Undergraduate vs. Graduate Student Loans: 6 Ways They Differ

Heading off to graduate school? You’re probably not a newbie at the financial aid process after your years as an undergraduate. You might even have a few things to say about the increase in graduate student loan borrowing.

Out of the over $1.5 trillion in student loan debt in the United States, dollars borrowed by graduate school students are rising more quickly than undergraduate debt.

The reality is that, when looking at funds borrowed over the last academic year, the percentage taken out by graduate students is at 40% of the total, compared to 32% in 2002.

However, it’s a mistake to assume that graduate student loans are the same as undergraduate loans. There are actually significant differences between the two, and knowing those differences can be the key to saving money on your grad school debt in the long run. Here are some key factors to consider when taking out graduate school loans.

1. Graduate Students Are Typically Considered Independent Students

Although, as a graduate student, you’ll still need to fill out the Free Application for Federal Student Aid (FAFSA®) to qualify for federal student aid, you no longer need to include financial information about your parents on the form.

That’s because students who are pursuing either a master’s or doctorate degree are virtually always considered to be independent students.

There are a couple of key benefits associated with being an independent student. First, it helps streamline filling out the FAFSA. And, secondly, as an independent student, you’ll likely report much less income because your family’s earnings generally are no longer considered when financial aid eligibility is calculated, which could potentially give you access to additional aid options.

There are circumstances where undergraduate students can also be considered independent, but it’s usually more common with graduate students.

2. Graduate Student Loans Typically Have Higher Interest Rates

The 2019-2020 federal student loan interest rates for graduate and professional students are 6.08% for Direct Unsubsidized Loans for Graduate or Professional students and 7.08% for Direct PLUS loans—much higher than the 4.53% interest rate on federal undergraduate student loans.

(Note: Federal student loan interest rates are reevaluated annually, and updates are announced in early July.) Private student loans, another option for grad students, can come with even higher rates.

Graduate students can typically use federal Direct PLUS loans for anything not covered by other financial aid, including tuition, fees, college textbooks, and living expenses.

PLUS loans are funded by the U.S. Department of Education and require a credit check, although the credit requirements are not as stringent as they would be with a private lender. At 7.08% , they have the highest interest rates of all the federal student loans.

Federal loans also have fees that should be factored into the total cost of borrowing. For Direct subsidized and unsubsidized loans, the loan fee for the 2019-2020 school year was 1.059%. For Direct PLUS Loans, the fee was 4.236%.

These fees are deducted proportionally from each loan at the time of disbursement. This means that the amount of money a borrower receives will be less than the total value of the loan. Borrowers are still responsible for repaying the total value of the loan.

3. There Are No Subsidized Graduate Student Loans

Grad school federal loans start accruing interest charges while you’re a full-time student, unlike subsidized loans for undergraduates.

Say for example, you borrowed $20,000 in Direct Unsubsidized Loans (for graduates, of course) to cover the cost of tuition when you started the program. When you factor in the current disbursement fee of 1.059%, you would have received approximately $19,788.

Since this loan type is unsubsidized, it will accrue interest while you attend school. Note, that even though you received $19,788, interest will accrue based on the loan total of $20,000. If the program is two years long, and you made no payments during that time, the loan would have accrued approximately $2,432 (assuming the interest rate stays the same 6.08% for those two years). For undergrads with subsidized loans, the interest clock doesn’t start until after graduation.

4. Borrowing Limits Are Higher for Grad Students

Typically, graduate students can borrow $20,500 annually in Direct Unsubsidized Loans , although there is currently a lifetime cap of $138,500 when undergrad loans and graduate school Direct loans are combined. If you’re in a qualifying health field, you may have a higher lifetime limit, potentially up to $224,000.

Compare that to annual limits for undergraduates, and they’re typically capped at $5,500 during year one; $6,500 for year two; and $7,500 for subsequent years, with a total availability of $31,000.

Having said that, although graduate students have more flexibility in how much can be borrowed, it can be challenging to pay back those higher amounts of debt.

5. Graduate Students May Qualify for Competitive Rates on Private Student Loans

Private student loans aren’t backed by the federal government; they’re issued by private lenders or banks.

If you’ve already established a solid credit history and/or have steady income coming in, those are important cornerstones that may help you qualify for more competitive rates on private student loans. This is in contrast to the typical undergrad, who may be new to credit and lending entirely, and don’t usually have well-paying, full-time jobs.

6. Student Loan Refinancing Can Be a More Viable Option for Graduate Student Loans

While anyone with higher education debt can apply to refinance student loans, there are a couple reasons why this option tends to be more popular with grad students.

First, in order to qualify to refinance loans at a lower interest rate than what a borrower may currently have, a strong credit history that includes a positive track record of paying debts is important—and proof that you make enough money to pay back the loan (among other factors that will vary by lender).

Depending on a graduate student’s background, there is a chance that they might be viewed as a more stable lending choice than an undergraduate. For example, some graduate students have spent a few years working in a field before returning to school. This could have allowed them to build a strong credit history and income.

Additionally, some graduate programs offer the potential for students to increase their earning potential after graduation, which also could be appealing to private lenders.

The other reason is that undergrads with federal student loans enjoy interest rates that are typically quite low already, and can be tough to beat when compared to private loan interest rates. Grad students, on the other hand, often carry student loan debt with higher interest rates and generally have higher debt burdens than undergraduate students.

With a strong credit history and steady employment (among other factors), it may be possible to get a better deal—and save money—through refinancing.

Refinancing won’t be the right option for everyone. Federal loans come with a variety of protections and benefits, like income-driven repayment plans and loan deferment. When you refinance a federal loan, it becomes a private loan, and will no longer qualify for any federal benefits.

7. Grants are Few and Far Between for Graduate Students

Even if you were eligible for a Federal Pell Grant the last time around, you can’t count on that for graduate school. Pell Grants, which are need-based grants that don’t have to be repaid, are typically awarded only to undergraduate students.

There are a variety of other opportunities available to grad students to help them finance their education, including some scholarships , other grants , and fellowships. Grants are generally offered based on financial need while fellowships are awarded based on a student’s academic performance and research.

Scholarships, grants and fellowships are available through sources like federal and state government, schools, and even some corporations. Each opportunity might have very specific application criteria or might only be for students specializing in certain areas of study.

If you’re interested in looking for a grant or scholarship for grad school, you can get a more detailed overview of what is available here. Typically, graduate and professional students are taking on more debt than undergrads. So smart upfront planning combined with a savvy repayment strategy—which may include refinancing—can make a world of difference to your bottom line.

Thinking Outside the Box

When you think about paying for graduate school, it’s natural to consider student loans, but there are additional avenues likely worth pursuing. For example, your school of choice may offer scholarships, fellowships, and grants.

Typically, the college will use the information in the FAFSA® to decide what funding, if any, they can offer you.

Other times, though, there may be separate applications unique to your school; you can ask for specifics at the financial aid office. Sometimes, the award might be small; other times, it might be full tuition reimbursement.

Some graduate students work on campus as teaching or research assistants . These opportunities could offer the opportunity for students to expand their skill set while earning some income.

If you’re pursuing a graduate degree while working full time, you can check with your employer to see if they offer a tuition reimbursement plan.
If they do, the program will have its own parameters and processes.

Sometimes, if you accept funds from this program, you’ll need to stay at the company for a predetermined amount of time; other times, they might fund only certain degrees.

Still other times, they may not specifically have tuition reimbursement funding available, but there might be professional development dollars you can access. Or, your employer may be willing to allow you to work a more flexible schedule to accommodate your class schedule. It doesn’t hurt to ask!

You can also use databases like FastWeb and Peterson’s to see if there are private scholarships available that you might qualify for.

Want access to more student loan resources? Explore our student loan help center to help guide you in your debt repayment!

Private Student Loans by SoFi

Student loans can get complicated—SoFi is here to help. In addition to the competitive refinancing options available to qualified borrowers, SoFi now offers private graduate student loans that can help you to focus on your degree, not your debt.

With SoFi, there are no fees—meaning no origination fees, no late fees, and no insufficient fund fees—and no fuss. You can fill out our simple online application in just minutes and have access to live customer support seven days a week.

Check out what kind of rates and terms you pre-qualify for in just a few minutes.


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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 or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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How Student Loans Could Impact Your Taxes

As winter begins to thaw and snowstorms are replaced with spring showers, that can only mean one thing— it’s time to get serious about your taxes.

For some, tax day means a much-awaited refund. For others, it may mean another expense. There are a variety of factors that can affect your taxes, including your status as a student.

Before we dive in too much further, we want to highlight the fact that tax law is complicated and can change from year to year. You should always consult with a tax professional when it comes to what might and might not affect your taxes—and never rely solely on a blog post (like this one) for tax guidance. This is for informational purposes only, and is not a substitute for talking with a pro.

First thing’s first: If you paid for qualified educational expenses or student loan interest in the previous tax year, you may qualify for a student loan interest deduction or an education tax credit—which could potentially mean a lower tax bill or a higher tax refund.

First, it might be helpful to understand the difference between a deduction and a tax credit. When you claim a deduction on your taxes, it is subtracted from your total income. Your income taxes are assessed after the deduction is taken. In contrast, a tax credit is subtracted from any taxes you may owe.

Before you mentally spend your tax refund, know that not everyone is eligible for each of these deductions or tax credits. There are a number of requirements that have to be met in order to take advantage of these tax benefits. Here’s a simple breakdown of some of the tax credits and deductions some might be eligible for.

Student Loan Interest Deduction Explained

Usually, you can expect to receive a 1098-E form from each of your student loan providers by the end of January each year. This form details the amount of interest you paid over the past calendar year.

Your loan servicer is only required to send you a 1098-E form if you paid more than $600 in interest on a qualified student loan. If you did not receive this by mail, your provider may have sent an email notification to let you know your 1098-E is ready to download.

To qualify for the maximum $2,500 student loan interest deduction, you must meet certain filing and income criteria. It may be possible to deduct student loan interest that has been paid on loans issued for yourself, your spouse (if you file jointly), and your dependents. However, parents can’t claim the student loan interest deduction if the student loan is in their dependent’s name only.

Since this is an adjustment to your gross income, you can take this deduction even if you don’t itemize. In order to claim this deduction, there are certain income requirements that must be met. The deduction is phased out when an individual’s modified adjusted gross income (MAGI) reaches certain thresholds.

For the 2019 tax year, the benefit begins to phase out at $70,000 for those whose filing status is single and $140,000 for those who are filing jointly.

The deduction is eliminated completely for those filing as single who make more than $85,000 and for those who are filing jointly that make more than $170,000.

Am I Eligible for Education Tax Credits?

If you paid tuition, fees, or other education-related expenses during the tax year, you may be eligible for an education tax credit, either the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).

Note that you can’t claim both credits for the same individual within the same year. If you qualify for both, it might be worth calculating them both in order to determine the option that is best for you.

American Opportunity Credit

This credit applies towards 100% of the first $2,000 of eligible education expenses and 25% of the next $2,000.

What does this mean? Students who are enrolled at least half time in a degree or certificate program for one academic period during the tax year may be eligible to receive a credit of up to $2,500 for the cost of tuition, fees, and course materials.

The credit may be claimed for up to four years, but it can’t be claimed after the eligible student has completed the first four years of post-secondary education, which means those pursuing graduate degrees aren’t eligible for this tax credit.

The MAGI limit for eligibility is $90,000 for individual filers and $180,000 for joint filers. The credit is reduced if MAGI is between $80,000 and $90,000 for individual filers and between $160,000 and $180,000 for joint filers.

The AOTC is a refundable tax credit. This means that if the credit takes your tax bill to zero, you can get 40% of the unused credit, up to $1,000, as a tax refund. The IRS has even more information on the requirements and eligibility factors for the AOTC on its website .

Lifetime Learning Credit

This credit is worth 20% of the first $10,000 of eligible education expenses, for a maximum of $2,000.

The LLC is similar to the AOTC, but with a few important differences. This credit has a lower income limit than the AOTC. For the 2019 tax year, if your MAGI is less than $68,000 as someone whose filing status is single, you should qualify for the deduction.

If you file a joint return, earning less than $136,000 should allow you to qualify for the deduction. The benefit is reduced (phased out) for those filing single with a MAGI between $58,000 and $68,000.

For those filing a joint return, the phase-outs occur between $116,000 and $136,000. If your MAGI is above $68,000 for single filers, or $136,000 for joint filers, you won’t be able to claim the LLC.

There is no limit to how many years you can claim the credit. And the credit can be used to help pay for a variety of education expenses, including undergraduate, graduate, and professional degrees. You could even qualify for the credit if you’re taking classes to “acquire or improve job skills.”

Unlike the AOTC, the LLC is not refundable. This means that the credit can be used to pay for the taxes you owe, but if it surpasses that, you won’t receive any money back as a refund. The IRS has even more information on the LLC available on its website.

Finding Tax Help

If you want to learn more about these education tax credits and additional education tax deductions, the IRS has further information .

If the process of filing your taxes seems overwhelming or you’re still confused by the ins and outs of these tax advantages, you could consider finding help this tax season. A qualified tax professional could assist you in navigating your taxes and help you maximize your refund with less hassle—and they will know more about any credits or deductions you may be eligible for. After all, it’s their job to know!

Figuring Out How to Pay for School

Tax credits and deductions could help you make the most of your taxes. But even with those benefits, paying for school might still be an overwhelming prospect.

When scholarships, federal student loans, grants, and savings just aren’t enough to pay for school, some students turn to private student loans to help make ends meet.

If you’re interested in borrowing a private student loan, you could consider SoFi. There are absolutely no hidden fees or prepayment penalties. You can complete the process easily online. SoFi offers up to four flexible repayment plans so you can choose the option that works best for you.

Looking to borrow for school? See your SoFi Private Student Loan interest rate in just minutes—with no pressure to sign up.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.
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 Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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10 Questions to Ask When Choosing a Student Loan Refinance Lender

If you graduated with student loans, it’s possible you have a combination of federal and private student loans. According to some reports, around 70% of all American students take out student loans to pay for college.

When you first took out your student loans, you agreed to a certain repayment plan and interest rate. However, it may be possible for you to find a better student loan repayment plan by refinancing.

Just a few years ago, not many people knew that they could refinance student loans. Fast-forward to today and there are regular news headlines on the subject. Almost overnight, refinancing has become a popular strategy for people looking to save money on student loans.

Not surprisingly, the demand for student loan refinancing has prompted a bevy of online lenders to start offering the service. That’s great news for you—after all, competition breeds innovation, and the smart lenders will continue to improve in order to win your business.

One of the main reasons many students choose to refinance their student loans is to secure a lower interest rate. But you may also choose to refinance to improve your lending terms or change your lender. If you qualify for a better interest rate than you currently have, it can help you save money over the life of the loans. But, it is important to know that when refinancing federal student loans with a private lender you’ll lose access to federal benefits such as student loan forgiveness programs and deferment.

But choosing a lender can be overwhelming. Which student loan refinance company is the best? How do the services of lenders differ? Which one should you trust with your money? If you do your homework and take a little time up front to shop around, you can figure out the answers to these questions for you—and potentially save money, too (and maybe even land a few unexpected perks).

To help you evaluate student loan refinance companies, we’ve created the handy cheat sheet below. Asking these 10 questions can help you zero in on your best fit.

Student Loan Refinance Lender Questions Cheat Sheet

1. How Great is the Rate?

One of the main reasons to refinance your loans is to get a lower interest rate.

Ask the lender to provide your interest rate before doing a hard credit pull. Most online lenders allow you to prequalify with a “soft” credit pull , which won’t impact your credit score.1 This should allow you to “rate shop” without affecting your credit. A “hard” credit pull stays on your credit report for up to two years, and can affect your credit score. You can use a student loan refinancing calculator to estimate your total savings with a new refinanced loan, even before you prequalify.

2. Can You Refinance Federal Loans?

All new federal student loans are granted through the William D. Ford Federal Direct Loan (Direct Loan) Program . Federal loans are different from private student loans, which are made by banks, lenders, and other financial institutions.

Refinancing federal student loans is an option available to borrowers. Sometimes, refinancing can be beneficial, for example when a borrower is able to qualify for a lower interest rate. Others may find that refinancing a federal loan isn’t the right option for them.

Here’s a quick list of some of the pros and cons to consider if you’re thinking of refinancing federal student loans.

Some of the Pros to Consider:

•   Long-Term Savings: Refinancing to a lower interest rate could potentially help you save money in interest over the life of the loan.

•   Lower Monthly Payments: Although you may end up paying more over time if you choose a lower monthly payment by extending the term of your loan, it may make sense for you if you can’t afford a higher one.

•   Shorten Your Loan Term: Imagine having no more student loans to pay back! By shortening your loan term, you could speed up your repayment.

•   Rate Change: You may be able to switch out a fixed rate loan for a variable rate loan and vice-versa.

Some of the Cons to Consider:

•   Loss of Access to Federal Repayment Plans : When you refinance federal loans with a private lender, they’ll no longer qualify for any federal repayment plans. This includes income-driven repayment plans.

•   No Longer Eligible Federal Forgiveness Programs: If you’re pursuing Public Service Loan Forgiveness (PSLF), refinancing may not be the right option for you, since doing eliminate your loans from being eligible for the program.

•   Inability to Defer Your Loans : You’d also lose the opportunity to put your federal student loans into deferment or forbearance in the event of financial difficulty. While some lenders, including SoFi , do offer some borrower protections, not all do.

3. Can You Pick Between Fixed and Variable Rate Loans?

With a fixed rate loan, the interest rate is locked in for the entire life of the loan. This means you’ll have also have fixed monthly payment. The interest rate on a variable rate loan can go up or down over time, depending on market conditions.

Although fixed rate loans are generally considered to be less risky as compared to variable rate loans, if you’re able to repay your loan in a relatively short time period, variable rate loans can be worth considering.

You can use SoFi’s student loan payment calculator to estimate your student loan payments with a fixed rate. Tools like this can help give you an idea of how much more you may need to be paying each month if you want to pay your loan off faster.

4. Can You Choose Your Loan Term?

Typically, yes. But beware: It may seem as though choosing the lowest monthly payment would be the best refinancing option, but you’ll most likely pay more money over time if you do that. That’s because lower monthly payments are typically achieved by stretching out the loan term, which means you’ll be paying more in interest over the life of the loan.

But If you recently graduated, you may not be making enough money to pay the monthly amount you’re currently signed up for, and in that case a longer term with lower monthly payments to free up some cash flow in the short-term might make sense.

Be realistic about how much you can afford to pay back each month. If you can afford a higher monthly payment, you’ll likely pay off your loan more quickly, and ultimately pay less money in interest.

5. What Happens if You Lose Your Job?

Life is unpredictable, and if you unexpectedly lose your job it may be difficult to keep up with your loan payments. An emergency fund could help you stay afloat while you look for another job.

When a borrower misses loan payments, they might incur late fees or other penalties. Additionally, late payments can have a negative impact on the borrower’s credit score. After a series of missed payments, the loan could go into default.

Borrowers with federal student loans can apply for deferment or forbearance to temporarily pause their loan payments while they look for work. Or they can look into income-driven repayment plans, provided their federal student loans are current.

Some private lenders provide forbearance options for financial hardship situations. For example, SoFi’s unemployment protection program allows eligible members to temporarily put loans on hold if they lose their job through no fault of their own.

SoFi members also have access to career services that can assist with their job search. Not all lenders provide options that allow borrowers to pause their payments, so it is worth asking as you review different lenders.

6. Will the Lender Help With Your Career?

One of the best ways to decimate student debt is to increase your earnings and, thus, your student loan repayment power. A lender who helps you get ahead in your career understands this principle.

Lenders know that if you can’t get a job, or you lose your job, you won’t be able to pay back your loans. Ask your lender if they offer any networking or other career services that could help you advance in your career.

7. What Other Perks Come With Your New Loan?

Not all lenders are created equal. As you are reviewing different lenders and refinancing options, review everything the lender has to offer. In some cases, you might find you qualify for similar refinancing options at a few different lenders, but one might offer additional benefits that pushes it ahead of the other options.

A few of the perks of refinancing with SoFi include:

•   Zero hidden fees: There are no application fees, origination fees, or prepayment penalties.

•   Add a cosigner: Many students have limited income and credit history, so adding a cosigner could help improve their application’s chances of being approved.

•   Automatic Payments: Not only can automatic payments help prevent any late or missed payments, enrolling your SoFi loan in autopay could qualify you for an interest rate reduction.

•   Career Services: SoFi offers career services from Korn Ferry, whenever you need them.

8. Is the Application Online?

The last thing you want is to be buried in a mountain of actual paperwork. Look for lenders that offer a short, simple, online form.

9. What’s the Lender’s Reputation?

Make sure to do your due diligence on any potential lender. A quick Google search should provide some online reviews and media coverage of the lender, which can help you understand how legit the company is.

You can also check out their social media pages. Overall engagement levels and conversations within a lender’s social communities may provide additional, valuable insights and help give you a sense of the company’s commitment to things like customer service.

10. Will the Lender Grow With You?

Sure, lenders can refi your student loans, but what about helping you with other financial milestones, such as buying a home and saving for retirement? Look for a lender that sees the big picture—and wants to invest in your long-term success.

Start the Refinancing Process Today

Whether you’re ready to start your application or you’re just beginning to consider refinancing, the SoFi team is here to help. Refinancing your student loans with SoFi could help you spend less money in interest, lower your monthly payments, or even pay off your loan faster.

Keep in mind that refinancing federal student loans with a private lender will eliminate them from federal protections and benefits like deferment, loan forgiveness, and income-driven repayment plans.

SoFi offers flexible terms and low rates to help you save, and the entire application process can be completed easily online. There are no hidden fees, and you’ll have access to a suite of complimentary, member-exclusive resources. SoFi allows you to refinance previously consolidated loans as well. And if you choose to go back to school, you could be able to defer your payments until you graduate.

Interested in refinancing? Learn more about how refinancing with SoFi could impact your student loans. You can get a quote and find out if you pre-qualify in just a few minutes.


Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website
.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Will There Ever Be a Student Loan Bailout?

It’s hard to believe, but it’s been more than a decade since the Great Recession. Remember how it brought multi-billion-dollar financial corporations to their knees and nearly chased the big American automakers right out of Detroit? Both industries got a bailout, to the tune of $627 billion .

So if the giants of capitalism got a pass, will the students paying loans get one? Will there be a student debt bailout for you and your former classmates?

The Impact of Student Loan Debt on Your Future

When you earned your diploma, you also most likely earned your way into a not-so-exclusive club. As many as 44 million borrowers owe $1.5 trillion in student loans in America. For comparison, that’s about $500 billion higher than the outstanding credit card debt in the country.

Since the amount of student debt has tripled over the past two decades , author and financial aid expert Mark Kantrowitz says it qualifies, to him, as a crisis.

“If we look only at students who borrow to attend college, it appears that more than a quarter (27.2%) of them are graduating with excessive debt,” he writes.

Why Wouldn’t a Student Loan Bailout Work?

While it sounds like a good idea in the face of high debt balances and delayed dreams, the reason it probably won’t work is the sheer magnitude of student loan debt owed by Americans. As of this writing, it would cost “more than any proposed infrastructure plan, military expansion, or any other government initiative that is currently being proposed would cost,” says Jordan Rothman, attorney and personal finance columnist.

Rothman is not your normal borrower. He paid off nearly $200,000 in student loans in less than four years and wrote an online diary about his experience.

Additionally, the optics of a bailout, as they say, aren’t necessarily good. For example, students with law degrees may have high debt balances, but also start lucrative careers immediately after graduation. How would it look if the government erased the loans of a lawyer earning $250,000 a year?

Besides the potential issue of fairness, wiping out student loan debts may also have moral side to consider. Former students who successfully paid off their loans may not appreciate seeing millions of current borrowers let off the hook.

And while you can default on a mortgage, or get rid of most credit card debt by filing for bankruptcy, most student loans are owned by the federal government, which is not typically forgiving of debt holders.

Paying Down Your Student Loans

If you happen to work in a qualifying public service field or as a teacher , and you have federal loans, you may be able to qualify for the Public Service Loan Forgiveness (PSLF) program. Unfortunately, the pool of people qualifying for loan forgiveness tends to be relatively small.

In addition to the forgiveness option, qualified federal student loan borrowers may be able to take advantage of reduced or delayed payments or have the government pay the interest on their loans while they attend school.

Another way some borrowers seek to ease student loan debt is through income-driven repayment plans. As the term suggests, the amount you pay is adjusted based on your income, usually 10% of your discretionary income. It’s intended to make your monthly payment more affordable.

And while you may not be a teacher or work in public service, you can find loan forgiveness arrangements if you choose the right career . There are forgiveness programs for doctors, lawyers, veterinarians, and others. To be eligible, you are usually required to work for a specific time before you receive the benefit.

How Refinancing Can Help with Student Loans

When you refinance your student loans, you may qualify for a lower interest rate, which can help you shave off thousands of dollars over the life of your loan. It’s possible to refinance a private, federal, or Graduate PLUS loan, plus there is the option to consolidate several loans into one easier-to-handle payment.

If you decide to refinance, you’ll have a choice between a fixed or variable rate loan, both of which carry their own risks and rewards. Generally, fixed rates stay the same for the life of the loan, so you always know what your monthly payment will be.

Variable-rate loans can fluctuate as the economy roars or slumps. They’re usually tied to a well-known index, so your payment amount may fluctuate over time. The potential benefit, however, is that initially the rate is sometimes lower than the fixed rate.

You may also have term options if you refinance. You can shorten your term length, which can help get you out of debt faster, or extend your term, which could ideally lower your monthly payment.

How to Prepare to Refinance Your Loans

Before you apply for refinancing, you will likely want to take stock of all your student loans. Many student loan borrowers have more than just one. Make sure you understand the interest rate and term for each one, as well as understanding whether it’s a federal or private loan.

If you’re refinancing your federal loans into private loans, you’ll be giving up federal protections such as deferral, forbearance, and income-driven repayment plans. So, for example, if you intend to go back to graduate school, refinancing loans might not be the right option, because you might forfeit the right to defer your federal loans while you’re in school.

If you still wish to refinance, it’s a good idea to first add up all your student loan balances and determine what that total is. Then jot down how many years you have to go on your longest-term loan. Once you’ve shopped around for refinancing rates, you can compare the rate and term of any potential new loan offers to the ones you’re already working with. It’s much easier to then see how much you could save by refinancing.

Given up on the idea of a student loan bailout? Learn more about refinancing your student loans with SoFi.


Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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.
The individuals quoted in this article were not compensated for their participation. Their advice is educational in nature, is not individualized, and is may not be applicable to your unique situation. It is not intended to serve as the primary or sole basis for your financial decisions.
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5 Financial Tips for Med School Grads Starting Residency

Congratulations—it’s finally over. After years of rigorous studying, training, and overall hard work, you’ve managed to graduate from medical school. At this point, you’ve likely made it through Match Day , are ready to start a residency, and are finally on the road to becoming a fully-fledged doctor.

Though the relief of graduation is certainly well deserved, unfortunately medical school isn’t totally behind you yet. If you’re like most medical students, chances are that you finished school with a considerable amount of debt.

Like students in any discipline, the average med school student graduated with a good amount of debt. According to the Association of American Medical Colleges , 84% of medical students in 2019 had education debt of $100,000 or more, with 54% of all students owing $200,000 or more.

And while the average doctor can potentially make quite a bit of money—pediatricians earn an average of $225,000 and orthopedic specialists make $482,000 , for example—the average resident does not.

So, what’s a resident to do? Unfortunately, for some finances may continue to be a challenge in the years immediately after graduating from medical school, so it could be helpful to take steps to lessen the financial anxiety that can accompany such a significant debt load.

The good news is most physicians could be on track to pay off their debt quicker than those in other fields with lower earning potential. But, even once you make the big bucks as a doctor and negotiate a sizable physician signing bonus, you’ll likely look to maintain your financial well-being.

Here, we take a look at some tips that may help you to get the most out of your money post-med school so that you can manage your student loans without unneeded stress.

Making a Post-Med School Budget and Sticking to it

Residency can feel like a time when you’re struggling to make ends meet while working 12-hour shifts on your way to becoming a doctor. But the reality is, the average resident salary in 2019 was $61,200, according to the latest annual Medscape report.

The good news is, depending on where you’re matched, this actually could be above the median salary for the area.

If you find yourself placed in a city with a relatively low cost of living, you could be at an advantage and may be able to better make ends meet as a resident, if you budget appropriately and stick to it.

If you find yourself living in a big, expensive city or somewhere where frugal living is harder to come by, you may find yourself facing some challenges when it comes to budgeting.

Either way, it’s helpful to create a budget that makes sense for your current circumstances. This might not include a fancy car (yet), and unless you’ve already signed a medical contract to stay in the same city after your residency, then it may not include buying a house either—even if you might be tempted by a mortgage loan.

Budgeting doesn’t end once you’re done with residency, either. If you can stick to your resident budget for an extra year or two, you may be able to save up money to pay down more on your student loans and start your medical career with some cash.

After all, the rate at which you are able to become debt-free may largely depend on your budget and lifestyle, not just your income.

Having an Emergency Fund and a Retirement Account

Typically, a good financial wellness rule of thumb is to aim to have a few months’ worth of your income saved up for an emergency fund. And yes, this is even applicable for doctors, who will likely still need the fallback if something happens that ends up being a huge expense.

You may want to keep in mind down the road that after paying for things like student loans, a car, and potential house payments, you might not have as much left over from your paychecks as you think.

Given this, one good idea may be to start stashing away money whenever you can, and putting this emergency money into a separate account from your regular checking account. This way, you can know that it’s there but not be tempted to use it.

Though retirement may seem like a lifetime away—especially after recently finishing up school—i saving for retirement as soon as is practical is a common financial goal. Though your post-practice life likely feels far away, it’s helpful to get into the habit of putting away something regularly. With a solid budget in place, You may be less likely to have to pick between paying down student loans or setting aside for retirement, either: it’s possible to do both.

Depending on what makes the most sense for your situation and goals, you may want to invest your money in a 401(k), 403(b), or a traditional or Roth IRA. It may be helpful to keep in mind that the first rule of retirement savings is to maximize your savings, so if your new employer offers a match, this is something you may want to consider taking advantage of.

Considering an Income-Driven Loan Repayment Plan

You might find yourself feeling tempted to put your medical school student loans (if they’re federal student loans) on hold or into forbearance while you finish residency, but that move could still rack up interest and leave you further in debt.

Instead, you might consider an income-driven repayment plan that establishes monthly payments based on your income and family size.

It may not be as fast as sticking with traditional repayment plans, but if it’s necessary, this method could potentially help you avoid ballooning interest payments while you’re in residency, and typically lowers your monthly payments by lengthening your loan term. (Repayer beware: longer loan terms mean more interest payments, so it’s likely you’ll pay more for your loans overall.)

For med school graduates, there are a few federal income-driven repayment plans you may want to consider: income-based repayment (IBR), income-contingent repayment (ICR), and Pay As You Earn (PAYE).

The eligibility requirements will vary for each type of plan, and you may have to pay more once you sign a medical contract or earn more as a doctor, as income for plans such as PAYE is reviewed on an annual basis. Still, it’s helpful to consider the different options out there and choose what works best for you. And if you choose to practice medicine in underserved communities—as we’ll explain in more detail below—an income-driven repayment plan may be part of that picture.

Checking out Student Loan Forgiveness Programs

Another potential option you may want to look into is going into a public service program. This option allows for a particularly attractive perk for doctors: student loan debt forgiveness.

Public Service Loan Forgiveness (PSLF) is one such program run by the U.S. Department of Education that forgives the remainder of federal loans after participants have met certain eligibility requirements, such as ten years’ worth of on-time, eligible monthly payments and working for a qualifying employer, which typically includes government or certain nonprofit organizations.

The good news is that these programs may tie in nicely with the work you already want to do as a doctor. If you’ve always wanted to go into public service and also find yourself feeling overwhelmed by the prospect of paying off all of your debts, then this may be a great option.

Even if you’re not entirely sure, it may be a good idea to get started with the process now because you will need to ensure your repayment plan is on track in order to qualify later—and that may require one of the income-driven plans mentioned above.

To set yourself up financially for this situation, first you may need to consolidate your federal loans into a Direct Consolidation Loan, but it’s wise to carefully review the PSLF program requirements first. A word of caution: Refinancing with a private lender means you’ll lose federal benefits such as PSLF and income-driven repayment.

And if public service just isn’t your thing, the National Institutes of Health (NIH) and the National Health Service Corps (NHSC) also have med school loan repayment programs for doctors who are interested in doing medical research for a nonprofit organization (through NIH programs) or health care work in a high-need area (via the NHSC program).

Many states also run their own loan forgiveness and repayment programs for doctors, which are worth looking into if you’re interested in this route. Keep in mind, there may be several different options that can help you get your loans forgiven.

Looking into Refinancing Your Student Loans

Dealing with student debt can be one of the most stressful things people experience in their lifetime. After years of hard work, graduating into a world of six-figure debt can sometimes feel anti-climatic, but rest assured that there are options.

Even if the above strategies aren’t a fit for you, there are other ways to move forward. Depending on your exact situation and needs, you may be a good candidate for student loan refinancing, which allows you to consolidate outstanding loans and may reduce your interest rates, as well as your stress levels.

(Keep in mind, again, that refinancing your student loans with a private lender will mean that federal loan benefits, like the ones mentioned above, will no longer be available to you.)

Refinancing your loans at a lower interest rate can be a fairly simple way to save money on your life of loan interest cost. SoFi has a number of student loan refinance options for medical school graduates, with variable or fixed interest rates and no application fees.

Don’t let your loans keep you from financial wellness. Consider refinancing your medical school student loans with SoFi, and see if you can save yourself money in the long run.



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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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