Dec
02
2020

8 Tips on Writing a Thesis Statement

By | Student Loans, student_loan | Comments Off on 8 Tips on Writing a Thesis Statement

Writing a good thesis statement can be extremely difficult, but it usually signals the end of a long road. Most theses are turned in at the end of undergraduate or graduate school.

It’s an accomplishment to celebrate, and for students who are just beginning to write theirs, this article could help make the thesis process a little less stressful.

Undergraduate Thesis

Some undergraduate programs do not require students to do a thesis. Other programs may require an undergraduate thesis to be completed as part of an Honors program, and other schools may offer the thesis as a voluntary option for students.

Doing a thesis gives students the opportunity to delve deeper into a topic they’re interested in and gain research and writing skills that may assist them later in life.

Students who are considering doing a thesis during undergrad should be aware of the time commitment. An undergraduate thesis is usually 40 to 60 pages long and takes about a year to complete. Typically, this is done during a student’s senior year.

Another difference between an undergraduate and graduate thesis is that an undergraduate thesis isn’t expected to reach the same level of originality as a graduate thesis is.

An undergrad thesis is less about presenting new ideas, and more about displaying critical thinking skills and an ability to conduct thorough research, bringing together ideas from many sources.

The requirements for completing an undergraduate thesis may vary depending on the school and program that a student is enrolled in.

Completing a thesis during undergrad can potentially be helpful for students who are interested in going to graduate school.

Successfully completing a thesis can highlight a student’s ability to tackle a large research project and potentially even illustrate how committed the student is to attending graduate school.

Graduate Thesis

The terminology of post-graduate work can be confusing, with both thesis and dissertations being used for different programs. Generally, in the U.S., we refer to a thesis for the project completed at the end of a Master’s program, and a dissertation is the completion of a Ph.D. program.

Not every Master’s program requires a thesis to graduate, some students may not want to focus on research, and instead they may have the opportunity to do some real-world work during their Master’s program.

For students who choose to do a thesis, this will be an intensive research project that focuses on a specific topic. A Master’s thesis typically ranges from 60 to 100 pages in length, and requires the student to research both primary and secondary sources to support their argument.

All this work may seem like a heavy burden for a student to complete on their own, but they’ll usually have an advisor to assist them throughout the entire process.

Each school and individual program may have different thesis requirements, so students who are just getting started may consider reviewing requirements with a program administrator or their thesis advisor.

Tips on Writing a Thesis

Whether the thesis is for undergrad or a Master’s program, there are some general tips that can be followed that might help make this monumental task a bit easier.

1. Understanding the Why

Writing a thesis, whether for undergrad or graduate school, is a big undertaking.

It can help students to cope better with the amount of work when they understand why they’re doing it, what the purpose of the thesis is. This is different from selecting the topic, this is about how the thesis will benefit them in the long-run.

Writing a thesis can help show that the student has developed professional research and writing skills as well as a refined knowledge of their topic of study. These skills will stay with students for life and may be of use in their career.

Should the student choose to pursue a doctoral program, these skills will almost certainly come in handy as they work on their dissertation.

2. Researching How to Write a Thesis

Research both how to research and how to write before getting started on the thesis itself.
Students may want to consider reading up on how to write a thesis even before they start the program, some recommendations suggest exploring this topic about six to 12 months before starting the actual thesis research.

Getting your bearings on the process could help make it feel a little less overwhelming. Students may want to checkin in with their thesis advisor when looking for resources as they may have helpful recommendations for sources or suggest reading that is specific to your field of study.

3. Choosing a Topic Carefully

This step can be stressful for students. A thesis topic has to be specific, but not so much so that students can’t find any research on it to support their argument. If their topic is too broad, it won’t be original enough.

Students can get help from their advisors and look into the most recent research that’s being done on their potential topic to help them narrow down exactly what they’d like to work on.

4. Reading Often

Another tip for writing a successful thesis is to read often. Reading often can help students cultivate ideas and develop more creative thinking. Even if the topics aren’t always within the students core area of research, they can still contribute to helping the student branch out and come up with a creative thesis topic.

5. Creating Citations Over Time

Writing a thesis means using primary and secondary sources to support an argument. Students will need to cite their sources and include a bibliography or works cited with their thesis.

It could save students a headache if they build their citations over time, taking notes and organizing their sources as they go instead of doing this all at the end.

Also make note of the format required for your citations, depending on the field of study students may be required to use American Psychological Associate (APA), Modern Language Associate (MLA) or Chicago, which has two styles; notes and bibliography or author-date.

There are digital services available to students that can help streamlining the citation process. Check in with your advisor to see if they have any insight to share. Some citation managers to consider might be EndNote, Mendeley, or Zotero.

6. Building a Relationship with Your Advisor

Students can benefit from building a strong relationship with their thesis advisor. The advisor will generally be overseeing the process, answering questions, and giving feedback and constructive criticism to the student.

It may be more comfortable receiving this feedback if students have developed a positive relationship with their advisor.

7. Writing and Rewriting

Writing a little bit every day can help turn this big project into more manageable pieces. Students should get in the habit of writing every day, and also rewriting and editing their work regularly.

Making improvements constantly will be easier than having to make improvements to the whole thesis at the end.

It may also be helpful to create an outline for the thesis, consider including the topics of interest and organizing them into sections. This could be a helpful tool to help you stay on task with writing and researching.

8. Staying Healthy, Mentally and Physically

Coping with the stress of writing a Master’s or undergraduate thesis can be difficult, but if physical and mental health are neglected for the sake of getting work done, the work will suffer in the long run.

While students can be hyper-focused on their thesis work, it is helpful to also prioritize their physical and mental health by getting adequate sleep, staying active, and eating well.

If the stress becomes unmanageable, students may consider seeing a counselor. Some universities offer health services and counseling on-site.

Refinancing Student Loans

For undergraduates who are completing their thesis, or graduate student’s who are beginning theirs, they may have more in common than just a heavy workload.

Both students may have taken out student loans, and maybe they’ve already begun the process of trying to pay them off.

After college, students often turn their sights to be looking for work—hoping to make enough money to make their loan payments. But aside from trying to snag a well-paying job, students who are eligible may want to consider refinancing their student loans as a strategy to streamline their loan repayment.

Refinancing a student loan means paying it off with another loan, ideally the new loan has a lower interest rate or better repayment terms.

The benefits of refinancing private student loans will depend on a variety of factors, like interest rates and income.

It’s usually not recommended to refinance federal student loans because these come with benefits like income-driven repayments and loan forgiveness, that won’t be available if they’re refinanced by a private lender.

SoFi can’t write that thesis for you, but we can help you learn more about your finances. Learn more about student loan refinancing with SoFi.


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

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

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

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

SoFi 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.

SOSL20039

Read more
Nov
27
2020

What Is LIBOR?

By | Debt Payoff, Home Ownership, invest, Investing, money, Student Loans, student_loan | Comments Off on What Is LIBOR?

This month’s to-do list may include submitting a student loan application for a child starting college next year, shopping for a used car now that the old one is making that sputtering sound again, paying a mortgage bill, and paying a credit card statement balance. (Plus a little extra because there weren’t enough funds last month to pay off the statement balance.)

These are fairly run-of-the-mill chores for any adult’s to-do list. But there’s something out there that affects each of those four tasks. It’s called the LIBOR.

Every item on that list—a student loan, car loan, mortgage payment, and credit card bill—comes with an interest rate. The London Interbank Offered Rate, or LIBOR, affects interest rates across the globe.

Chances are, the LIBOR rate has affected almost every American today, either directly or indirectly. So, what is this LIBOR rate that is affecting everyone’s finances?

LIBOR is the interest rate that serves as a reference point for major international banks. Just as average joes might take out loans that carry interest rates, banks loan each other money at an interest rate. This rate is the LIBOR.

The LIBOR rate is recalculated every day and published by the Intercontinental Exchange, aka ICE, an American financial market company.

The LIBOR rate should not be confused with the US prime rate. The LIBOR rate is floating, meaning it changes every day. The US prime rate is another benchmark interest rate, but it stays fixed for an extended period of time.

The LIBOR is an international rate, so it’s based on five currencies: the American dollar, British pound, European Union euro, Swiss franc, and Japanese yen.

It also serves seven maturities, or lengths of time: overnight (also referred to as “spot next”), one week, one month, two months, three months, six months, and one year.

The combination of five currencies and seven maturities results in 35 separate LIBOR rates each day. Borrowers might hear about the one-week Japanese yen rate or six-month British pound rate, for example.

The most common LIBOR rate is the three-month U.S. dollar rate. When people talk about the current LIBOR rate, they’re most likely referring to the three-month U.S. dollar LIBOR.

Every day, ICE polls a group of prominent international banks. The banks tell ICE the rate at which they would charge fellow banks for short-term loans, which are loans that will be paid back within one year.

ICE takes the banks’ highest and lowest interest rates out of the equation then finds the mean of the numbers that are left. This method is known as the “trimmed mean approach,” or “trimmed average approach,” because ICE trims off the highest and lowest rates.

The resulting trimmed mean is the LIBOR rate. After calculating the LIBOR, ICE publishes the rate every London business day at 11:55 a.m. London time, or 6:55 a.m. in New York.

How LIBOR Is Calculated

So far, we know that a group of international banks submits interest rates to ICE, and ICE calculates the trimmed mean to find the LIBOR rate. But there’s more to it than that. Which banks are involved, and how do the banks decide what rates to submit?

ICE selects a panel of 11 to 16 banks from the countries of each of its five currencies: The United Kingdom, United States, European Union, Switzerland, and Japan. This group of banks is redetermined every year, so banks may come and go from the panel.

The chosen banks must have a significant impact on the London market to be selected. (The L in LIBOR does stand for London, after all.) Some of the current US banks are HSBC, Bank of America, and UBS, just to name a few.

The banks have a pretty complex way of determining their rates called the “Waterfall Methodology.” There are three levels to the waterfall. In a perfect world, every bank from the panel would be able to provide sufficient information in Level 1, and that would be that. But if a bank can’t provide adequate rates for Level 1, it moves on to Level 2; if it doesn’t have submissions for Level 2, it moves on to Level 3.

•   Level 1: Transaction-based. A bank determines rates by looking at eligible transactions that have taken place close to 11 a.m. London time.

•   Level 2: Transaction-derived. If a bank doesn’t have rates based on actual transactions, they provide information that’s been derived from reliable data, such as previous eligible transactions.

•   Level 3: Expert judgment. A bank only gets to Level 3 if it can’t come up with transaction-based or transaction-derived rates. In this case, its bankers submit the rates they believe the bank could afford to charge other banks by 11 a.m. London time.

Seems complicated, doesn’t it? And bankers from every bank on the panel go through the Waterfall Methodology every business day.

After the ICE Benchmark Administration (IBA) receives all the banks’ rates, they cut the lowest and highest numbers and use the remaining data to find the “trimmed mean,” and—tada!—that’s the LIBOR for the day.

Why LIBOR Matters

Wondering why people should care about LIBOR? If they don’t work at a bank, who cares? Well, LIBOR actually affects almost every person who borrows money. Many lines of credit, including credit cards, mortgages, auto loans, student loans, and more, are tied to LIBOR.

All federal student loans come with fixed interest rates. Once the government sets interest rates, that rate remains fixed regardless of what happens with LIBOR because it’s based on the 10-year Treasury note instead.

When it comes to things like private student loans and mortgages, however, Americans can choose between fixed-rate loans and variable-rate loans. With variable-rate loans, the borrower’s rate may increase or decrease along with the LIBOR rate.

That may seem like a scary way to determine rates. What if the LIBOR rate increases to, say, 10%? Many lenders place a rate cap on loans so variable-rate loans can’t become expensive to the point that many borrowers may feel they have no choice but to default on their loans.

So while the LIBOR does affect many variable-rate loans, borrowers shouldn’t worry about rates spiraling out of control.

When the LIBOR rate is low, it could be a good time for consumers to take some steps toward achieving financial goals.

They might consider consolidating or refinancing their loans, or even taking out a personal loan. If their income is steady and credit score is good, a low LIBOR rate could help them land a competitive interest rate.

Someone with no debt or a fixed-rate loan might think, “Phew! It looks like the LIBOR doesn’t affect me.” Actually, LIBOR affects everyone. When the LIBOR rate continues to increase, borrowing can become so expensive that many Americans can’t afford to borrow money anymore.

When people stop taking out loans or using their credit cards, the economy slows down and the unemployment rate could rise as a result. After a while, this could lead to a recession.

Remember the financial crisis of 2008? LIBOR played a big part in that tumultuous time for America.

Subprime mortgages started defaulting, and the Federal Reserve had to bail out insurance companies and banks that didn’t have enough cash. Banks were afraid to lend to each other, so the LIBOR rate surged and investors panicked, leading the Dow to drop by 14%.

And think about what is currently going on in the economy right now. Because of the coronavirus pandemic unemployment rates have skyrocketed and interest rates have dropped dramatically.

But, interest rates will no longer be tied to LIBOR in the near future. 2021 has been set as a deadline for financial firms to move away from using LIBOR. Financial firms are looking to tie to other rates, such as the Secured Overnight Financing Rate (SOFR), instead.

The History of LIBOR

How LIBOR Began

Why does LIBOR exist in the first place? Well, in the 1960s and 1970s, demand for interest rate-based goods such as derivatives started to increase.

The British Bankers’ Association (BBA) represented London’s financial services industry at the time, and the association decided there should be a consistent way to determine rates as demand grew. This led to the creation of the BBA LIBOR in 1986.

The BBA doesn’t control LIBOR anymore. In fact, the BBA doesn’t even exist. The association merged with UK Finance a few years ago. After some struggles and scandals took place on the BBA’s watch, ICE took over LIBOR in 2014. The BBA LIBOR is now the ICE LIBOR.

LIBOR Scandals

Bankers in ICE’s group of banks have been found guilty of reporting falsely low LIBOR rates. In some cases, these lies benefited traders who held securities tied to the LIBOR rate.

In other instances, the banks raked in the dough by keeping LIBOR rates low. People tend to borrow more money from banks when rates are low, so by deceiving the public, banks conducted more business.

In 2012, a judge found Barclays Bank to be guilty of reporting false LIBOR rates from 2005 to 2009, and the CEO, Bob Diamond, stepped down. Diamond claimed other bankers did the exact same thing, and a London court found three more bankers guilty of reporting false LIBOR rates.

After the 2008 financial crisis and 2012 scandal, it became clear that there were some flaws in how LIBOR was determined.

The Financial Conduct Authority of the United Kingdom started overseeing LIBOR, and in 2014, the ICE Benchmark Administration (IBA) took over LIBOR and started changing how things were done.

How LIBOR Is Changing

LIBOR has gone through a lot of changes since 1986. In 1998, the bankers were told to change the question they asked themselves each morning before reporting their rates. Bankers used to base rates on the question, “At what rate do you think interbank term deposits will be offered by one prime bank to another prime bank for a reasonable market size today at 11 a.m.?”

Now they should ask themselves, “At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11 a.m.?” The questions may seem similar, but the change in wording showed that the BBA was trying to keep them honest.

In 2017, the IBA held a three-month test period of LIBOR standards in an attempt to limit further scandal.

LIBOR has changed currencies over the years. There used to be more than the remaining five currencies and more than the seven maturities, but some were added and removed after the financial crisis of 2008.

But despite all the attempts at improvements over the years, CEO of the FCA Andrew Bailey has announced that he hopes to stop using LIBOR by the end of 2021.

Some say LIBOR is becoming less reliable as banks make fewer transactions that depend on its rate. The Federal Reserve is proposing American banks use alternative benchmark rates, one option being an index called the Secured Overnight Financing Rate (SOFR) .

Competitive Interest Rates With SoFi

It’s difficult to know what will happen with the LIBOR rate next week, next month, or even at the end of 2021. But one thing’s for sure: benchmark rates continue to affect the US economy and consumers’ loan interest rates.

When members apply for a loan through SoFi, borrowers can choose between variable rates (which would be more directly affected by fluctuations in benchmark rates) or fixed rates on a variety of loan products.

SoFi offers variable-rate or fixed-rate mortgage, variable rate or fixed rate private student loans, or fixed rate personal loans. They may also be able to refinance their student loans or mortgages for more competitive rates if they qualify.

SoFi members can receive other discounts when they borrow through SoFi. For example, when student loan borrowers set up automatic payments, they are eligible to receive a reduction on their interest rate.

Whatever happens with LIBOR, SoFi members can benefit from perks like unemployment protection, exclusive member events, and member discounts.

Searching for a loan with competitive rates? SoFi offers home loans, student loans, and personal loans, as well as refinancing.


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 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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

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.

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. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

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.

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.

SOAP20001

Read more
Nov
13
2020
student on laptop

4 Tips for Repaying Federal Student Loans

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | Comments Off on 4 Tips for Repaying Federal Student Loans
Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Even though common sense might suggest that repaying any loan should be straightforward—that all you have to do is send money until you don’t owe any more—there is actually a fair amount of strategy involved. When it comes to repaying federal student loans, there are many ways to think about taking them on.

Having a game plan for eradicating student loan debt is a good idea: In the United States alone, 45 million borrowers hold more than $1.6 trillion in student loan debt, and payments to tackle that mountain of debt have been slowing, on the whole. Those numbers and that trend underline the necessity that a borrower knows how to shoulder debt while reducing it.

So here’s a guide that offers tips for repaying federal student loans. Are you the calculating sort? Our student loan payoff calculator is a good tool for getting an idea of your loan payoff date. (The Education Department also has a calculator if you want to play around with your numbers.)

As outlined in the CARES Act, and extended by executive order, both the suspension of loan payments and the 0% interest rate on loans held by the Department of Education are set to expire after Aug. 31, 2022.

Repaying Federal Student Loans

1. Taking Advantage of the Grace Period

An important factor to determine your strategy to pay off a federal student loan is when you are expected to make your first loan payment. This deadline can dictate the rest of your actions. According to the Federal Student Aid office , for most student loans, there is a set period of time after a student graduates, leaves school, or drops below half-time enrollment before payments begin.

This grace period could be six to nine months, depending on the program a student received a loan through. As the date of the first payment draws closer, the loan servicer should let the borrower know when the first payment will be due—but it helps to think of how to take advantage of the grace period in advance.

While it might be tempting to view the grace period as a time when you can sink your extra money into other things you want or need, it’s probably smarter to save up for when those payments will start coming due.

If you have a subsidized federal student loan, your loan will not accrue interest while you’re in school or during the grace period, so it helps make paying it off in the longer run less burdensome.

If you have an unsubsidized federal student loan, interest has been accruing since the loan was disbursed, so you could consider taking the time when you do not have to make principal payments to pay down some of the interest that accrued.

For more information on ways to pay off student loans, this link includes tips for budgeting during a grace period and others you can mull over in that time. Interest has a way of sneaking up on borrowers because they might have in mind only the principal amount when thinking about monthly payments.

Also be aware that some federal student loan programs can have an up-front interest rate reduction, which requires making a number of monthly payments on time to prevent the rate from increasing.

So, just as studying is important to one’s academic life, studying up on student debt strategies is important to your overall life.

Borrowers can also learn to harness momentum to pay off student loans faster.

2. Selecting the Right Repayment Plan

Federal student loans come with many options for repayment. The options that might be open to you will depend on the type of loan you took out.

This Federal Student Aid office brochure drills down on the most common plans and loans they apply to, and offers bullet points of comparison.

It also links to information on consolidating federal student loans. Refinancing loans is something else to consider.

Generally speaking, the most popular repayment plan for federal student loans is the Standard Repayment Plan. Part of the reason it’s the most popular is—wait for it—is that it’s the default plan borrowers will be designated for unless they request otherwise.

The Standard Repayment Plan affords borrowers up to 10 years to repay, with an expectation of fixed monthly payments of at least $50 during that time.

There’s also the Graduated Repayment Plan, which starts with lower payments that increase every two years. Under the plan, a borrower makes payments for up to 10 years.

With the Extended Repayment Plan, a borrower can take up to 25 years to pay the loan. There are specific eligibility requirements. The plan requires lower monthly payments than the 10-year Standard plan, though you will wind up paying more in interest for your loan than you would have over 10 years.

Then there are income-driven repayment plans, which are geared toward monthly payments that are intended to be affordable based on discretionary income and family size. These are meant to further lighten the financial burden for individuals who have additional ongoing expenses or obstacles.

As such, they offer a greater degree of flexibility on their terms—like the Income-Contingent Repayment Plan. With that plan, any outstanding balance will be forgiven if the borrower hasn’t repaid the loan in full after 25 years. (Income tax may still be owed on the amount that was forgiven.) Again, more details on each of these payment plans—and others—can be found in this Federal Student Aid office publication .

Some of these plans are good options if you are seeking Public Service Loan Forgiveness—circumstances that apply if you are employed by a U.S. federal, state, local, or tribal government or nonprofit organization.

Many of the income-driven repayment plans may be good options if Public Service Loan Forgiveness is a light at the end of your federal student loan debt tunnel.

The Income-Based Repayment Plan is worth a mention, as monthly payments would be 10% to 15% of discretionary income, and payments are recalculated each year to factor in family size and discretionary income.

It’s normal to feel a little confused with so many numbers being thrown around. Our guide on fast ways to pay off debt makes a good addition to everything discussed so far.

3. Student Loan Consolidation

A Direct Consolidation Loan allows a borrower to consolidate multiple federal education loans into one loan at no cost. It’s just a way to minimize the headaches—and ulcers—that can stem from the obligation to make monthly payments on different loans.

It’s not usually a way to save money, as the new interest rate you get with a Direct Consolidation Loan is a weighted average of all your loans’ interest rates rounded up to the nearest eighth of a percentage point.

There is another asterisk in considering this option: Private student loans cannot be consolidated with federal student loans into a Direct Consolidation Loan. You can, however, pursue refinancing both types of loans with a private lender.

If you have solid credit and a stable income, among other personal financial attributes, it’s possible to qualify for a new loan at a lower interest rate.

But there’s an asterisk to this asterisk, which is that refinancing with a private lender can make you ineligible for the federal benefits and protections offered to qualified federal student loan borrowers, like Public Service Loan Forgiveness, income-driven repayment, deferment and forbearance.

4. Paying More Than the Minimum

A strategizer knows that there’s more to it than paying the lowest amount required every month on student loans.

A big reason to pay more than the monthly minimum is that student loan repayment is structured around amortization—a word you heard if you took an accounting or economics class that basically means a portion of fixed monthly payments goes to the costs associated with interest (what the lender gets paid for the loan) and reducing your loan balance (paying off the total amount owed).

Paying more than the minimum means you can accelerate reduction of the amount you owe rather than covering the interest—which is effectively the lender charging you for the privilege of having the loan in the first place.

That privilege isn’t exactly bragworthy, so it’s smart to make more than the minimum payment—however little more it might be.

One plan of attack for borrowers to consider is signing up for automatic payments through their federal loan servicer so the payments are taken directly from their bank account as they’re due.

The payment amount to be withdrawn can be customized, and there’s a discount for doing so: Those who have a Direct Loan will get an interest-rate reduction while participating in automatic debit.

Getting Student Loans Under Control

Nobody really enjoys thinking about student loans, but the upshot of that is the pain points associated with them are well known—and there are proven strategies to ease the pain and manage the process of repaying government student loans, whether going for a special payment program, consolidating, or refinancing.

All it takes is a little planning and a willingness to adapt those plans to the ways your life unfolds after you have that degree.

SoFi student loan refinancing offers flexible terms and low fixed or variable rates. There are no application or origination fees. And getting prequalified online is easy.

Check your rate today.

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.


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.

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.

SOSL20016

Read more
Aug
26
2020

Exploring Student Loan Forgiveness for Nonprofit Employees

By | Debt Payoff, Financial Independence, Student Loans, student_loan | Comments Off on Exploring Student Loan Forgiveness for Nonprofit Employees

Public Service Loan Forgiveness. The unicorn of student debt.

Its very existence is debated. Thousands of federal student loan borrowers pursue it. And for those who could prove they’d decided their lives to doing (the public) good—and followed all the eligibility rules—it was supposed to be attainable.

So far, however, the approval process has been grindingly slow—and difficult—which hasn’t helped borrower skepticism. The Department of Education’s Office of Federal Student Aid reported that of the 110,729 applications processed as of June 30, 2019, 100,835 had been denied—a whopping 91%.

And of the over 90,962 unique borrowers applying, only 1,216 have been accepted—about 1.3%. Although the numbers are improving, it seems that only the most tenacious and patient seekers will survive. The specifics are daunting, follow-through is a must, and a number of applicants don’t qualify from the start.

So is it even worth it to apply? Misinformation abounds. Here are some helpful things to know as you explore your options.

What Is the Public Service Loan Forgiveness Program?

The Public Service Loan Forgiveness Program, often referred to as PSLF, was introduced in October 2007 as a way for those working for a qualifying not-for-profit or the government to obtain forgiveness for their federal student debt after making a decade’s worth of payments. The program took effect in October 2007.

Under the plan, those who have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer may have their remaining balance on a federal direct student loan zeroed out.

That’s a lot of qualifying to be done, so let’s break it down.

What’s Considered Full Time, Qualifying Employment?

For starters, it’s not about the specific job you have, it’s about your employer. The following types should pass muster:

•   Government organizations at any level (federal, state, local or tribal)
•   Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
•   Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3), if their primary purpose is to provide certain types of qualifying public services
•   AmeriCorps or the Peace Corps (if you’re a full-time volunteer)

Student loan forgiveness is for eligible not-for-profit and government employees, so if you’re a freelancer or employed by an organization that is working under contract, that won’t count.

To be considered “full time,” you must work at least 30 hours per week. Or, if you work more than one qualifying part-time job at the same time for an average of at least 30 hours, you might meet this standard.

But any time spent on religious-type work (instruction, worship services, or any form of proselytizing) will not be included towards the 30 hours.

What Kinds of Loans Qualify?

Here’s where it starts getting complicated. OK, more complicated.

Only non-defaulted loans received under the William D. Ford Federal Direct Loan Program are eligible for PSLF. If you received a loan under the Federal Family Education Loan (FFEL) program or the Federal Perkins Loan program, you may be able to combine them into a Direct Consolidation Loan, which does qualify, but there’s a catch: Only the payments you make on your new consolidation loan will be applied toward the 120 payment requirement. The FFEL and Perkins payments you made before that won’t count.

And if you combine Direct loans and other federal loans when you consolidate, you’ll lose credit for the payments you already made on the Direct loans.

What Qualifies as a Monthly Payment?

Any payment made after Oct. 1, 2007 may qualify, as long as it’s for the full amount on the bill, is under a qualifying repayment plan, and was made on time (no later than 15 days after the due date) while you were employed full time by a qualifying employer.

Payments made while you were in “in-school status,” under a grace period, or in deferment or forbearance won’t qualify.

But here’s a bit of good news: Your 120 qualifying monthly payments don’t have to be consecutive. If you were out of work or worked for a for-profit company for a while, you won’t lose credit for the qualifying payments you made.

And there are special rules for lump-sum payments made by AmeriCorps or Peace Corps volunteers.

What’s a Qualifying Repayment Plan?

It’s important to know this: Even though the 10-year Standard Repayment Plan qualifies for PSLF, you aren’t actually eligible to receive forgiveness unless you enter into one of the income-driven repayment plans.

That’s because if you’re on a 10-year repayment plan, and you make all the payments, you won’t have a balance left to forgive at the end of that period. So if you plan to pursue PSLF, it may be in your best interest to switch to an income-driven plan ASAP.

What Does it Take to Apply?

First thing’s first. You won’t submit your PSLF application until after you’ve made your 120 qualifying payments. What you will need to complete first is the Employment Certification for Public Service Loan Forgiveness form annually or whenever you change employers.

In the ideal case, the government will use that information to let you know for sure that you’re making qualifying payments. (If you don’t stay on top of this, you can submit an Employer Certification form when you apply for forgiveness.)

After you submit an Employment Certification form and your loans have been transferred to FedLoan Servicing (if it wasn’t already your servicer), your form is reviewed and you’ll receive notification of the number of qualifying payments you’ve made. You can track that number by logging into your FedLoan account or by looking at your most recent billing statement.

When you have made enough qualifying payments, you can file your PSLF application . But you aren’t through yet: You must be working for a qualifying employer at the time you apply for forgiveness and when the remaining balance on your loan is actually forgiven. (We know—it’s complicated. Definitely review the Department of Education’s website to get all the details.)

What Happens if the Application Is Denied?

Don’t panic. You may still be eligible for forgiveness if you were denied because payments weren’t made under a qualifying repayment plan.

The U.S. Department of Education is currently offering Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity. (The word “temporary” means it won’t be around forever and it may be just as difficult to get a request approved as PSLF.)

You can get more answers at the Office of Federal Student Aid’s Q&A page . Or you can call FedLoan Servicing at 800-699-2908.

Pros and Cons of PSLF

Some of the basic pros and cons of going for PSLF are fairly straightforward.

If you took on tens of thousands of dollars in federal student loans, the prospect of losing at least a portion of that debt is likely huge.

And, as a bonus, the IRS isn’t going to ask you to pay federal income taxes on the loan amount forgiven under the PSLF program. (That isn’t the case with all student loan forgiveness programs.)
The big drawback, of course, is the time and effort required for the chance to get a PSLF application approved.

And if, after all that, you don’t receive forgiveness—because the government changes the rules, because you decided to go another direction with your career, et cetera—you may have missed out on other opportunities to pay down your debt.

Federal student loans come with lots of benefits and protections, but with an income-driven repayment plan, you’ll be looking at a 20- to 25-year loan term (depending on the federal student loans you have).

With income-driven repayment, your payments are lower, it’s usually because the loan term is longer, not because your interest rate has improved. Your interest rate will stay the same under this plan.

Applying for Public Service Loan Forgiveness could be worth the challenge, if you’re pretty sure you’ve got what it takes—both in mental fortitude and when it comes to fulfilling the requirements.
But it isn’t the only option for getting student debt under control.

Refinancing Your Student Loans

If you work through a private lender like SoFi to consolidate and refinance your student loans, you may be able to get a competitive interest rate and a better fit of loan term.

But it is important to remember that if you refinance with a private lender you will lose federal benefits such as Public Service Loan Forgiveness, income-driven repayment plans, and deferment.

And with SoFi, you can combine all your federal and personal student loans into one manageable payment, so you can keep track of your debt.

Interested in refinancing with SoFi? Applying online is easy and takes just minutes.

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.


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

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

SOSL18269

Read more
Aug
13
2020
woman on laptop in cafe

What Is the Student Loan Forgiveness Act?

By | Fresh Out of School, Student Loans, student_loan, Terminology | No Comments
Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

With Americans facing over $1.6 trillion in combined student loan balances, many borrowers are on the hunt for ways to ease their debt burden. One option you may have seen was called the Obama Student Loan Forgiveness Plan, which according to some websites, was a way for some borrowers to escape their debt for a small fee.

This offer might sound appealing, but there’s one problem: It’s fake. It’s just one example of real ads that scammers have used to target and bilk borrowers.

Fraudsters have used lines like this to lure in their marks, then charged them hefty fees to fill out forms they could’ve filled out themselves for free. In the worst cases, people end up paying for nonexistent services.

Here are some answers to your burning questions on student loan forgiveness, so you can get a better idea of how the program works:

Does Any Student Loan Forgiveness Act Exist?

Yes. The Student Loan Forgiveness Act (SLFA) was a congressional bill introduced in 2012 intended to help borrowers with paying down their student debt.

In addition to capping interest rates for all federal loans, the proposed law would have introduced a repayment plan that allows borrowers to have their loans forgiven after 10 years if they made monthly payments equivalent to 10% of their adjusted gross income. The bill also would have made borrowers in public service jobs eligible for loan forgiveness after five years, instead of 10.

Sound too good to be true? It was. The bill never made it out of committee.

So, What is Obama’s New Student Loan Forgiveness Program?

Even though you may have heard about it, “Obama’s new student loan forgiveness program” doesn’t exist. During his tenure, President Obama did expand the reach of federal loan forgiveness programs. A bill he signed in 2010 allowed students who took out certain federal loans to have their balances forgiven in 20 years, rather than 25.

The same bill capped annual payments at 10% of adjusted gross income, rather than 15%. It also ushered in loan forgiveness after 10 years for borrowers working in qualified public service jobs.

Those changes preceded the introduction of the Student Loan Forgiveness Act (SLFA), and was never officially called “Obama’s Student Loan Forgiveness Program.” Likewise, there is no “new” student loan forgiveness program in Obama’s name, either, obviously.

Then Why Have I Read About Obama’s New Student Loan Forgiveness Program?

Because it’s a term that debt relief companies use to confuse student loan borrowers. The name seems convincing since President Obama did take action on federal student loans and legitimate federal loan forgiveness programs exist. That’s why some borrowers have been duped into paying high fees for pointless—or nonexistent—services. Don’t be fooled: The program isn’t real!

Debt relief companies advertising the “Student Loan Forgiveness Act” or “Obama’s New Student Loan Forgiveness Program” are bad news. Understanding which programs are real and which are fake can help you avoid being scammed—and find legitimate ways to actually have some of your student loans forgiven.

What Are Some Legitimate Options for Student Loan Forgiveness?

No, Obama’s Student Loan Forgiveness Act never passed. However, there are several real options for having federal student loans forgiven.

In fact, in response to the coronavirus epidemic, the CARES Act suspended federal student loan interest and payment suspension through September 2020. (Update: The pause on federal student loan repayment has been extended through Dec. 31, 2022)

The pending HEROES Act (narrowly passed by the House in mid-May, 2020) proposed $10,000 each of federal student loan AND private student loans forgiveness initially but may have more stringent eligibility requirements if passed by the Senate. While it’s definitely something to keep an eye on, here are some existing programs that may be helpful.

Income-Driven Repayment Plans

The government currently offers four income-driven repayment plans for federal student loans that can forgive borrowers’ balances after 20 or 25 years.

There are eligibility requirements, like making required monthly payments for a designated period of time, which are tied to a person’s income. The plans a borrower qualifies for will depend on the types of loans they have and when they took them out.

These student loan repayment plans are based on borrowers’ discretionary income, or the amount they earn after subtracting necessary expenses like taxes, shelter, and food. Here is a brief overview of each one:

•   Revised Pay As You Earn Repayment Plan (REPAYE): Borrowers’ monthly payment is typically 10% of their income. If all loans were taken out for undergraduate studies, they’ll make payments for 20 years; if they also took out loans for graduate or professional studies, they’ll make payments for 25 years. At the end of 20 or 25 years, the remaining amount will be forgiven.
•   Pay As You Earn Repayment Plan (PAYE): People pay up to 10% of their discretionary income each month, but they never pay more than they would under the 10-year Standard Repayment Plan. After 20 years, the remaining debt will be forgiven.
•   Income-Based Repayment Plan (IBR): People will pay 10% of their discretionary income for 20 years if they became a new borrower on or after July 1, 2014, and 15% for 25 years if they were a borrower before July 1, 2014. They will never pay more than they would under the 10-year Standard Repayment Plan. Borrowers’ debt will be forgiven after either 20 or 25 years.
•   Income-Contingent Repayment Plan (ICR): Borrowers choose whichever repayment plan is cheaper—20% of their discretionary income or what they would pay if they spread their payments out equally over 12 years. Any remaining balance will be forgiven after 25 years.

These four plans are designed to help borrowers make monthly payments they can actually afford. Some people may assume that an income-driven repayment plan that results in forgiveness is best for them, when in reality, this might not be the case.

Note that if the remaining balance of your loan is forgiven, you may be responsible for paying income taxes on that amount.

A repayment calculator can be a useful tool to help determine enrolling in an income-based forgiveness program that would be beneficial. After a borrower plugs in their information, they could discover that they would pay less, in the long run, should they enroll in, say, the government’s Standard Repayment Plan.

Public Service Loan Forgiveness

Borrowers can have their loans forgiven in 10 years under the Public Service Loan Forgiveness (PSLF) program. To potentially qualify, they must work full-time for a qualified government organization, nonprofit, or certain public-interest employers, such as a public interest law firm, public library, or public health provider.

Over those 10 years, borrowers must make 120 qualifying monthly payments, and the payment amount is based on their income. Those 120 payments don’t necessarily have to be consecutive. For example, let’s say a borrower works for the local government for three years, then switches to the private sector for a year.

If they decide to go back into public service after that year, they can pick up where they left off with payments rather than start all over.

The PSLF program can be difficult to qualify for, but some people have successfully enrolled. As of March 2020, 145,758 borrowers had applied for the program. Only 3,174 applications were accepted. 171,321 applications had been rejected, and the remaining applications were still processing.

Teacher Loan Forgiveness Program

Qualifying teachers can also get up to $17,500 of their federal loans forgiven after five years teaching full-time under the Teacher Loan Forgiveness Program. The American Federation of Teachers has a searchable database of state and local loan forgiveness programs.

To qualify for the full amount, teachers must either teach math or science at the secondary level, or teach special education at the elementary or secondary level. Otherwise, borrowers can have up to $5,000 forgiven if they are a full-time teacher at the elementary or secondary level.

NURSE Corps Loan Repayment Program

Health professionals have access to other loan assistance programs. The federal government’s NURSE Corps Loan Repayment Program pays up to 85% of eligible nurses’ unpaid debt for nursing school.

To receive loan forgiveness, borrowers must serve for two years in a Critical Shortage Facility or work as nurse faculty in an accredited school of nursing.

After two years, 60% of their nursing loans will be forgiven. If a borrower applies and is accepted for a third year, an additional 25% of their original loan amount will be forgiven, coming to a total of 85%.

Borrowers interested in the NURSE Corps Loan Repayment Program can read about what qualifies as a Critical Shortage Facility or an eligible school of nursing before applying.

Indian Health Services’ Loan Repayment Program

The Indian Health Services’ Loan Repayment Program will repay up to $40,000 in qualifying loans for doctors, nurses, psychologists, dentists, and other professionals who spend two years working in health facilities serving American Indian or Alaska Native communities.

Once a borrower completes their initial two years, they may choose to extend their contract each year until their student loans are completely forgiven.

In 2019, the Indian Health Service’s budget allows for up to 384 new awards for two-year contracts, and around 392 awards for one-year contract extensions. The average award for a one-year extension is $24,840 in 2019.

Even those who aren’t typical medical professionals, like doctors or nurses, may still qualify. The IHS has also provided awards to people in other fields, such as social work, dietetics, and environmental engineering.

The National Health Service Corps

The National Health Service Corps offers up to $50,000 for loan repayment to medical, dental, and mental health practitioners who spend two years working in underserved areas.

Loan forgiveness programs are generally available for federal loans, as opposed to private ones. In rare cases, such as school closure while a student is enrolled or soon after, they could qualify to have their loan discharged or canceled.

Health Professional Shortage Areas (HPSAs) include facilities such as correctional facilities, state mental hospitals, federally qualified health centers, and Indian health facilities, just to name a few. Each HPSA receives a score depending on how great the site’s need is.

Scores range from 0 to 25 for primary care and mental health, and 0 to 26 for dental care. The higher the score, the greater the need.

Borrowers have the option to enroll in either a full-time or part-time position, but people working in private practice must work full-time. Full-time health professionals may receive awards up to $50,000 if they work at a site with a score of at least 14, and up to $30,000 if the site’s score is 13 or below. Half-time employees will receive up to $25,000 if their site’s score is at least 14, and up to $15,000 if the score is 13 or lower.

Interested in learning more about your options for student loan repayment? Check out SoFi’s student loan help center to get the answers you need about your student debt. The help center explains student loan jargon in terms people can understand, provides loan calculators, and even offers student loan refinancing to hopefully land borrowers lower rates.

Refinancing student loans through a private lender can disqualify people from enrolling in federal loan forgiveness programs and loan forgiveness programs, and disqualifies them from CARES Act forbearance and interest rate benefits.

Check out SoFi to see how refinancing your student loans can help you.

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.

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.

SLR17149

Read more

CATEGORIES

  • All
  • No categories
Close modal

See what SoFi can do for you and your finances.

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

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

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

©2024 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender