student_loan Archives

Jan

2025

Guide to Student Loans for H-1B Visa Holders

By Kevin Brouillard | Going to College, Student Loans, student_loan | Comments Off

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.

Key Points

• H-1B visa holders can apply for private student loans but not federal ones.

• Challenges include limited U.S. credit history and being seen as high-risk borrowers.

• H-1B visa holders may need to add a cosigner to a student loan in order to qualify.

• The loan application process for H-1B visa holders includes gathering documents, comparing lenders, and submitting a completed application.

• Alternatives to student loans for international students include scholarships and grants.

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.

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.

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

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

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

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

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

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.

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.

SOSLR-Q424-027

Jan

2025

Can You Use Scholarship Money for Anything?

By Kevin Brouillard | Going to College, student_loan | Comments Off

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.

Key Points

• Scholarship funds don’t need to be repaid, but they typically do come with spending restrictions.

• Scholarships are primarily designated for tuition and fees and often also cover room and board.

• Scholarship money may cover textbooks and other educational materials.

• Noncompliance with scholarship spending terms can lead to having to repay the money and possibly owing taxes on it.

• The organization that awarded the scholarship can offer guidance on spending restrictions and eligible expenses.

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.

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

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

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.

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.

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

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

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

SOSLR-Q424-028

Jan

2025

Understanding the Extended Repayment Plan

By Pam O’Brien | Debt Payoff, Student Loans, student_loan | Comments Off

Table of Contents

How Does the Extended Repayment Plan Work?
Eligibility for Extended Repayment Plans
Weighing the Pros and Cons of Extended Repayments
Alternatives to Extended Repayment Plans
The Takeaway
FAQ

Graduating from college is exciting. But for borrowers, graduation also triggers new financial obligations, including paying off student loans.

With the average student loan debt at $39,075, it’s no wonder many people have trouble staying on top of their student loans.

There are currently a number of repayment options for those with federal student loans, including the Standard Repayment Plan, which gives borrowers up to 10 years to pay off their student debt, and the Extended Repayment Plan, which lengthens the repayment term for eligible borrowers up to 25 years.

The Extended Repayment Plan, which is available to borrowers with loans taken out before July 1, 2025, reduces the dollar amount of monthly payments by spreading the cost out over a much longer time period.

For some individuals, these longer-term loans might be a helpful way to balance their loan payments and their other expenses. However, borrowers on the plan will pay substantially more in interest over the life of the loan.

Key Points

• The Extended Repayment Plan lets eligible federal borrowers repay loans over 25 years instead of 10, lowering monthly payments but increasing total interest paid.

• Borrowers must owe more than $30,000 in either Direct Loans or FFEL loans (not combined) to qualify.

• Under the Extended Repayment Plan, a borrower’s monthly payments may be a fixed or graduated amount.

• Pros: lower monthly payments and flexibility for lower-income borrowers, especially early in their careers.

• Cons: repayment period more than doubles, and borrowers pay significantly more interest over the life of the loan compared to the Standard Repayment Plan.

How Does the Extended Repayment Plan Work?

Under the Extended Repayment Plan, eligible borrowers can spread out the repayment of their federal student loans over a 25-year period, compared to the Standard Repayment Plan’s 10 years.

Because student loans are subject to interest, the borrower will also pay more interest on their loan over a longer period of time. So the monthly payments may be lower, but the borrower will end up paying more over the full term of the student loan.

To see what this looks like in action, compare the costs of two repayment plans for paying back a hypothetical, but typical, federal student loan after receiving a four-year degree from a for-profit private college.

Let’s say you borrowed $34,722 four years ago at an average interest rate of 3.9%.

• Under the Standard Repayment Plan, monthly payments would total $350 over a 10-year term, for a total cost of $41,988.

• Under the Extended Repayment Plan, the borrower would only have to repay $181 a month — but over a 25-year term, the total cost would be $54,409.

On the Extended Plan, borrowers can opt to repay their loans with a fixed or graduated amount. If they choose the graduated option, monthly payments start low after the borrower leaves school but then gradually increase every two years over the lifetime of the loan.

Using the above loan example, graduated payments under the Extended Repayment Plan would start at $143 a month in the first two years after graduation and slowly increase to $251 by the end of the loan term. The total amount paid back would add up to $57,026.

Eligibility for Extended Repayment Plans

If the reduced monthly cost of an Extended Repayment Plan sounds appealing, the first step is to assess eligibility. Not all student loans or borrowers qualify for the program.

It’s important to be aware that as a result of the big U.S. domestic policy bill passed in the summer of 2025, the Extended Repayment Plan will be closed to new federal loans made on or after July 1, 2025. Borrowers who take out loans before that time are eligible for the plan as long as they meet the criteria below.

The federal student loans eligible for the Extended Repayment Plan are:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans

• Direct Consolidation Loans

• Subsidized Federal Stafford Loans

• Unsubsidized Federal Stafford Loans

• FFEL PLUS Loans

• FFEL Consolidation Loans

Qualifying loans must have been obtained after October 7, 1998, and the outstanding loan balance must be more than $30,000 in either Direct Loans or FFEL program loans to be eligible.

Eligibility can’t be pooled across loan types, so if, for example, a student has $35,000 in Direct Loans and an additional $10,000 in FFEL program loans, the Direct Loan portion would qualify for the Extended Repayment Plan but the FFEL loan would not.

Weighing the Pros and Cons of Extended Repayments

The Extended Repayment Plan might be appealing to some federal student loan borrowers. After all, who wouldn’t want a lower payment each month?

But it’s not actually that simple. There are benefits and drawbacks to longer student loan repayment terms.

Pros of the Extended Repayment Plan

One benefit of the Extended Repayment Plan is an obvious one — lower monthly payments.

Typical monthly student loan payments, which are generally between $200 and $300 on average, according to the most recent data from the Federal Reserve, can eat up a significant amount of take-home pay for lower earners. The smaller monthly loan payments associated with the Extended Repayment Plan might free up vital funds for other essential expenditures.

This benefit may be even more pronounced for borrowers who choose the graduated monthly payment option on the Extended Repayment Plan. This means borrowers pay the least in the first years after graduating, corresponding with lower entry-level salaries, and more later on when they may be better able to afford it.

Cons of the Extended Repayment Plan

Although monthly payments may be lower, there are some cons to the Extended Repayment Plan.

For starters, the loan term can be more than twice as long as the Standard Repayment Plan, meaning borrowers have to keep making monthly payments for 15 years longer.

Not only does the Extended Repayment Plan mean more years of making student loan payments, those payments will also add up to more money paid over the lifetime of the loan term.

For example, based on the example described above, for a $34,722 student loan at 3.9% annual interest, the borrower would pay an additional $12,421 over the lifetime of the student loan under the 25-year Extended Repayment Plan than they would on the 10-year Standard Repayment Plan.

The option for graduated monthly payments costs even more over the life of the loan. Deferring the bulk of repayment to later in the loan term in order to allow for lower payments earlier on means borrowers carry a higher level of educational debt for a longer period of time.

Alternatives to Extended Repayment Plans

While the monthly savings may make the Extended Repayment Plan sound appealing, for some borrowers the added total cost may outweigh this benefit. But there are alternatives that can help meet various financial needs.

Income-Driven Repayment Plans

Monthly payments for income-driven repayment plans are based on a percentage of the federal student loan borrower’s discretionary income, and the amount increases or decreases as their income and family size changes during the lifetime of the student loan. This helps to ensure that payments remain affordable, even as the borrower’s income changes.

There are now three income-driven repayment plans borrowers can enroll in — Income- Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay As You Earn (PAYE). Current borrowers who plan to apply for the Public Service Loan Forgiveness Program (PSLF) can consider the IBR plan, which may allow them to have the outstanding balance of their loan canceled after 20 years.

However, for borrowers taking out their first loans on or after July 1, 2025, there will be only one income-driven repayment plan available — the Repayment Assistance Program (RAP). On RAP, payments range from 1% to 10% of adjusted gross income for up to 30 years. At that point, any remaining debt will be forgiven. If a borrower’s monthly payment doesn’t cover the interest owed, the interest will be cancelled.

Student Loan Refinancing

Some borrowers may choose to refinance student loans with a new loan from a private lender. Eligible student loan borrowers may qualify for lower interest rates or more favorable terms.

One benefit of student loan refinancing is that it could reduce monthly payments for some borrowers, especially those that qualify for a lower interest rate. If you choose a longer loan term, you could also lower your monthly payments. However, you may pay more interest over the life of the loan if you refinance with an extended term.

Just be aware that refinancing federal student loans means forfeiting benefits and protections that come with those loans — like income-driven repayment and federal forgiveness.

The Takeaway

With the Extended Repayment Plan, eligible borrowers can repay their loans over a period of 25 years, which reduces the amount of their monthly payments. However, because of the long repayment term, they will pay significantly more interest over the life of the loan. Other options borrowers may want to consider include student loan refinancing and income driven repayment plans.

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

Learn more about student loan refinancing with SoFi.

FAQ

How does the Extended Repayment Plan work?

On the Extended Repayment Plan, eligible borrowers can reduce their federal student loan payments by spreading out the repayment over a period of 25 years. However, the longer loan term increases the amount of interest paid over the life of the loan.

What are the cons of the Extended Repayment Plan?

Drawbacks of the Extended Repayment Plan include a loan term that’s more than twice as long as the term of the 10-year Standard Repayment Plan, and also because of the long term, borrowers pay substantially more in interest over the life of the loan.

Is the Extended Repayment Plan going away?

While the Extended Repayment Plan will remain open for loans currently in the plan, it will be closed to new federal loans made on or after July 1, 2025, as a result of the big U.S. domestic policy bill that was passed in the summer of 2025.

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

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

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

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

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Jan

2025

8 Medical School Loan Forgiveness Programs for Doctors

By Kim Franke-Folstad | Going to College, Student Loans, student_loan | Comments Off

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.

Key Points

• There are a number of programs that offer medical school loan forgiveness for doctors, including federal and state initiatives.

• Public Service Loan Forgiveness requires 120 payments and full-time work for a qualifying employer.

• The National Health Service Corps Loan Repayment Program can erase up to $75,000 in medical student debt for a two-year commitment.

• State-based initiatives aim to attract health care professionals to underserved areas with specific eligibility criteria.

• Other options for managing medical school loan debt include income-driven repayment plans, federal loan consolidation, employer repayment programs, and student loan refinancing.

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.

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

Photo credit: iStock/andresr

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.

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.

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Jan

2025

How to Negotiate Student Loan Payoff

By Melissa Brock | Debt Payoff, Student Loans, student_loan | Comments Off

Paying off student loans can feel overwhelming, but with the right strategies, you may be able to negotiate a more manageable solution. Whether you’re struggling with payments or looking to settle your loan for less than the total amount owed, understanding the negotiation process can open up options you didn’t know were available.

Let’s look at how the student loan payoff process works. We’ll explore when negotiation might be a viable option, how to approach lenders, and tips for reaching a favorable agreement.

Key Points

• Before negotiating a student loan payoff, evaluate your income, expenses, and overall financial health to determine how much you can realistically offer toward a student loan payoff.

• Federal and private student loans have different rules for negotiation. Federal loans rarely offer settlements, while private lenders may be more open to negotiating reduced balances.

• For defaulted loans, lenders may accept lump-sum payments or reduced balances to settle the debt, especially if recovery seems uncertain.

• Ensure any negotiated terms are confirmed in writing to protect yourself and avoid misunderstandings regarding the settlement or adjusted repayment plan.

• Another option for a student loan payoff is student loan refinancing, which could lower your interest rate and possibly your monthly payment. Just keep in mind that by refinancing federal loans with a private lender, you’ll lose access to federal benefits and protections.

• While student loan settlement is an option for some borrowers, SoFi does not offer settlement services. Instead, SoFi provides alternatives such as student loan refinancing, deferment, and forbearance.

What Student Loan Settlement Is

While SoFi does not provide student loan settlement services, it’s important to understand how settlement works and when it may be an option for borrowers with other lenders. Student loan settlement refers to an agreement between the borrower and lender where the borrower pays a lump-sum amount that is less than the total balance owed to settle the debt. This option is generally available for borrowers who are in default or facing severe financial hardship.

You’ll go into default after a certain number of days, depending on your loan type (270 days for some federal loans; Perkins loans go into default immediately).

Defaulting on student loans can lead to several negative consequences, including:

• Your entire unpaid loan balance becomes immediately due (called acceleration)

• Tax refunds and federal benefit payments may be withheld to go toward your defaulted loan(s)

• Garnished wages (your employer must withhold a portion of your pay to send to your loan holder)

• No deferment or forbearance options available to you (more on these later)

• Losing eligibility for other federal student loan benefits, including the ability to choose repayment plans

• Losing eligibility for additional federal student aid

• Damaging credit

• Your loan holder taking you to court, which could result in court costs and collection and attorney’s fees

• Withheld official college transcripts

How Student Loan Settlement Works

Settling loans can reduce what you owe and eliminate future repayment obligations. Here’s how it works in a nutshell:

1. You negotiate with your loan servicer or a collections agency and offer to make a lump-sum payment.

2. The loan servicer or collections agency agrees to the terms.

3. You pay an amount lower than what you owe in outstanding loans, collection fees, and interest charges.

4. The servicer or agency marks the debt as settled, and your loan obligation is satisfied.

5. The default status comes off your credit report (but note that the settlement can still affect your credit).

🛈 While SoFi does not offer student loan settlement solutions, we do offer student loan refinancing, which could help you save money on your student loan debt.

How to Be Eligible for Student Loan Settlement

You can only qualify for a student loan payoff if your federal student loans are in default. If you have loans in good standing, you can’t qualify for a settlement request. It’s also important to note that federal student loan settlements are rare, because it’s difficult to get rid of student loans even if you go bankrupt.

You might also be able to negotiate a settlement with private student loans if you’re in default (which usually means you’re 120 days late on payments). Check with your lender for a definition of default on your particular private student loans.

Private student loan lenders cannot pursue the money owed them in the same way that federal loan servicers can, so they may be more likely to settle the loan(s).

Recommended: How to Get Student Loans Out of Default

Steps to Negotiating Student Loan Payoff

Can you negotiate student loan payoff? In other words, can you settle student loans?

Absolutely! Read on to learn the steps on how to settle student loan debt.

Step 1: Gather Your Documents

You must show that you can’t repay your student loans, which may include gathering the following:

• Health records, such as your mental or physical illness diagnosis that makes it difficult for you to hold a job

• Pay information, such as pay stubs, W-2 forms, and tax returns

• Financial records, including information about a potential inheritance that could help pay your debts

• Credit reports

Step 2: Contact the Agency and Negotiate Settlement Terms

Your loans typically go into collections after you go into default. You can call or email the collections agency, lender, or loan servicer and tell them you want to settle the debt by paying a portion of the total amount you owe. Describe the challenges you’re facing, such as financial challenges or medical problems.

Federal student loans often offer four settlement options:

• Principal and interest: You only pay the outstanding principal and interest.

• Principal and 50% interest: You pay the outstanding principal and 50% of interest, with collection costs waived.

• 90% principal and interest: You pay 90% of the outstanding principal and interest charges, with collection costs waived.

• Discretionary compromise: You pay less than what you would owe under the other three standard options.

You may be able to settle private student loans for 40% to 70% of the amount you owe. Check with your lender or collection agency for more information.

Step 3: Review and Make Your Payment

You’ll receive a letter about your settlement terms. The letter will outline the amount you have to pay and the deadline. After you receive the letter, make your lump sum payment.

Note that if you don’t pay by the deadline, the agreement will be canceled and you’ll owe the total outstanding amount, interest, and fees. Keep track of all paperwork involved in the settlement.

Alternatives to Student Loan Settlement

Instead of opting for a loan settlement, consider repaying your loans in full. Repaying them in full may prevent you from having to go through loan repayment that could drag on for years. If you can’t repay them in full, consider deferment or forbearance, income-driven repayment plans, or student loan refinancing, which we’ll outline below.

Deferment or Forbearance

A student loan deferment or forbearance might be a good alternative to settlement. Here’s the definition of each:

• Loan deferment: You temporarily stop making payments.

• Loan forbearance: You stop making payments or reduce your monthly payments for up to 12 months.

It’s important to note that both are temporary situations and that you can accrue interest while your loan is in either forbearance or deferment.

Income-Driven Repayment Plan

An income-driven repayment (IDR) plan bases your monthly payments on your income and family size.

There is currently one income-driven repayment plan open to everyone: Income-Based Repayment (IBR). With this plan, borrowers typically pay 10-15% of their discretionary income, with payments adjusted annually. IBR plans offer loan forgiveness after 20-25 years of qualifying payments, depending on when the loans were issued. It’s a helpful option for those with high student loan debt compared to their income, ensuring payments remain affordable.

Note that there are two other income-driven repayment plans available — Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). However, you must currently be enrolled in the Saving on a Valuable Education (SAVE) plan in order to apply.

Student Loan Refinancing

You may also consider refinancing your student loans instead of negotiating student loan debt. Student loan refinancing means a private lender pays off your existing federal or private student loan(s). A private lender might be a bank, online lender, or another type of financial institution. It’s worth shopping around for a private lender that offers a better:

• Term

• Interest rate

• Monthly payment

Refinancing does have some downsides. You’ll lose access to federal repayment plans (such as the standard, graduated, and extended repayment plans, and income-driven plans) and Public Service Loan Forgiveness, and you’re no longer eligible for federal repayment protections or grace periods (where student loan payments haven’t yet started).

Also, it may not be possible to refinance student loans that are already in default. However, borrowers can rehabilitate or consolidate defaulted federal loans to regain eligibility for refinancing. Private loans in default may require negotiation with the lender before refinancing becomes an option.

The Takeaway

While negotiating a student loan payoff is possible, it is often challenging to get approved. SoFi does not offer settlement options, but we provide alternatives like refinancing, deferment, and forbearance to help manage your student loan debt. It’s important to consider all your options.

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

FAQs

What are the benefits of student loan settlement?

The biggest benefit of student loan settlement is that you pay an amount lower than what you owe in loans, fees, and interest charges. Once you follow the settlement terms, your loan is settled and your obligation to pay the loan “goes away.” The default also gets removed from your credit report.

What are the downsides of student loan settlement?

The largest downside of student loan settlement is simply that they don’t happen that often. Federal loans are extremely difficult to discharge, even in bankruptcy. Student loan settlement can harm your credit score, as settled debts are reported as less than fully paid. Additionally, forgiven amounts may be considered taxable income, increasing your tax liability.

Will settling student loans hurt your credit score?

Yes, settling student loans can hurt your credit score. When a loan is settled for less than the full amount, it’s reported as “settled” rather than “paid in full,” indicating you didn’t meet your original repayment terms. This can negatively impact your credit history and future borrowing potential.

Photo credit: iStock/Jacob Wackerhausen

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 .

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