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Mar

2022

Choosing the Right Medical School

By Jacqueline DeMarco | Going to College, Student Loans, student_loan | Comments Off

Medical school is a big commitment. Not only will students spend four years of their life working towards a medical degree, but they’ll pay a big chunk of change for it (financing medical school is a major undertaking and can lead to debt). Which is why choosing the right medical school is so important. Keep reading for insight into how to pick the right medical school and how to finance it.

What Is Medical School?

Medical school is a necessary step towards becoming a doctor and generally, it takes four years to complete in order to receive an M.D., N.D., or D.O. degree. After medical school, graduates will need to pursue a medical residency in their specialty before they can become practicing doctors.

Recommended: How to Pay for Medical School

Different Types of Medical Courses

One of the first steps potential medical students can take to find the right medical school for them, is to better understand the different types of medical courses there are. Once they know what type of medical courses they want to take, they can narrow their search to just medical schools that offer those courses.

Traditional Courses

Some medical students may be attracted to more traditional courses that have students finish two years of pre-clinical work before they move on to the three years of clinical work they need to complete to get their degree. Typically, pre-clinical work occurs in a classroom setting. This is where medical students can learn the key principles of medical science. Once they move on to the clinical work portion of their studies, they will need to work in hospitals or clinics with direct supervision, while attending lectures.

This combination educates students on medical practices while making sure they get the hands-on experience they need to use their pre-clinical knowledge in real life situations.

Integrated Courses

Integrated courses are becoming more and more popular at medical schools, as this style, of course, combines pre-clinical and clinical education. In an integrated course, medical students can expect to learn practical clinical skills and work through problem-based learning.

Often in integrated courses, a lot of the students’ work is self-directed and early patient contact is encouraged.

Intercalated Courses

Intercalated courses are unique, as they allow students to take a year out of medical school to earn a BSc or MSc in a related subject. It’s not a guarantee that every medical school will allow students to do this, but in some schools students have the option or are mandated to do intercalated courses.

How to Choose Your Medical School

Every medical student had to ask themself at one point, which medical school is right for me? Here’s a few factors medical students can take into consideration to make answering that very important question easier.

1. Cost

Med school tuition is pricey and it’s not uncommon for students to take on debt for medical school. On top of tuition, students will also need to pay additional costs such as service fees and textbooks.

While medical schools do offer financial aid such as grants and medical school scholarships to their students, it’s important to prepare for the cost of medical school as not everyone receives financial assistance.

Attending an in-state school could help medical students find a lower tuition cost than at out-of-state or private options. For example, at the University of Utah, tuition for medical school if the student lives in-state is about $40,000 a year, whereas out-of-state students can expect to pay closer to $77,000 a year on tuition at the same school.

Each school charges different tuition rates, but generally, staying in-state can save medical students a lot of money.

Recommended: Average Cost of Medical School

2. Programs Offered

Apart from their general MD program, medical schools typically have multiple programs to choose from that lead to different careers paths. Before applying to medical school, students can take into consideration how many different programs are offered, how many students are accepted to each program, how long their ideal program takes to finish, and how that program aligns with their career goals.

3. Admissions Criteria

One of the easiest ways to start a search for the right medical school is by looking for schools where the applicant meets the admissions criteria. Students can do some research on the admissions criteria for each school to make sure their qualifications lineup, as well as what they need to do to apply to each specific school.

4. Location

Location matters. The location of a medical school can affect how much it costs a student to attend, what their housing situation looks like, and what their lifestyles outside of school is like. By choosing a local school, students may be able to save money on tuition or be able to cut costs by living with a family member. Not to mention, some locations simply have a higher cost of living than others. Students can crunch the numbers on what it would cost them to live at each medical school they want to apply to, so they can get a better idea of what attending medical school will cost them as a whole.

5. Career Path Opportunities

There are a wide variety of career opportunities that can arise after medical school and not all of them involve working as a practicing doctor. Medical school graduates can pursue teaching, research, and business opportunities amongst other exciting career paths. Students can check what career path opportunities a school’s curriculum and counseling center support before they apply to get a feel for if that medical school can help them meet their unique career goals.

SoFi’s Private Student Loans For Medical School

Students that need to take out medical school student loans, may find that SoFi’s private student loans can meet their needs. It only takes minutes to apply online and borrowers can apply with a cosigner. Keep in mind that because private student loans don’t have to offer the same benefits or protections as federal student loans (like the opportunity to apply for Public Service Loan Forgiveness), they are generally considered by students only after they have thoroughly reviewed all other financing options.

Borrowers can repay their SoFi student loans in a way that works for them by choosing a monthly student loan payment and rate that fits their budget. Borrowers never have to worry about fees and can enjoy a six-month grace period after graduation so that they have time to get settled in their post-grad life before they need to start making monthly loan payments.

The Takeaway

Choosing medical schools to apply to is a lot of work, but that research is a key step students need to take to find the best medical school for them.

For help covering the costs of medical school, learn more about SoFi private student loans.

FAQ

Is 30 too old for med school?

No, 30 is not too old to attend medical school. Applicants that apply for medical school will be in their mid-thirties four years later whether or not they pursue a degree. It’s up to them if those four years make a difference in the scheme of things.

What makes a good med school?

A good medical school is one that meets the needs of the student, when it comes to location, finances, and program opportunities.

How do you compare med schools?

Potential medical students can take factors like cost, location, and areas of study into account to compare and contrast their different medical school options.

Photo credit: iStock/Courtney Hale

Mar

2022

What Is a Scholarship & How To Get One

By Josephine Nesbit | Going to College, Student Loans, student_loan | Comments Off

Considering the average published college tuition according to The College Board ranges from $3,800 for a public two-year institution to $38,070 at private nonprofit four-year institutions, college students need all of the financial help that they can get.

One option is to use scholarships, which are a form of financial aid awarded to students to help pay for tuition and other education expenses. Unlike student loans, scholarships don’t need to be repaid.

Below, you’ll find the answers to “what is a scholarship?” as well as where to get a scholarship and the different types of scholarships that may be available to you.

What Is a Scholarship?

A scholarship is a form of financial aid that’s awarded to students to help pay for school. Over the last 10 years, the number of scholarships awarded has increased by 45%, according to the National Scholarship Providers Association (NSPA). Each year, there’s an estimated $46 billion in grants and scholarship money awarded by the U.S. Department of Education, colleges, and universities and an additional $7.4 billion awarded through private scholarships and fellowships.

Scholarships can be delivered in a lump-sum payment or the scholarship award can be broken up into multiple payments that are sent out each semester or school year. Depending on the scholarship, funds can either be sent directly to the student or sent to the school and the student would pay any additional money owed for tuition, fees, room, and board.

Scholarships are awarded based on a number of different criteria, including academic achievement, athletic achievement, community involvement, job experience, the field of study, financial need, and more.

Unlike student loans, scholarships don’t need to be repaid. Scholarships are generally considered gift aid.

What Is a Full-Ride Scholarship?

A full-ride scholarship is an award that covers everything — tuition, books, fees, room, board, and sometimes even living expenses. Full ride scholarships mean no other additional aid is needed to pay for school.

Full-ride scholarships are highly sought after and some may have strict guidelines and requirements.

Different Types of Scholarships for College Students

There are various forms of gift aid that students can use to pay for college. While there are differences between them, they’re similar in the fact that they do not need to be repaid. Here are different types of scholarships for college students.

Federal Grants

Federal grants are need based financial aid from the U.S. government to help students pay for college. The Department of Education offers a variety of grants to students attending four-year colleges or universities, community colleges, and career schools.

Most federal grants are awarded to students based on financial need, the cost of attendance, and enrollment status. Students can start by submitting a Free Application for Federal Student Aid (FAFSA®) form annually to determine eligibility. Once FAFSA is submitted, your school will let you know how much you may receive and when you may receive it.

Here are grant programs provided by the federal government:

• Federal Pell Grants

• Federal Supplemental Educational Opportunity Grants (FSEOG)

• Iraq and Afghanistan Service Grants

• Teacher Education Assistance for College and Higher Education (TEACH) Grants

While grants don’t typically have to be repaid, there are circumstances that may require repayment, such as:

• You withdrew from the program early

• Your enrollment status changed that reduced your eligibility for the grant

• You received outside scholarships or grants that reduced the need for federal student aid

• You received a TEACH Grant but did not meet the requirements for the TEACH Grant service obligation

Recommended: Finding Free Money for College

State Grants and Scholarships

According to the National Association of Student Financial Aid Administrators (NASFAA), almost every state education agency has at least one grant or scholarship available to residents. Eligibility may be restricted to state residents attending an in-state college, but this isn’t always the case. Check what state financial aid programs may be available to you through your state education agency.

Scholarships and Grants From Schools

Institutional aid is awarded to students by the schools they plan to attend. Scholarships and grants from schools may be offered based on need or merit. For example, a student may be awarded a scholarship or grant through the school for strong academic or athletic performance.

It’s also important to read the requirements for scholarships and grants from schools. Some awards may demand that students maintain a minimum GPA throughout the year. Others may only be available for your freshman and sophomore years.

Private Scholarships

Private scholarships are financial aid awarded to students that are funded by foundations, civic groups, companies, religious groups, professional organizations, charities, and individuals. Most private scholarships have specific criteria required to qualify, according to the Massachusetts Educational Financing Authority (MEFA) , and it may take some extra effort to research the availability of private scholarships.

Most private scholarships are only awarded for a single year. Check with the scholarship’s agency to find out if the scholarship is renewable and any criteria you may need to meet.

Main Sources of Scholarships and Grants

The main sources of scholarships and grants are from the four types of scholarships and grants listed above. Here are the major sources of scholarships and grants for college students and the percentage of total grants and/or scholarships that comes from each source:

• Federal grants: 47%

• State grants and scholarships: 8%

• Scholarships and grants from schools: 35%

• Private scholarships: 10%

Reasons to Be Awarded With a Scholarship

Scholarships aren’t only awarded to those with a 4.0 GPA. There are many reasons to be awarded a scholarship and students should consider their skills, areas of interest, and past achievements or awards.

Need-Based

Need-based scholarships are typically awarded to students based on their household income. The school’s financial aid office may also determine how much financial aid the student is able to receive.

Schools subtract your Expected Family Contribution (EFC) from your Cost of Attendance (COA) to determine your financial need and how much need-based aid you can receive. Your COA is the cost to attend the school and your EFC is the number that financial aid staff uses to determine how much financial aid you would receive. Information provided on your FAFSA is used to calculate your EFC.

Academic performance may also be taken into consideration when awarding need-based scholarships.

Academic Scholarships

Academic scholarships, also known as merit scholarships, are awarded to students based on their GPA and SAT/ACT admissions test scores. Award committees may also take other factors into consideration, such as extracurricular activities and leadership qualities.

Athletic Scholarships

Athletic scholarships are awarded to students who show exceptional athletic abilities while also taking academic performance into consideration. The National Collegiate Athletic Association, a nonprofit organization that regulates student-athletes, has provided more than $3.6 billion in athletics scholarships annually to more than 180,000 student-athletes. Athletic scholarships are not available at Division III colleges. Only about 1% to 2% of high school athletes are awarded athletics scholarships to compete in college.

Community Service Scholarships

There are also scholarship opportunities for students who volunteer in their local communities. For example, the Equitable Excellence Scholarship awards students who have made a positive impact on their communities through volunteer service. The scholarship provides renewable awards of $5,000 to students for a total of $20,000 per recipient as well as one-time $2,500 scholarships.

Scholarships for Hobbies and Extracurriculars

Certain hobbies, interests, or extracurricular activities may also provide scholarships. For example, members of Starfleet, the International Star Trek Fan Association, can be awarded scholarships up to $1,000 in the categories including medicine, engineering, performing arts, international studies, business, science, education, writing, law enforcement, and general studies.

Scholarships based on Identity or Heritage

Some scholarship programs offer funds to help support traditionally underrepresented students. Outside of identity, many of these scholarships may require a minimum GPA, a need for financial assistance, leadership potential or participation in community activities.

There are also scholarships for mothers. When dealing with the costs of child care, many single mothers face unique obstacles to getting their college degrees.

Employer or Military Scholarships

Students may also be able to find opportunities through the employer of a family member. Eligibility and award amounts vary by employer. A variety of scholarships are also available to the children and spouses of active duty, reserve, National Guard, or retired members of the U.S. military.

How Can You Spend a Scholarship for Student?

How you can spend a scholarship for students depends on that specific program. Some programs may send the check directly to the college’s financial aid office to apply the funds to your tuition bill. Funds that are sent to the student may be used for education-related expenses deemed necessary by the school, like tuition, books, supplies, and housing.

Make sure to check with the scholarship program for rules regarding how you can spend your award.

How to Get a Scholarship for Student

There are several ways for students to find and apply for scholarships. Students can contact the financial aid office at the school they wish to attend or use other free resources. Some of these include:

• Your high school counselor

• The U.S. Department of Labor’s scholarship search tool

• Federal agencies

• Your state grant agency

• Your library

• Foundations, religious or community organizations, local businesses or civic groups

• Organizations related to your field of interest

• Identity-based organizations

• Your employer or your parents’ employers

Check with each program to see how to apply and the requirements. Make sure you apply by the deadline.

Scholarship Requirements

Scholarship requirements vary by program. However, you may notice some common criteria, such as:

• A GPA minimum

• Age and grade requirements

• College enrollment requirement

• An essay requirement

• Financial requirements

• Location requirement

• Test score requirements

Depending on the program, there may be some requirements related to your major, ethnicity, gender, disability or military service. In some cases, applicants may be required to complete an interview. If you’re applying for scholarships, check with each program to be sure you fully understand the application requirements and eligibility criteria.

Alternative Funding Options for College Students

Outside of scholarships and grants, there are other ways for students to pay for college.

One option is to get a part-time job and send extra income aside to put towards tuition or other school-related expenses. While this will likely not cover everything, it could make your costs more manageable. If you have a 529 college savings plan, you can tap this savings account to pay for qualified education expenses on a tax-free basis.

Students can also turn to the federal government to see if they qualify for federal work-study jobs, federal student loans, aid for military families, aid for international students or certain tax benefits. According to the Department of Education, outstanding federal student aid totals $1.61 trillion, representing 43.4 million students. These are typically awarded based on financial need and students can see what they qualify for by filling out FAFSA each year.

Another option is to use private student loans to pay for college. These are nonfederal loans made by a lender, such as a bank, credit union, state agency, university or other institution. Private student loans can be an option to consider after you’ve exhausted all other forms of aid.

Unlike most federal student loans, private loans require a credit check and the loan’s interest rate will depend on the borrower’s creditworthiness, among other factors. Private student loans are not required to offer the same borrower protections as federal student loans, things like deferment options or income-driven repayment plans.

You can even apply for scholarships and grants to pay off student loans after you’ve already graduated. You may also be able to have your student loans forgiven through state or federal programs.

The Takeaway

Before taking on student loans, scholarships and grants can be used to supplement other forms of financial aid. Before you start applying for scholarships, make sure you read the program’s requirements and turn in the application before the deadline.

If you’ve taken out federal or private student loans, there’s always the option to refinance. By refinancing your student loans, you could potentially qualify for a lower interest rate that could help you pay off the principal faster and/or decrease how much you pay each month. Note that decreasing your monthly payments is often the result of extending your loan term, which can ultimately increase the cost of borrowing over the life of the loan. Refinancing any federal loans will eliminate them from federal protections or programs such as the option to apply for Public Service Loan Forgiveness.

You can refinance the student loan with SoFi. If a competitor offers a lower rate, SoFi will match it and give you $100 after funding the loan.

Check your rate and learn more about SoFi student loan refinancing today.

Photo credit: iStock/fizkes

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

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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

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

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

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Mar

2022

Student Loan Debt by Major

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

There’s no question that furthering your education can be an expensive endeavor. Almost a third of all American students take on some level of debt to go to college, according to the Federal Reserve.

But students in some majors can expect to pay a significantly higher price than others.

If your goal is to study law, medicine, or veterinary medicine, for example, and you plan to get a graduate degree, you could end up owing five or six times more than the average person with a bachelor’s degree.

Whether you choose your major out of passion or for the potential paycheck — or both — only time will tell if you’ll get the outcome you’re hoping for. In the meantime, it can be a good idea to look at how much you might have to borrow to finance the course of study you’re considering.

Recommended: How to Pay for College

Student Loan Debt in America

How much do student loan borrowers in the United States owe after college?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.58 trillion in the fourth quarter of 2021. That’s nearly triple what the Fed says Americans owed in 2006.

Most of that debt is carried by millennials and Gen Xers. At the end of 2021, adults 35 to 49 had more than $622 billion in student loan debt, according to the U.S. Department of Education’s Federal Student Aid office. Younger adults, ages 25 to 34, owed more than $500 billion.

And the United States isn’t the only country with a high amount of student debt. In England, the value of outstanding loans reached £141 billion (approximately $191 billion in U.S. dollars) at the end of March 2021. The government there forecasts the value of outstanding loans will be around £560 billion (approximately $760 billion in U.S. dollars) by the middle of this century.

In Sweden, the Board of Student Finance has been asked to raise interest rates on student loans to help make up for the millions of dollars that are lost each year when borrowers don’t repay what they owe.

Still, while student loan forgiveness and other reforms are often discussed here and abroad, little is happening so far.

Recommended: Average Student Loan Debt: By Career

Average Student Loan Debt

According to Education.org, the average federal student loan debt balance is $37,113. And if you include private loan debt, the average balance may be as high as $40,904.

Of course, the amount you might borrow (or have borrowed) could vary significantly depending on your major and the degree required to pursue your chosen profession.

The average student loan debt for a borrower with a bachelor’s degree, for example, is about $29,000. But if your major moves you on to a graduate degree, the cost can move on as well — to an average of $71,000. And if you’re thinking about a degree in law or medicine, your debt could be in the hundreds of thousands.

According to research from The Brookings Institution published in 2020, while only 25% of borrowers went to graduate school, those students account for about a half of the outstanding education debt in the United States.

That’s partly because graduate students typically spend at least a few more years in school than undergraduates do. And besides their undergraduate and graduate courses, many professionals (doctors, dentists, veterinarians, etc.) also go through a residency or post-doctoral program that adds to the overall cost of their education.

Federal student loan programs also allow graduate students to borrow more money than undergraduates. Though there’s a $31,000 cap on federal loans for undergraduate students who are dependents, graduate students may be eligible to borrow up to the full cost of attendance through the federal Grad Plus program.

Other factors that affect the amount students end up borrowing can include the cost of living in the state or city where the school is located, whether the school is public or private, and whether the student is paying in-state or out-of-state tuition.

Recommended: What is the Average Student Loan Debt?

Student Loan Debt by Major

When you first start thinking about how to choose your college major, it’s likely you base your top choices on the academic subjects you’ve always been good at or things you’re interested in. Maybe you have a passion for a subject you feel destined to pursue.

If you’re a practical person, you also may have considered what career that degree might potentially lead to, and how much you’d earn if it became your profession.

What you may not have thought about — at least not at first — was how much it might cost you to major in one subject vs. another. Or if you might have to get an advanced degree in your major to actually get the job, or paycheck, of your dreams.

Here’s a look at the average student loan debt for some popular degrees:

Law Degree

$165,000 upon graduating

More than 95% take out student loans

Medical Degree

$241,600 upon graduating

76% to 89% take out student loans

Dental School

$304,824 upon graduating

83% take out student loans

Nursing

Associate Degree in Nursing (ADN): $19,928

Bachelor of Science in Nursing (BSN): $23,711

Master of Science in Nursing (MSN): $47,321

More than 70% take out student loans.

Business Administration

$66,300 (average for undergraduate and MBA student debt)

51% of MBA graduates take out loans

Architecture

$40,000

(% who borrow not available)

Veterinary Medicine

$188,853

83% take out student loans

Pharmacy

$173,561

85% take out student loans

Education/Teaching

$55,800

45% take out loans

Communication/Journalism

Bachelor’s degree: $24,233

Master’s degree: $58,586

(% with loans not available)

Student Loan Debt by State

If it seems as though your neighbors are carrying higher or lower amounts of debt than the U.S. average of $37,113, it might have something to do with where you live. If you have a high concentration of residents with medical or law school debt in your city or state, for example, the average student debt loan might be higher than it is in other parts of the country. If the amount of debt carried is lower than average, it could be because your state offers its students more financial aid.

Here’s what the average student loan debt by state looks like in the U.S., according to EducationData.org . (These numbers refer to federal student loan debt only.)

State	Avg. Student Debt	Residents w/ Student Debt
Alabama	$37,348	12.3%
Alaska	$34,431	9.1%
Arizona	$35,431	12.1%
Arkansas	$33,525	12.7%
California	$36,937	9.8%
Colorado	$37,120	13.2%
Connecticut	$35,448	13.4%
Delaware	$37,338	12.4%
District of Columbia	$55,077	16.9%
Florida	$38,481	11.8%
Georgia	$41,843	15%
Hawaii	$36,575	8.3%
Idaho	$33,100	11.7%
Illinois	$38,071	12.5%
Indiana	$33,106	13.2%
Iowa	$30,848	13.4%
Kansas	$33,130	12.8%
Kentucky	$33,023	13.1%
Louisiana	$34,683	13.7%
Maine	$33,352	13.4%
Maryland	$43,219	13.3%
Massachusetts	$34,549	12.5%
Michigan	$36,295	13.9%
Minnesota	$33,822	13.6%
Mississippi	$37,080	14.6%
Missouri	$35,706	13.3%
Montana	$33,953	11.4%
Nebraska	$32,138	12.4%
Nevada	$33,863	10.9%
New Hampshire	$34,353	13.5%
New Jersey	$35,730	12.6%
New Mexico	$34,237	10.6%
New York	$38,107	11.9%
North Carolina	$37,861	12.1%
North Dakota	$29,446	10.9%
Ohio	$34,923	15%
Oklahoma	$31,832	12.1%
Oregon	$37,251	12.7%
Pennsylvania	$35,804	13.7%
Puerto Rico	$27,607	9.9%
Rhode Island	$32,212	12.7%
South Carolina	$38,662	13.9%
South Dakota	$31,858	12.7%
Tennessee	$36,549	12.2%
Texas	$33,123	12.1%
Utah	$32,781	9.2%
Vermont	$38,411	11.7%
Virginia	$39,472	12.3%
Washington	$35,521	10.1%
West Virginia	$32,272	12.4%
Wisconsin	$32,272	12.1%
Wyoming	$30,246	9.2%

Federal vs Private Student Loan Debt

As these student loan debt statistics show, the rising cost of attending college can be a heavy financial burden for many Americans. And because there are limits on how much students can borrow in federal loans each year, many turn to private student loans to help cover their education bills.

The national private student loan balance now exceeds $140 billion, according to EducationData.org, which says 88.5% of that balance is in undergraduate loans and 11.5% is in graduate student loans.

Private student loans are a pretty small piece of the overall outstanding student loan debt in the United States — about 8.4%. But the number of students taking out private loans is growing. Student loan borrowers owe 71% more in private student loan debt than they did a decade ago, the Student Borrower Protection Center reports.

Explore SoFi’s Private Student Loan Options

Since private student loans are not associated with the federal government, repayment terms and benefits can vary from lender to lender. So if you decide to use private student loans to help pay for your education, you may want to take the time to shop for the most competitive interest rates and other loan benefits, and to be clear on what each lender is offering.

Remember: After you graduate, you’ll have to pay back the money you owe — along with all your other bills. And federal loans offer some important protections that you may not get from a private lender, such as the ability to switch to an income-driven plan if you can’t afford your monthly payments or to defer payments if you lose your job. You may want to exhaust all your federal grant and loan options before you consider using a private student loan.

SoFi has a loan to fit the requirements of just about any major you might choose, whether you’re an undergraduate or graduate student, a law school or MBA student, or if your parent is the one doing the borrowing.

Recommended: A Guide to Private Student Loans

The Takeaway

No matter what your major is, these days, there’s a good chance you may have to take on some debt to get the education you need and want.

And the final bill could be substantial: The average federal loan debt balance is $37,113, but if you choose a major that requires a graduate degree, it could be two or three times that amount … or more.

Most student borrowers use federal loans to help pay for their education. But a combination of federal and private loans may be necessary to cover all your costs. If you find you’re in need of extra funds from a private lender, there are plenty of options out there. However, all private student loans are not the same, so it can be helpful to research the best interest rates and repayment terms for your needs.

Learn more about whether a private student loan with SoFi could be the right financial solution for you.

FAQ

How much student loan debt is there in the United States?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.58 trillion in the fourth quarter of 2021.

What is the average U.S. student loan debt per student?

According to Education.org, the average federal student loan debt balance is $37,113. And if you include private loan debt, the average balance may be as high as $40,904.

Who owns most student debt?

The federal government — or, more specifically, the U.S. Department of Education — owns about 92% of all student loan debt in America.

Photo credit: iStock/FabrikaCr

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

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

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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Mar

2022

Student Loan Rehabilitation: What It Is and How It Works

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

Student loan default rehabilitation is a one-time opportunity to clear the default on a federal student loan. It also allows you to regain eligibility for federal student aid after your loans have gone into default.

With student loan rehabilitation, you can work with lenders to create a new payment plan that is theoretically more reasonable and affordable. This can be advantageous if you follow payment deadlines moving forward, but there are some caveats to student loan rehabilitation programs.

What Is Student Loan Rehabilitation?

Student loan rehabilitation is a program that’s offered by the federal government. Borrowers who have a Direct Loan, Federal Family Education Loan (FFEL), or Federal Perkins Loan that is in default, and owned by the Department of Education, may request rehabilitation. Private student loans are not eligible for student loan rehabilitation.

A federal student loan is considered in default when a borrower has missed payments for 270 days. Prior to defaulting on a student loan, the loan may be considered delinquent as soon as you miss a payment. If you fail to make a payment for 90 days, those late payments may be reported to the credit bureaus.

The monthly payment required during the student loan default rehabilitation depends on your income and can be as low as $5 per month. After making the minimum number of voluntary, reasonable, and affordable payments, the defaulted loan is considered rehabilitated.

Recommended: Types of Federal Student Loans

How Student Loan Rehabilitation Works

If you already have a federal loan in default, you can submit a written request for student loan rehabilitation through your loan holder.

A calculation, called the 15% formula, is used to determine your reasonable and affordable monthly payment during the rehabilitation program. First, it determines how much of your Adjusted Gross Income exceeds 150% of the federal poverty guideline, based on your family size and state. Then, your loan holder will calculate 15% of that amount, divided by 12, to arrive at your monthly payment.

If you don’t agree to make voluntary payments at the amount that’s calculated under the 15% formula, you can ask your loan holder to calculate an alternative payment.

To do so, you must submit a “Loan Rehabilitation: Income and Expense Information” form. You’ll need to supply details regarding your monthly income and monthly expenses and certify your family size. This alternative amount might be higher or lower than the payment amount offered under the 15% formula.

Upon agreeing to the payment amount and signing the student loan rehabilitation agreement, you must make nine on-time monthly payments within a consecutive 10-month period. After the ninth payment is completed, your loan holder will contact the credit bureaus to request the removal of the default status on your student loan account.

Pros and Cons of Student Loan Rehabilitation

The student loan rehabilitation program can be beneficial for borrowers whose federal loans are in default. However, there are also a few caveats to consider before requesting student loan rehabilitation.

Pros of Student Loan Rehabilitation

There are a handful of advantages to student loan rehabilitation. Instead of making a lump sum payment to get a defaulted loan in good standing, rehabilitation allows you to make consistent, on-time installment payments at a reasonable amount.

After successfully rehabilitating your loans after nine consecutive payments, the defaulted mark on your loan account is removed from your credit record. This can potentially improve your credit score. Any involuntary payments, such as wage garnishment or Treasury offset, will cease upon successful loan rehabilitation.

Rehabilitating your loans also gives you access to federal aid; for example, if you want to get your master’s or your Ph.D., you’ll once again be eligible to receive loans from the federal government. You’ll also have access to federal benefits, like federal loan deferment and forbearance, and the option to enroll in income-driven repayment plans.

Recommended: Student Loan Deferment vs Forbearance

Cons of Student Loan Rehabilitation

Rehabilitation is a one-time opportunity. If you default again after your loans are rehabilitated, you can’t request a rehabilitation program again.

Another point to note is that involuntary payments, such as those collected by your loan holder through wage garnishment, don’t count toward the nine voluntary payments needed to rehabilitate your loan. This means you might potentially have two separate loan payments occur each month until some rehabilitation payments are made or your loans are fully out of default.

Upon successfully rehabilitating your loan account, the default is removed from your credit report, but the late student loan payments on the account remain on record.

Pros of Student Loan Rehabilitation	Cons of Student Loan Rehabilitation
Can remove default status from your credit report.	Doesn’t remove history of late payments that led to default.
Stops collections efforts on successfully rehabilitated loans.	Only one chance given to rehabilitate student loans.
Rehabilitated loans can be eligible for income-driven repayment plans.	Involuntary payments can continue while your loan(s) is in rehabilitation.
You can regain federal loan benefits and eligibility for student aid.

Student Loan Rehabilitation vs Consolidation

Another way to address a defaulted federal loan is through a Direct Consolidation Loan.

Consolidating defaulted federal student loans, making it easier to keep up with one monthly payment instead of multiple. This means using a Direct Consolidation Loan with a new interest rate — generally the weighted average of your initial interest rates. To undergo a Direct Consolidation loan, you must either:

• Make payments via an income-driven repayment plan or

• Make three consecutive and voluntary on-time payments before initiating a Direct Consolidation Loan.

Although you can rehabilitate most federal loans, regardless of whether your student loans are in collections, there are special conditions and restrictions for Direct Consolidation Loans. For example, you can only consolidate an existing Direct Consolidation Loan that’s in default if you reconsolidate it with another eligible loan.

An important note: Consolidating only applies to your federal loans — you can’t roll private loans into a Direct Consolidation Loan.

Like rehabilitation, consolidating a defaulted loan through a Direct Consolidation Loan provides access to future federal aid, loan forgiveness programs, and federal benefits like deferment, forbearance, and an income-driven repayment plan.

Another notable factor that differentiates student loan rehabilitation vs. student loan consolidation is that the latter doesn’t remove a default from your credit history.

Student Loan Rehabilitation	Student Loan Consolidation
Requires nine voluntary and consecutive, on-time payments.	Requires an income-driven repayment plan, or three voluntary and consecutive, on-time payments before consolidation.
Access to your choice of repayment plans.	Conditions and/or restrictions for defaulted Direct Consolidation Loans, FFEL Consolidation Loans, and PLUS Loans.
Can rehabilitate loans while making involuntary payments.	Can’t consolidate a defaulted loan that’s in collections.
Removes default from credit record.	Doesn’t remove default from credit record.

Can Student Loan Rehabilitation Affect Your Credit?

Loan rehabilitation results in the defaulted loan status taken off of your credit report. Having a default removed from your record can potentially improve your credit score.

The record of late payments that resulted in the defaulted loan, however, will remain on your credit report. Late payments on your record are still considered a derogatory mark that could impact your credit for up to seven years.

What Happens After Student Loan Rehabilitation

After your defaulted loan is rehabilitated, your loan is sold or transferred to a new loan holder or lender. The loan holder will formally send a request to the three credit bureaus to have the default taken off of your credit report. Also, existing collection activity toward the rehabilitated loans will cease (e.g. wage garnishment or Treasury offset).

Once your loans are under a new loan holder, you’ll need to select a repayment plan, otherwise, a standard 10-year plan will apply.

To request a lower monthly payment, you might be able to enroll in an income-driven repayment plan which calculates your monthly payment based on your Adjusted Gross Income and family size.

This type of repayment option extends the term across 20 to 25 years, depending on the plan. In doing so, your monthly payment is limited to a percentage of your discretionary income, but you’ll pay more interest over time.

In addition to being eligible for new federal aid, you’ll again be eligible for federal benefits that were inaccessible when your loan was in default. These benefits include access to student loan forgiveness programs, and deferment and forbearance.

The Takeaway

Student loan rehabilitation might not completely erase all of the missteps you’ve had with regard to your federal loans, but it can be an option to get out of default. Another option for getting a federal student loan out of default is to consider a Direct Consolidation Loan.

Refinancing a defaulted student loan can be challenging, but if your student loans have been rehabilitated, and you’re now in good standing on your loans, student loan refinancing may be an option to consider. Refinancing lets you take out a brand-new loan with a new interest rate and new loan terms. If you qualify, refinancing could allow qualifying borrowers to secure a lower interest rate or lower monthly payments. Note that lower monthly payments are generally the result of extending your loan term, which can cost more in interest over the life of the loan.

While refinancing can help make loan repayment more affordable over the long-term for borrowers who are able to qualify for a more competitive interest rate, it will eliminate any federal loans from borrower protections – such as income-driven repayment plans, so it may not make sense for everyone. If you feel refinancing is an option for you, consider SoFi where there are no hidden fees and the application is completed entirely online.

Check your student loan refinancing rate in 2 minutes.

FAQ

How long does it take to rehabilitate student loans?

It takes several months to complete a student loan rehabilitation program. Direct Loans, Federal Family Education Loan (FFEL), and Federal Perkins Loans require nine, full and on-time payments over 10 consecutive months to rehabilitate.

Can you rehabilitate student loans in collections?

Yes, you can rehabilitate student loans in collections. However, involuntary collection payments, such as those occurring as a result of wage garnishment, may continue while you make voluntary rehabilitation payments.

Is rehabilitation or consolidation of student loans better?

Deciding whether student loan rehabilitation or consolidation is best for you depends on your personal situation and goals.

Student loan rehabilitation takes longer than consolidation but by successfully rehabilitating your loans, you are able to remove the default from your credit history. So, if that is your primary goal, rehabilitation might make more sense. However, if your goal is to simplify repayment for your defaulted loans, and you want to enroll in an income-driven repayment plan as soon as possible, a Direct Consolidation Loan can be an option to consider.

Keep in mind that both student loan rehabilitation and Direct Loan Consolidation are only options for federal student loans.

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

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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

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

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

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.

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Feb

2022

Save for Retirement or Pay Down Student Loans: Where Should You Focus?

By SoFi | Growing Wealth, Student Loans, student_loan | No Comments

Money talks. And student debt proves you’ve made a massive investment in your career. While most people want to pay student loans off as quickly as possible, it can actually be smart to take a little longer to do so and start saving for retirement sooner.

Sure, retirement isn’t a trendy topic at happy hour. But concerns over investing in your future have a way of creeping up on you. In fact, respondents to a nationwide May 2019 survey , indicate that not saving enough for retirement is a major financial regret (27% of people).

The good news? Paying down your student loans while contributing towards your retirement (e.g. cruising the Mediterranean) is not only possible, but also very doable with the right strategy and just a little bit of patience.

Making At Least Minimum Student Loan Payments

When you have outstanding student loans, your first financial obligation is to make the minimum payments. If you don’t, you risk default, which could harm your credit score and, worse, lead to higher monthly payments and higher interest rates.

Automatic payments are a great way to help ensure you never miss a due date. Autopay can also potentially save you money too, as many private and government loan servicers offer an autopay discount.

Taking Advantage of Employer Matching Benefits

When you start a new job, you’re pummeled with decisions regarding insurance, 401(k) plans, and other benefits. Sure you get a big 401(k) information packet, but many people just scan that material or skip it altogether. A tip: don’t do that. You could miss out on a big opportunity—namely employer-matching benefits.

Many 401(k) plans include a match on employee contributions as a percentage of your annual salary. That is free money each year contributed to your retirement account. To get the match, you usually do have to contribute to the plan yourself. Make sure you don’t leave that money on the table.

Making Extra Loan Payments When Possible

If you have leftover income each month that’s not used for living expenses, loan payment minimums, or to supplement your emergency fund, you could pay more toward your student loans to lower the balance.

For example, if you get a tax refund or a bonus at work, you could put it toward an extra student loan payment. It’s money you don’t rely on for your monthly budget, so use it as a tool to get out of debt as fast as possible.

Making extra payments can save you a little bit in interest every month for the entire life of the loan. To get an idea of how much you would save by paying your loans off early, you can use this student loan calculator.

If you focus on paying off your student loans early, you could save money on interest over the life of the loan and then take those savings and put them towards retirement.

Refinancing Your Student Loans

Another option to help speed up your student loan payoff date and put saved money towards retirement is to refinance your student loans. When you refinance, you take out a brand new loan with a private lender at a new rate and new terms. You can usually refinance both private and federal student loans, but keep in mind you’ll lose access to federal benefits (such as deferment, forbearance, and forgiveness) if you refinance federal student loans with a private lender.

Refinancing can be a great idea if you have a stronger financial profile currently than when you took out your original student loans. If you qualify for a lower interest rate on your new refinanced loan, that could help save money over the life of the loan. Those extra savings could then go towards your retirement savings. You can check out this student loan refinancing calculator to see how much you could save by refinancing.

Stepping Up Retirement Savings

If you keep true to your budget, make student loan payments responsibly, and still have income to set aside at the end of each month—then you could funnel those extra dollars into retirement savings.

For most young professionals, a Roth IRA—a retirement account that allows you to set aside after-tax income for tax-free withdrawal in retirement—can be a solid investment option once you are taking advantage of the full 401(k) employer match. Prepare for retirement with an online IRA from SoFi Invest.

While the name is stodgy, the impact on your bank account is anything but. Roth IRA investments are typically preferred for professionals in their 20s, 30s, and 40s due to how they are taxed. All of the money going into your Roth IRA is taxed, so that when you take out your money in the future it will be tax-free. Younger people are generally in a lower tax bracket, so choosing a Roth IRA could make sense compared to a Traditional IRA where you would be taxed for taking your money out later (when you may be at a higher tax bracket). For more information on which IRA account could be right for you, you can check out our IRA calculator.

For a more complex retirement savings system aimed at investors with retirement dates farther into the horizon, consider the following in terms of priority:

– Investing in your employer 401(k) until reaching a full employer match.

– Putting money in a Roth IRA until reaching the annual maximum or income limit. The 2022 limit is $6,000 for individuals under age 50.

– Dropping more into an employer 401(k) up to the annual maximum, which is $20,500 for 2022.

– Depositing additional dollars into a regular investment account through your favorite brokerage or through SoFi Invest®, which also offers IRAs.

Getting on Track Today

Retirement might seem a long way off, but every year counts when your goal is financial comfort. It’s okay to start small, especially while keeping your loan debt in check.

By taking practical and responsible steps today to put your student loans behind you, you could be debt-free in no time, and on track for that dream retirement.

Consider refinancing your student loans with SoFi. You could qualify for a new interest rate and loan terms to potentially free up some money for your retirement savings. Check your rate in 1 minute!

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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.

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

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

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