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When you’re looking for funds to pay for your college education, you’re likely to go after federal funds and all of their benefits first — and, if that isn’t enough, then you’ll seek private loan funding. One option for private funding is a signature student loan.

Keep reading to learn more on what a signature student loan is, how it can be used, pros and cons of signature student loans, and more.

What Are Student Signature Loans?

Student signature loans, also known as “sig student loans,” are private loans that typically don’t require collateral, relying instead on the borrower’s creditworthiness or that of a cosigner. These loans can cover tuition, housing, and other educational costs, offering flexible repayment options.

Understanding the terms and conditions is crucial before choosing a signature student loan.

What Type of Loan Is a Signature Student Loan?

There are two main types of student loans: federal and private student loans. Federal loans require the filling out of a FAFSA to see if a student qualifies for any type of aid from the federal government. They come with certain benefits and protections not offered by private lenders. Private loans, on the other hand, are given by banks, credit unions, and online lenders to help students pay for college. They should be used after all federal aid options have been considered.

A student signature loan is a form of private funding, one where collateral is not needed, making it an unsecured private loan for college expenses.

Recommended: How to Complete the FAFSA Step by Step

Common Uses of a Signature Student Loan

Common uses of a signature student loan include for tuition/attendance, books, and housing. Here’s more about each.

Tuition/Attendance

The average cost of tuition and fees for the 2024-25 school year at a public in-state university was $11,610. Those at private universities paid an average of $43,350 for the same school year. A student may decide to use a sig student loan to cover costs of tuition/attendance that aren’t covered by grants, scholarships, and federal student loans.

Books

The average college student spends $1,212 annually to pay for their books and supplies during college. One single hardback textbook can now cost as much as $400, although the average is between $100 and $150. Students may need to resort to loans to cover the cost of books each semester.

Housing

Although some students continue to live at home during college, many pay for room and board. At a public, four year institution, the average cost for room and board is $12,639 a year. At a private, nonprofit institution, the average cost is $14,406 annually.

Should You Get a Signature Student Loan?

Deciding whether to get a signature student loan will depend on your unique circumstances. As general guidance, students who don’t receive enough funding through grants, scholarships, and federal student loans often look to private funding to make up the difference. Private student loans, sometimes called signature student loans, can help bridge funding gaps, but they may come with higher interest rates than federal loans.

Pros and Cons of Signature Student Loans

Signature student loans come with both advantages and drawbacks. Understanding the pros and cons can help borrowers make informed choices about their education financing.

Pros of Signature Student Loans

Pros of signature student loans include the following:

•   Extra source of funds

•   Variety of repayment terms

•   Flexibility of usage

Extra Source of Funds

Student signature loans can provide a source of funding for college after grants, scholarships, and federal options have been exhausted. Grants and scholarships typically do not have to be repaid. Federal loans and signature student loans do need to be repaid, but payments won’t start until six months after the student graduates or drops below half-time enrollment.

Variety of Repayment Terms

With a private student loan, funds are obtained from a private lender. Some offer better rates and terms than others, with some of them deferring payments while the student is attending college classes. Compare rates and terms to choose which route is best for you.

Flexibility of Usage

In general, a private loan can offer flexibility with how the funds are used. For example, this funding can be used as one of the undergraduate student loan options or one of the graduate student loan options: for tuition, books and supplies, and/or housing expenses.

Cons of Signature Student Loans

Unlike a federal student loan, private lenders of student signature loans don’t rely upon information found in the FAFSA. Instead, a student interested in receiving private funding would fill out an application with the lender and must qualify for the loan.

Qualifying for a Sig Student Loan

Loan terms can vary by lending institution. This includes the interest rates offered, borrowing limits allowed, and the length of the loan. Some require payments while the student is in school, while others will defer payments until the student is out of school. Choose parameters that fit your needs, with the understanding that you’ll need to qualify for the loan program.

Credit Score

Private lenders may require you to have a certain credit score to obtain the loan or to get the best rates and terms. The three main credit bureaus that issue scores are Equifax, Experian, and TransUnion. A private lender will likely have a certain credit bureau that they use to get an applicant’s credit scores, and yours will need to fit within their lending guidelines to get loan approval.

Income

The lender will also want to see proof of a steady income, one that’s sufficient to pay back the loan. If you don’t have enough on your own, adding a cosigner could help you qualify. This can help reassure the private lender that the loan will be appropriately paid back.

Other Ways to Pay for College

Ways to pay for college include:

•   Financial aid

•   Federal loans for students

•   Federal PLUS Loans for parents

•   Work-study jobs

•   Part-time jobs

•   Private student loans

Financial Aid

Student financial aid can be a combination of grants and scholarships, federal student loans, private student loans, and federal work-study programs.

Federal Loans for Students

Federal Direct Loans, also known as Stafford Loans, can be either subsidized or unsubsidized. With subsidized loans, the government covers the interest while the student is in school; with the latter, the interest accrues while the student is in school. In either case, finding out what you qualify for in federal funding can be a logical first step.

Federal PLUS Loans for Parents

Parents can take out a Parent PLUS Loan for an undergraduate with fixed interest rates and flexible repayment methods. These loans do require a credit check and can also be taken out by graduate/professional students. The maximum amount that can be borrowed is the full cost of tuition minus other financial assistance the student receives.

Work-Study Jobs

There is a federal work-study program that allows students with financial need to earn income to pay their education-related expenses. Ideally, the work will be connected to community service and/or the student’s academic study courses. This program is managed by the colleges themselves, so check with yours to see if they participate and if you qualify.

Part-time Jobs

If you don’t qualify for work study, you can still seek part-time employment in the general location of your university. You could work at a restaurant or coffee shop, babysit, or walk dogs. This allows the student to earn income, hopefully on a schedule that is flexible enough to work around college commitments.

Private Student Loans

Private student loans can be a source of funding for college expenses when grants, scholarships, and federal funding options have been exhausted. Keep in mind, though, that private student loans do not offer the same protections and benefits as federal student loans. Private lenders can have different loan programs, so compare carefully before making a decision.

The Takeaway

A signature student loan is a type of unsecured (no collateral) private funding to help with educational expenses. Signature student loans rely on the borrower’s or cosigner’s creditworthiness for approval. In addition to signature student loans, students can rely on grants, scholarships, cash savings, and federal student loans to pay for college.

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

FAQ

Is a signature student loan a good idea?

A signature student loan can be a good idea if you need funding beyond federal aid and have strong credit or a cosigner. However, they often come with higher interest rates and stricter repayment terms, so carefully compare options and consider your ability to repay before committing.

Is it easy to get a signature student loan?

Getting a signature student loan depends on your creditworthiness or having a creditworthy cosigner. It can be easier for those with strong credit and steady income, but students with limited credit history may face challenges. Loan approval criteria vary by lender, so researching options is essential.

When do you have to start paying a sig student loan back?

Repayment for a signature student loan typically begins after graduation or dropping below half-time enrollment, following a grace period of about six months. Some lenders may require immediate payments or offer flexible repayment plans. Always review loan terms carefully to understand when repayment begins.

Photo credit: iStock/FatCamera

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

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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 .

SOISL-Q424-054

If you’re in the U.S. on a H-1B visa, which allows skilled workers from abroad to be temporarily employed by U.S. companies in specialized occupations, you might be considering attending graduate school to further your career while you’re in the country. You might also need student loans to help pay for school, since the average cost of earning a master’s degree is $62,820.

Here’s what you need to know about student loans for H1-B visa holders, including where to get them, the application steps, and potential challenges to navigate, plus other college financing options to consider.

Can H-1B Visa Holders Attend School in the U.S.?

H-1B visa holders are allowed to attend school in the U.S. So if you are an H-1B visa holder and you’ve been wondering, can you study on an H-1B visa while working in the U.S.?, the answer is yes, as long as you maintain your employment and H-1B status while going to school.

Another question that often comes up among visa holders is: Can H-1B holders study part-time? International students with H-1B visas can enroll in degree programs or nondegree programs, such as a post-grad certificate program, on either a part- or full-time basis. This way they can work and go to school.

Can International Students Apply for Student Loans?

Given the high cost of education in the U.S., many individuals, including international students, use student loans to attend college. But obtaining student loans as an H-1B visa holder can be challenging. International students have fewer financing options than American students to pay for college tuition.

Federal student loans are reserved for U.S. citizens and eligible noncitizens, which includes individuals in the following categories:

•   Permanent resident, also known as green card holder

•   Arrival-Departure Record (I-94) Record holder

•   Citizen of the Federal States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau

•   You or a parent has T-1 nonimmigrant status

•   You or a parent are a battered immigrant-qualified alien

If you are ineligible for federal student loans, as many H-1B visa holders are, you can look into scholarships and grants to help pay for college. In addition, you may qualify for other types of financing, including private loans for college.

Private Student Loans

If personal savings, scholarships, and grants aren’t enough to cover the cost of school, H-1B visa holders can apply for private student loans to fill the gap.

Private student loans are offered by banks, online lenders, and credit unions. They can help borrowers cover the cost of attendance at college. Private student loan interest rates may be fixed or variable, and borrowers are charged interest on their loans while they’re in school. H-1B visa holders can shop around for international student loans and compare multiple lenders to find the best rate and terms.

Student loan requirements vary by lender, but borrowers are typically evaluated based on their ability to repay the loan. Lenders consider your financial situation, such as your credit score and income. They may also ask for visa documentation as well as confirmation that you’re enrolled at an accredited school or qualified educational program.

If you get approved for a student loan, keep in mind that you can always choose to refinance student loans in the future, ideally when you might be able to qualify for a lower rate and more favorable terms. With refinancing, you replace your current loans with one new loan that has one monthly payment, which may be easier to manage.

Recommended: Refinancing as an International Student

What to Expect When Applying for an International Student Loan

Preparing in advance and organizing the materials you’ll need can help streamline the application process for an international student loan. Compile proof of income, such as pay stubs or a letter from your employer, as well as visa documentation and your U.S. address. And be sure to add up your anticipated education expenses so you’ll know exactly how much of a loan to apply for.

As mentioned, lenders will consider your credit history in the U.S. when you apply for an international student loan. If your credit history isn’t robust enough, finding a cosigner for the loan could improve your chances of qualifying and securing more favorable loan rates and terms.

How to Get a Student Loan as a H-1B Visa Holder

There are multiple steps in the application process for a student loan. Here are the actions H-1B visa holders need to take.

Gather Documentation

Although the specific process can be different from lender to lender, there are certain documents you will likely need to provide. Make sure to have on hand:

•   Acceptance letter or proof of enrollment from a college or graduate school

•   Anticipated graduation date

•   Loan cosigner name and information if applicable

•   Pay stubs and financial statements

•   Transcripts from any prior higher education

•   Valid passport with an expiration date beyond your anticipated graduation date

•   Visa documentation

Compare Lenders

Loan terms can vary between lenders, so it’s important to compare offers. To do that, prequalify with multiple lenders to help find the best deal. You can typically complete prequalification on a lender’s website.

Once you have several offers, look at the interest rate of each one, since it impacts how much you’ll pay over the life of the loan. Also, note whether it’s a fixed or variable rate.

Fixed interest rates are locked in for the entire loan term, so your monthly loan payment stays the same. Variable rates fluctuate with the market, which can change your monthly loan payments, making variable rate loans riskier and harder to budget for.

As you’re comparing lenders, check to see if there are any loan fees you’ll need to pay and explore what the repayment options are. For example, some private lenders may offer different term lengths to pay off the loan.

Submit an Application

After determining which lender best suits your needs, submit a loan application. Go over the form carefully to make sure you’ve completed it accurately and that you’ve supplied all the necessary information to avoid delays or having your application denied.

Review the Offer and Sign the Loan Agreement

The lender will inform you once they’ve made a decision, which could take up to several weeks. Review the loan agreement to verify that the terms, including the interest rate and repayment plan, are correct.

If the loan terms meet your satisfaction, sign and return the agreement — typically called a promissory note — to the lender.

Possible Challenges for International Students

While international students can secure financing to help pay for college in the U.S., there are challenges involved. These are some of the most common ones.

Limited Credit History in the U.S.

H-1B visa holders may not have had a chance to build up a credit history in the U.S. Lenders might consider them to be high-risk borrowers, which could mean that they get a loan with a higher interest rate or need a cosigner to qualify.

Recommended: 10 Strategies for Building Credit Over Time

Finding a Cosigner

If an international student does need to add a cosigner to qualify for a student loan, they will have to find a person who agrees to take on that obligation.

Since a cosigner is legally required to repay the loan in the event the student can’t, finding someone willing to assume this responsibility can be difficult. A cosigner should be someone with a solid credit history, and they must also be a permanent resident of the U.S.

Time Limits on an H-1B Visa

International students might be considered high-risk borrowers by lenders since their stay in the U.S. is temporary. They can have their H-1B status extended up to a total of six years until they must leave for at least a year before re-entry into the country. Lenders will consider this timeframe when evaluating a student’s loan application.

The Takeaway

A private student loan for H-1B visa holders may be an option to help pay for college or graduate school while working in the U.S. International students often need a cosigner to qualify for student loans, unless they have an established credit history in the country.

Other options international students can explore to help pay for college include applying for scholarships and grants. And if H-1B visa holders do obtain private student loans with terms they consider less than ideal, they can explore refinancing at some point to see if they might qualify for a lower interest rate or more favorable terms.

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

FAQ

Can you get student loans on H-1B?

Yes, it’s possible to get a student loan on a H-1B visa. Although H-1B visa holders are generally not eligible for federal student loans, they can apply for private student loans. But they may need a cosigner to qualify for these loans unless they have a strong credit history in the U.S.

Can H-4 visa holders get student loans?

H-4 visa holders, who are typically spouses and children of H-1B visa holders, are not eligible for federal student loans. However, they might qualify for private student loans. While not all private lenders offer loans to H-4 visa holders, some do. Look for a private lender that works with borrowers with an H-4 status, and be aware that you will likely need a cosigner on the loan.

Can international students get education loans in the USA?

International students aren’t eligible for federal student loans, but they can apply for private student loans from a private lender like a bank, credit union, or online lender. Lenders look for borrowers with a strong credit history in the U.S., so if an international student doesn’t have that kind of credit, they may need to add a cosigner to the loan in order to qualify.

Photo credit: iStock/AzmanL

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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

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, 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.

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOSLR-Q424-027

There are many different college costs to cover — tuition and fees, books and supplies, living expenses and transportation, to name just a few. If you received a scholarship to help pay for school, you might be wondering, can I use scholarship money for anything? In short, it depends on the scholarship terms.

If you were awarded a scholarship, congratulations! But before earmarking those funds for any specific purpose, it’s important to understand the way scholarships work and how to use scholarship money.

How Scholarships Work

Scholarships are a type of financial aid that students can use to pay for tuition and other school-related expenses. A key difference between scholarships vs. loans is that scholarships usually don’t need to be paid back, but student loans need to be repaid with interest.

Depending on the type of scholarship, these awards can be based on academics, financial need, participation in extracurricular activities, or a student’s chosen major, among other things.

There are different application requirements and selection criteria for each scholarship. But in general, students need to submit an essay, letters of recommendation, transcripts, and financial information to apply.

Scholarships often require students to complete the Free Application for Federal Student Aid (FAFSA). It’s a good idea to do that as soon as possible since scholarship deadlines vary.

Scholarships are available from a range of sources, including schools, nonprofit organizations, local government, and private companies. Using a
scholarship database can help narrow your search to find awards that align with your background, studies, and interests.

Recommended: Grants vs Scholarships

Does It Matter What Kind of Scholarship You Have?

The type of scholarship you have may be the key factor in how to use scholarship money.

Many scholarships stipulate the types of costs they cover. A scholarship may be limited to qualified education expenses, such as tuition, books, and supplies required for academic coursework, or it may extend to a broader set of education-related costs, including room and board and living expenses.

Typically, scholarships are paid directly to the school to ensure that financial aid goes toward a student’s education costs. Review a scholarship’s details to verify how the funds will be disbursed and any requirements on how it is spent.

What Can Scholarship Money Be Used For?

Can you use scholarship money for anything? Typically, scholarship money must be used for a student’s education and related expenses, but it depends on the specific scholarship requirements.

Here are some costs that could be covered by scholarship money.

Tuition and Fees

Scholarship funds are usually intended to be used to pay for tuition and fees at a college, graduate school, or trade school. Tuition is often the greatest expense when calculating the cost of attendance for college.

For the 2024-2025 academic year, the average sticker price for tuition and fees was $11,610 for students at public four-year institutions with in-state tuition, according to the College Board. For students at private nonprofit four-year colleges, the average tuition costs is $43,350.

If scholarships plus other federal financial aid you’ve been given don’t cover the total cost of your tuition and fees, private student loans could help cover the gap. These loans are offered by banks, credit unions, and online lenders.

How private student loans work is that their interest rate may be fixed or variable. The rate you get is based on your credit history and other financial factors. Interest on student loans accrues while you’re in school, and you may need to start repaying private loans while you’re in school or within a certain amount of time after graduation.

Keep in mind that it’s possible to refinance private student loans at a later date should you choose to. With student loan refinancing, you replace your current loans with a new loan, ideally one with a lower rate and more favorable terms, which could help lower student loan payments.

Education-Related Expenses

Along with tuition, students typically have to pay for other education-related expenses. Depending on your major and coursework, this could involve books, lab equipment, or other supplies required for classes.

Research

Students may be able to use scholarship money for research activities. For example, there are STEM scholarships specifically intended to help students advance their research in the fields of science, technology, engineering, and mathematics (STEM).

Supplies

Some of the supplies you need for school, such as a laptop, notebooks and pens, and even a backpack may be eligible expenses for scholarship funds.

Books

Books are another expense that could be covered by scholarship money. How much students need to spend on books and supplies varies by school, major, and from semester to semester. On average, students can expect to pay between $930 to $1,500 on books and supplies, according to the Education Data Initiative.

Living Expenses

Whether you live at home, on campus, or in an off-campus apartment, living expenses are another significant cost to plan for. What college students spend monthly on living expenses is around $2,932, according to the College Board.

Not all scholarships cover living expenses, but some of them do consider these expenses to be part of a college student’s cost of attendance.

Housing

You may wonder, can I use scholarship money for rent or student housing? Scholarship funds can often be used for room and board, but there may be limitations on the type of housing that’s covered.

In general, on-campus housing, which is a cost that is verified by schools, is more likely to be an eligible use of scholarship money than off-campus housing.

Bills

Students may have a number of bills to pay, including transportation costs.

Scholarships may help cover some transportation-related expenses, such as campus parking fees, but can you use scholarship money to buy a car — or pay for monthly car loan payments? It’s unlikely your scholarship funds can be used for car payments, unless the scholarship funds are completely unrestricted in their use.

Food

How much students spend on food depends on a number of factors, but the average monthly cost is $673 according to the Education Data Initiative.

Purchasing a school meal plan is a fixed cost that may be covered by scholarship funds. However, spending on groceries and dining at restaurants could be harder to justify as an eligible use of scholarship money.

Should You Save Scholarship Money for Certain Things?

Receiving a scholarship can change your expected family contribution on the FAFSA and impact what financial aid you qualify for. Additionally, students are typically limited to borrowing only up to the cost of attendance at their school if taking out student loans for undergrads. So if you don’t spend scholarship money wisely, you could come up short.

That’s why it’s wise to use a scholarship to cover education-related and eligible living expenses like tuition and fees, room and board, and supplies needed for classes.

Consequences of Misspent Scholarship Money

Using scholarship money inappropriately can have consequences. While scholarship funds aren’t meant to be repaid, it’s possible that an organization providing an award will have stipulations for how money is spent. This means that students could be on the hook for repaying a scholarship if it’s used for personal expenses instead of their education.

Additionally, scholarship money can be taxable if it’s used for living expenses not related to being enrolled in school.

If you have questions about whether an expense is eligible for scholarship money, check with your school’s financial aid office or the organization that issued the award.

The Takeaway

Scholarship funds are typically sent directly to a school to cover a student’s education costs, including tuition and fees, books and supplies, and room and board. Using scholarship money for personal expenses could mean having to pay taxes on the award or even repaying the funds if it violates the scholarship terms.

If, after applying for scholarships and grants and taking out federal loans, you still have a funding gap, you may want to consider private student loans. And remember, you can refinance student loans in the future for a lower interest rate and more favorable loan terms, if you qualify for them, which could help make your payments more manageable.

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

FAQ

Can you cash scholarship money out?

Scholarship money is typically sent directly to your school. If there are leftover scholarship funds, your school might send the unused money to you as a refund check. This money would be subject to taxes, however, and its use may be restricted by the awarding organization.

Could you use scholarship money to buy a car

Buying a car is considered a personal expense, so it’s unlikely that a car purchase would be eligible for scholarship funds.

Are there any restrictions on what scholarship money can be spent on?

Many scholarships include restrictions on how the money can be spent. Some scholarships may limit funds to tuition and fees, while other awards might also cover education-related expenses and room and board. Check with the organization that awarded you a scholarship for specific funding restrictions.

Photo credit: iStock/ADragon

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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Doctors have the potential to earn a good salary after graduating medical school and completing their residency — the average primary care physician in the U.S. earns about $260,000, according to a 2022 report by Medscape. But they also typically end up owing hundreds of thousands dollars in student loan debt.

Getting the education and training required to practice medicine in the U.S. is a long and expensive endeavor. Fortunately, there are forgiveness programs and repayment options that can help. Read on to learn about eight medical school loan forgiveness programs that doctors can use to relieve their student debt burden, plus other methods that could make it easier to manage student loan payments.

Physician Student Loan Forgiveness

According to the Association of American Medical Colleges (AAMC), the average medical school debt in 2024 was more than $200,000. Add the cost of interest, and some doctors can end up paying $400,000 or more over the life of their loans.

If you are dealing with medical school loans, here are some of the student loan forgiveness programs that might help you pay down — or even erase — your debt.

1. Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program was created by the Department of Education to encourage college graduates, including doctors, to consider public service careers.

Doctors who make 120 qualifying student loan payments while working full-time for a qualifying government, nonprofit, or public health employer, may be eligible to have their remaining federal loan balance erased through the PSLF program. The amount that’s forgiven is not subject to federal taxes.

Participants in the PSLF program must meet several requirements. Only Federal Direct Loans are eligible. (Federal Family Education Loans, Parent Plus loans, and Perkins loans must be consolidated to a Direct Consolidation Loan to qualify.) And you must be on a qualifying repayment plan, such as an income-driven repayment plan.

You can get more information about PSLF at the Federal Student Aid website. While you’re there, you can also use the loan simulator to get a personalized projection to help determine if PSLF makes sense for you based on your financial and career goals.

2. National Health Service Corps Loan Repayment Program

The National Health Service Corps Loan Repayment Program (NHSC LRP) offers doctors and other eligible health care providers an opportunity to have their qualifying federal or private student loans repaid while also earning a competitive salary in exchange for serving in communities with limited access to care.

Award amounts may vary based on the health care field you’re in. For instance, primary care providers who make a two-year full-time commitment to working at an NHSC-approved site can erase up to $75,000 in student debt. And those who serve half-time for two years may be able to cancel up to $35,000 in student loans. (If you pass a Spanish-language competency assessment, you may be eligible for an additional amount.) These awards are not subject to income tax.

Find out more about NHSC LRP program requirements to see if you qualify.

3. National Health Service Corps Students to Service Loan Repayment Program

The National Health Service Corps Students to Service Loan Repayment Program (NHSC S2S LRP) offers eligible fourth-year medical students an opportunity to receive up to $120,000 (in $30,000 installments) in tax-free student loan repayment funds to put toward qualifying federal or private student loans.

To enter the program, participants must commit to working full- or half-time at an NHSC-approved site in an underserved area for at least three years. After the initial three-year contract is completed, you may be eligible for a service extension.

Learn more information about NHSC S2S eligibility and how to apply.

4. Military Health Professionals Student Loan Repayment Programs

Several branches of the U.S. military offer medical school loan repayment programs to doctors who serve in the military. Benefits may be used to repay qualifying federal or private student loans. Eligibility requirements and benefit amounts may vary, so contact your service branch (Army, Navy, National Guard, and so on) for details and specific information.

5. Department of Veterans Affairs (VA) Specialty Education Loan Repayment Program

The VA’s loan repayment program is for recent graduates of accredited medical or osteopathic schools who are currently in a residency that’s been identified as experiencing a shortage. Eligible specialties include psychiatry, family practice, internal medicine, emergency medicine, gastroenterology, urology, and geriatric medicine. (Other specialties may be considered on an individual basis.)

The loan repayment amount is $40,000 per year for qualifying federal and private student loans, with a lifetime maximum of $160,000. In exchange, recipients agree to serve in a clinical practice at a VA facility for a minimum of two years.

6. National Institutes of Health Loan Repayment Programs

The National Institutes of Health (NIH) Loan Repayment Programs were established by Congress to recruit and retain highly qualified health professionals in biomedical or biobehavioral research careers.

These NIH programs are for medical professionals in a variety of fields, including pediatric research, health disparities research, and clinical research. Payments may be up to $50,000 annually and can be applied to qualifying federal or private educational debt.

7. Indian Health Service Loan Repayment Program

This program allows Indian Health Service (IHS) clinicians to repay up to $50,000 of their eligible health profession education loans in exchange for a two-year service commitment to practice in health facilities serving American Indian and Alaska Native communities. After their initial commitment is completed, participants can apply to extend their contract annually until their qualified federal or private student loans are repaid.

Interested physicians can applyy online.

8. State Medical Student Loan Forgiveness Programs

A number of states offer student loan repayment options to physicians and other health care professionals. Use the Association of American Medical Colleges’ searchable database to find any med school loan forgiveness and repayment opportunities in your state.

In addition, the National Health Service Corps provides grants to all 50 states and the U.S. territories through its State Loan Repayment Program. These grants allow individual states to offer their own repayment programs with a goal of incentivizing health care providers to work at their facilities. You can find out more about the available programs, eligibility requirements, and practice sites to see if one is near you.

Other Strategies to Repay Medical School Debt

If you aren’t eligible for a medical student loan forgiveness program, or you can’t find one that’s a good fit for your situation, there are other methods for managing loan payments that you may want to consider.

Here are some repayment options to explore.

Income-Driven Repayment (IDR) Plans

With a federal IDR plan, your monthly federal student loan payments are based on your discretionary income and the size of your family. So, for instance, while you’re earning a medical resident’s salary, an IDR plan could make your payments more affordable.

Under an IDR plan, you must recertify your income every year. That means if your income increases as you advance in your career, your payments may go up. However, your monthly payments will never be more than they would be under the federal 10-year Standard Repayment Plan.

You also may qualify for federal loan forgiveness with an IDR plan. If you reach the end of your payment term (which is generally 20 or 25 years), and you still have a balance, the government will forgive the remaining amount due. You won’t owe federal income taxes on the forgiven amount.

Federal Loan Consolidation

With a Federal Direct Consolidation Loan, borrowers who have federal loans from their undergraduate and medical school degrees can combine them into one loan. The interest rate of the consolidation loan is based on the weighted average of your current loan rates, so you may not save any money, but if you choose a longer loan term, you can lower your monthly payments (though you may pay more interest overall). Consolidating your federal loans may also give you access to additional federal repayment options like income-driven repayment.

There are pros and cons to student loan consolidation to consider, depending on your overall payment strategy. Be sure to compare the costs and benefits.

Employer Repayment Programs

Many employers, including health care facilities, offer student loan repayment assistance as a tool for recruiting and retention. If your employer offers an educational assistance program (EAP), you may be able to receive tax-free contributions to help pay the principal and interest on qualified federal and private student loans. You can get up to $5,250 in tax-free EAP benefits each year. (Any assistance provided above that threshold will be taxable as wages.)

Student Loan Refinancing

If you have private student loans, or you have federal loans and you aren’t pursuing federal benefits such as forgiveness, refinancing your student loans with a private loan is another alternative you might want to consider.

Student loan refinancing is offered by private lenders, such as banks, credit unions, and online lenders. The lender pays off your existing student loan balances and gives you a new private loan that ideally has a lower interest rate and more favorable terms. (It’s important to note that refinancing federal loans makes them ineligible for federal forgiveness and other federal benefits.)

If you decide to refinance only some of your loans — such as your private loans — it may make sense for your situation, especially if refinancing student loans could save you money.

A student loan refinancing calculator can help you see what your monthly payments might be.

Recommended: Student Loan Refinancing Guide

The Takeaway

The average doctor typically owes hundreds of thousands of dollars in student loan debt, and paying it off can be a challenge long after they graduate, complete their residency, and begin practicing medicine.

That’s why student loan repayment and forgiveness programs for doctors can be so helpful. Physicians who are willing to work for a nonprofit organization, pursue a career in public service, or commit to practicing in an underserved area may be able to get their student loans forgiven.

For those doctors who don’t qualify for forgiveness, there are repayment options that may reduce or make it easier to manage monthly student loan payments. These include income-driven repayment, federal loan consolidation, and student loan refinancing. Thoroughly researching all the available options can help doctors choose the best method for tackling their student loan debt.

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

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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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