Ready to get ahead of your grad school debt? Learn more about how SoFi student loan refinancing can lower your interest rate or your monthly payment.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
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).

SLR14104

Read more
Jan
29
2020

Student Loan Rates: A Primer

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

Trying to figure out ways to lower your student loan interest rates?

The process may seem impossible to understand. Consolidation, refinancing, federal vs. private student loans, variable vs. fixed rates—what do these terms even mean?

The lingo isn’t as scary as it sounds. And snagging a lower student loan rate may not be as difficult as you think.

Granted, there are a lot of moving parts, between understanding average student loans rates and learning the difference between federal and private loans.

Don’t worry, though — we’ve done some homework for you. Once you get the hang of how rates work, you may be able to better determine whether you’re getting a good deal.

Who Sets Student Loan Rates for Federal and Private Loans

Federal student loan rates are set by Congress (through legislation). Your student loan servicer, or the company in charge of your loan repayment plan, doesn’t have any power to change your federal student loan interest rates.

Private lenders set their own interest rates, and each of those lenders may have multiple loan packages offering different rate and term options. The rate can depend on several factors, such as the lender’s underwriting criteria, and the borrower’s credit history, employment history, and income.

Average Student Loan Rates for Federal Loans

For the 2019–2020 school year, the interest rate on undergraduate Direct Loans taken out after July 1, 2019, is 4.53%. And for graduate Direct Loans, it’s 6.08%.

Direct PLUS loans, which are federal loans available to graduate students or to parents of undergrads, have an interest rate of 7.08% as of July 2019.

To break this down a little further, let’s say your debt is $31,172 , which is the average amount of student debt per person in the U.S. as of 2019.

Using SoFi’s Student Loan Calculator for an estimate, if you are paying an interest rate of approximately 4.53% over a 10-year term, your monthly payment would come to around $323.51 and the interest charge would be approximately $7,650, for a total debt of $38.822.

While these numbers may seem high, federal rates are actually down. Rates on federal student loans had been steadily rising for the past two years, but they dropped from 5.05% for the 2018–2019 school year to 4.53% for the 2019-2020 school year.

Federal student loan rates have been reset annually (in July) since a 2013 law that tied loan rates to market conditions and placed a cap on rates. Because of this law, federal student loan rates are based on the yield, or return on investment, of 10-year Treasury notes. These notes are sold at Treasury auctions held annually in May. A lower yield at the Treasury auctions prompts lower student loan rates.

If you’re a parent expecting more than one child to attend college in the coming years, remember that federal rates currently change annually. This means that your second or third child’s rate could be different from the rate of your student starting school in 2020. .

However, if rates rise, you can take comfort in knowing that a higher yield at the Treasury is also seen as a signal of investor confidence in U.S. economic growth—and though there’s obviously no guarantee of where the economy is headed, a strong economy is just the kind of thing you want when your child enters the job market after college.

Average Rates for Private Student Loans

Private lenders each set their own fees, interest rates, terms, and APRs. An APR (or annual percentage rate) combines the interest rate over a year with the fees to reflect the total cost of the loan and make it easier to compare lenders.

As of this writing, APRs on private student loans range from around just under 3% (for variable rate loans) to just under 14% . This range is similar to 2019, but can (and does frequently) fluctuate. Many lenders offer repayment terms of five, 10, or 15 years, and some will offer even more repayment options, like eight-year terms.

Even for a single lender, rates offered can differ depending on factors like the borrower’s credit history, employment, whether they have a cosigner, and the specific loan package chosen.

Lenders typically offer fixed rate loans, meaning the rate doesn’t change over time, or a variable rate loan, meaning the rate could go up or down during the debt repayment term depending on market factors.

Lowering Student Loan Payments by Consolidating or Refinancing

Whether you have one student loan or several, you might be able to get better rates or terms by either refinancing or consolidating your loans.

When you initially took out your student loan(s), you agreed to certain conditions, like fees, length of loan repayment, and, of course, interest rate. But better loan conditions might become available after you’ve agreed to your loan terms.

Maybe there’s a student loan option that better fits your needs but didn’t exist before, or there’s a new financial institution that’s arrived on the scene.

Or maybe your own financial situation has changed and you have a better-paying job or an improved credit score. Or perhaps you’ve chosen to work for a non-profit or for a government agency to give back to underserved communities.

In these cases, among others, consolidating or refinancing could be a game-changer. These two options are similar but have some important differences.

Lowering Monthly Payments by Consolidating Student Loans

If you have multiple federal loans, you could consider consolidating them with a Direct Consolidation Loan. When you consolidate federal student loans, you lump the loans you have chosen to consolidate into just one loan.

Consolidating your loans won’t necessarily land you a lower rate, first because the outstanding interest on the loans you’re consolidating is added to the principal balance on your new Direct Consolidation Loan..

In addition, to determine your new interest rate with a Direct Consolidation Loan, figure out the weighted average of all your original loans’ rates, then round up to the nearest eighth of a percent. You may want to play with the mix of loans you are thinking about consolidating to view different weighted averages.

In some cases, your monthly payments may decrease when you consolidate your loans, but it’s usually because you end up paying back your loans over a longer period of time—which means paying more for your loans overall.

Consolidation could be an ideal solution, especially if you’re seeking to take advantage of income-driven repayment or Public Service Loan Forgiveness (PSLF), but you might not save much on interest in the long run. However, some borrowers still prefer to consolidate. One reason may be because making one monthly payment is simpler than making several, so it can be easier to keep up.

Lowering Rates by Refinancing Student Loans

If you have private student loans (or a combination of federal and private student loans), you may benefit from refinancing. Essentially, refinancing is taking out a new loan with new terms to pay off an older debt.

How can refinancing lower your interest rate? When you refinance, the lender looks at your financial situation now as opposed to your finances from when you originally took out your loans.

Depending upon market conditions and if your credit has improved or you earn more money now, you could possibly qualify for a lower rate or more favorable terms on a new loan. If you qualify for a better interest rate, refinancing could mean saving thousands of dollars over the life of the loan. And the earlier you refinance into a lower student loan interest rate, the more you could possibly save.

Student loan refinancing into a longer term also could be a great way for working graduates with high-interest loans to save money without having to cut other expenses. Although, just as it is with the Direct Consolidation Loan, lower monthly payments are usually achieved by having a longer repayment term, which likely means paying more interest over the life of the refinance loan.

When refinancing, you can typically choose between fixed or variable interest rates. If a rate is fixed, your monthly payments will stay the same until you pay off the entire loan. When the rate is variable, it can change as economic conditions change.

As of this writing, fixed rates for private refinance loans range anywhere from around 4% to around 13%, and variable rates range between just under 3% to around 13% (but these rates can, and do, change frequently ).

Before you choose between a fixed or variable rate, you might want to talk with your chosen lender and if you are considering a variable rate, check out the London Interbank Offered Rate (LIBOR) movement to view how the LIBOR index is directly tied and can move in tandem with economic conditions and the fed funds rate. Refinancing is always done through a private lender. Many private lenders handle only private loans, but SoFi refinances both private and federal loans. This makes it possible to have only one monthly payment, even if you have both federal and private loans.

This way, you’ll no longer have to deal with the hassle of keeping track of multiple student loan payments that may have different lenders, terms, or interest rates.

SoFi doesn’t charge application fees, origination fees, or prepayment penalties. As a SoFi member, you are also eligible to gain complimentary access to features like career services, exclusive member events, , and live online customer support.

Before refinancing, keep one thing in mind: Refinancing government loans could mean losing out on federal benefits such as student loan forgiveness programs and income-driven repayment options, so it is worth considering this tradeoff before making any decisions.

Ready to refinance your student loans? Find your rate online with SoFi!


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
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).

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.

SLR17108

Read more
Jan
13
2020
A woman in a striped top uses a tablet to check a digital calendar, perhaps tracking how student loans are disbursed.

How Long is a Student Loan Grace Period?

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

While the stress of term papers and finals comes to an end once you graduate from college, the stress of building your post-collegiate life—and dealing with student loans—is just beginning.

Even if you’ve already got a job, you may have to move to a new city, and it will likely be a bit before a steady paycheck starts rolling in. Luckily, many student loans allow a grace period to give you a chance to put your life in order before you have to pay back your loans.

What Is a Grace Period?

The student loan grace period is typically six months after you graduate from school. However, the clock can start ticking if you leave school before you graduate or you drop below half-time enrollment.

Rules about grace periods can vary depending on the type of loan. You can expect a six-month grace period from Direct Subsidized and Unsubsidized Loans. Federal Perkins Loans, when they were offered, sometimes have a nine-month grace period (check with the school where you received your loan), while PLUS Loans offer no grace period at all, but if you have a PLUS Loan and need more time before you start to pay it off, you can usually apply for student loan deferment.

In general, private loans do not offer grace periods, but there are some that do. So be sure to check with your loan provider to understand their specific terms regarding grace periods.

The grace period is typically only available to you once during the life of your loan. However, there are two possible exceptions for federal student loans: First, if you are an active member of the military and you are called to service for more than 30 days during your grace period, the grace period will start over upon your return.

Second, if you go back to school before the loan’s grace period ends. One word of caution: If you consolidate a federal student loan during its grace period, you will forfeit the remainder of that grace period.

Grace periods also come with another hitch—though you don’t have to make payments during the grace period, some loans, such as a Direct Unsubsidized Loan, will still accrue interest. These interest charges are added to your principal balance, and will have to be paid when the grace period is over.

Making the Most of Your Grace Period

The main advantage of grace periods is that it gives you time to settle in to your new post-graduate life before you have to start paying off your student debt. It gives you time to do things like find a job, move to a new city, and figure out the other bills you may be paying for the first time. Ideally, this period gives you some time to build your income to the point where you can then start paying back your loans.

If you find yourself a little bit ahead of the game, you don’t have to wait for the grace period to end before you start paying back student loans. You may decide that the cost of accruing interest over the period isn’t worth the benefits of waiting. The choice you make will depend on your personal situation and income.

While the grace period may seem like a vacation from your loans, it actually might be a good time to put your financial house in order so you’re better positioned to handle them. Here are a few steps you might consider taking that can help you stay on track:

Getting Reacquainted With Your Loan Terms

First things first—gather information about all of your loans. It may be four years since you last looked at any of your loan information, so get yourself reacquainted.

You can look up your federal loans on the National Student Loan Data System , and you can request information about private loans from your private lender(s). Pay attention to what types of loans you have, whether they offer a grace period, how long the period is, and all interest charges.

Once you understand what types of loans you carry and their terms, you can determine the best options for paying them back. This will help prioritize which loans you want to tackle first.

Federal loans may offer hardship options like forbearance (temporarily halt payments) and income-driven repayment plans (longer-term payment reduction). Though private loans are less likely to offer programs like this, some do, so it’s worth checking.

Is your grace period up?
Look into refinancing your student loans.

Building a Budget

This may be a good opportunity to take a long hard look at your finances. While you may be just getting on your feet financially, this is a perfect time to get into the habit of budgeting. Take a look at all of your monthly income and subtract any necessary living expenses like bills, rent, and food.

What you’ve got left is the money you can devote to paying down debt and for discretionary expenses. This amount can give you an idea of how large a student loan payment you can make each month.

Figuring Out Your Monthly Payment

Federal loans often offer flexible repayment options and loan terms. For example, extending the term of your loan can help you lower your monthly payment.

Be aware that extending your term also extends the amount of time you pay interest on your loan, which can cost you more money in the long run. Weigh this consideration carefully as you decide how much to devote to monthly payments.

Considering Student Loan Refinancing

Getting reacquainted with your loans gives you a refresher on their terms and interest rates as well as the repayment options available to you. Yet, if these options don’t work for you, the good news is you’re not necessarily stuck with them.

You could consider refinancing your federal and private loans for terms that work better for your situation.

When you refinance a student loan, you are essentially taking out a new loan that pays off your old loans. Now, you only have one loan to manage, and hopefully a lower interest rate or a term that works better for you.

Typically, to qualify for student loan refinancing, it helps to have a strong credit history. For example, if you had a credit card that you paid off regularly, your credit score may be sufficient to meet lender eligibility requirements. They’ll likely consider other personal financial factors, like your income, too.

Also, before refinancing a federal loan, make sure that there are no federal benefits that you want to take advantage of, such as loan forgiveness, income-driven repayment, and other programs that are only available if you hold on to your federal loans.

These benefits don’t transfer when you refinance with a private lender. That said, other benefits may be available, depending on the lender. For example, if you refinance before your grace period ends, some lenders will honor the remainder of the period.

Make sure your grace period is time well spent, and take the opportunity to understand all your options for paying back student loans.

To learn more about how refinancing your student loans could help you manage your loan repayment, visit SoFi.

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.
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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
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).

SOSL19068

Read more
Dec
30
2019
showing phone to another person mobile

A Guide to Military Spouse Student Loan Forgiveness

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

Most military spouses understand going in that their married life will come with a distinct set of challenges.

When a husband or wife who serves is deployed, many of the duties married couples expect to share—from caring for children to running the household and making ends meet—fall to the one who stays behind. And the frequent moves military couples typically experience can be disruptive to careers, families, and friendships.

The federal government provides many forms of financial assistance and other benefits to personnel and their partners to make military life easier, including help with moving, job hunting, child care, and health care.

There are some educational benefits for military spouses as well. The Department of Defense’s My Career Advancement Account (MyCAA) Scholarship Program currently provides up to $4,000 in tuition assistance to eligible military spouses who wish to pursue certain associate degrees, certifications, or licenses for in-demand portable careers.

And the transferability option of the Post-9/11 GI Bill allows service members to assign all or some of their unused benefits to a spouse or dependent children.

Those benefits don’t cover past college debt, however. There isn’t a designated military spouse student loan forgiveness program or a military spouse school loan repayment plan.

There are options, though, for those who are struggling with student loan debt. Here are just a few options you may consider looking into:

Public Service Loan Forgiveness

Military spouses who share their loved one’s passion for helping others and want to have a career in public service—at a nonprofit organization, in public health, education, law enforcement, or government, for example—may want to check out the Public Service Loan Forgiveness Program (PSLF).

This program forgives the remaining balance on some federal loans after the borrower has made 120 on-time monthly payments under a qualifying repayment plan while working full time for a qualifying employer.

Private student loans are not included in the program, and only federal loans received under the William D. Ford Direct Loan Program are eligible for PSLF.

Those who have loans under other federal student loan programs, such as a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, may become eligible if they consolidate them into a Direct Consolidation Loan.

However, only qualifying payments made on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF.

The program has its pros and cons, and it certainly isn’t a quick fix. Applicants must be vigilant about tracking their employment through the years, and getting certified can be complicated.

According to the June 2019 PSLF Report Other Sources of Assistance

Those who don’t qualify for PSLF may be able to find career-based repayment assistance from other sources.

Under the Teacher Loan Forgiveness Program, for example, someone who teaches full time for five complete and consecutive academic years in a low-income school or educational service agency—and meets certain other qualifications—may be eligible for forgiveness of up to $17,500 on Direct/Federal Stafford Loans.

Nurses also may be eligible for help with their student loans through federal programs like the Nurse Corps Loan Repayment Program or the National Health Service Corps Loan Repayment Program.

The amount of repayment in those programs can vary depending on the nurse or nurse practitioner’s length of service at a qualifying facility, but they could knock thousands of dollars off an eligible person’s debt.

Many industries and professional associations also offer student loan repayment assistance, with programs for lawyers, doctors, medical researchers, and others. And there may be opportunities to apply for student loan help through state and local programs as well.

Federal Repayment Plans

For borrowers who don’t necessarily qualify for those career-related forgiveness and repayment programs, there are other options out there for those who apply and meet certain criteria.

The government offers four income-driven repayment plans that could lower a military spouse’s payments: the Revised Pay As You Earn Repayment Plan (REPAYE), the Pay As You Earn Repayment Plan (PAYE), the Income-Based Repayment Plan (IBR), and the Income-Contingent Repayment Plan (ICR).

Under all four plans, after making qualifying monthly payments, borrowers will be eligible for forgiveness on remaining loan balances. Keep in mind that lowering your monthly payment will likely mean paying more in interest over the life of the loan.

Military spouses can get an idea of what their payment will look like by logging in and using the Repayment Estimator at StudentLoans.gov. This tool can compare payments under different federal repayment plans to help find which one is right for you and your situation.

One thing to remember is that under an income-driven plan, the amount that’s forgiven is sometimes treated as taxable income—so a borrower may end up with a tax bill in the year the debt is forgiven.

Refinancing to a More Manageable Payment

You may have noticed that most of the options listed above are limited to borrowers with certain types of federal student loans and who are willing to do a bit of legwork.

But those who don’t have qualifying loans—or those who think they can find a workable repayment plan elsewhere with a more competitive interest rate—may want to check into refinancing student loans through a private lender.

Refinancing offers borrowers a chance to adjust their monthly payments and choose new repayment terms. And military spouses with multiple loans may find they like the idea of combining them into one manageable payment.

Lenders may offer both fixed and variable interest rates, varying loan lengths, and autopay options so borrowers can tailor a loan to suit their specific needs. Finding rates and applying online for a refinancing loan usually only takes a few minutes.

Before shopping for offers, however, it’s important to note that refinancing federal student loans turns them into private loans, which means losing access to all federal forgiveness programs, repayment plans, and other federal benefits and protections.

Once a borrower refinances with a private lender, there’s no going back to a federal loan or the advantages it may offer.

But borrowers who have good credit and solid employment (among other factors) may find they can qualify for a lower interest rate and/or a shorter repayment period—or to lower their monthly payments via extending their repayment terms—as well as other perks by refinancing with a private lender.

For example, SoFi offers member benefits that include career counseling, networking events and a referral program. And some private lenders, including SoFi, will combine and refinance both federal and private loans so there’s just one student loan bill to pay every month.

Dealing with life as a military spouse can be difficult enough without also having to grapple with the stress of student debt. Though there currently aren’t any student loan forgiveness or repayment programs designed specifically with military spouses in mind, there are ways to help get rid of that extra burden.

Are you a military spouse who wants to give student debt its marching orders? See if refinancing with SoFi could work for you.

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.
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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
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).

SOSL19079

Read more
Close modal

See what SoFi can do for you and your finances.

Select a product below and get your rate in just minutes.

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

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.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2026 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender