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Paying off your student loans can feel like a grueling journey, especially if you have a lot of it. And there’s a lot of student loan debt out there—$1.5 trillion to be exact .

It’s becoming clear just how much student debt can have a negative impact on the psyche of the student debt holder. In a survey conducted by SoFi, 83% of respondents felt like they couldn’t relax due to their student loans, and 50% felt that student loan debt has made them feel depressed.

More than a third have reported losing sleep due to student loan debt, and plenty of others say that it’s caused them to miss out on opportunities to travel, practice self-care, and make major life decisions.

If you’re in the throes of student loan debt repayment, you should know that there’s hope: Catie Gould and Veronica Scafe, two SoFi members, show us that it can be done. Not only did they each pay off their nearly $100,000 in respective students loans, but did so in about four years—significantly faster than their original loan terms.

It is important to note that these results may not be typical of every person paying down student loans. Below, these two members share their student debt journeys as well as their tips to help pay off student loans.

Meet Catie Gould and Veronica Scafe, SoFi Members

If you’ve got student loans and are looking for inspiration to get rid of them once and for all, Catie Gould and Veronica Scafe are your people. Both paid down nearly $100,000 in student loan debt.

Catie Gould paid off her student loans in just over four years—an impressive feat considering she graduated with around $91,000 in student debt from her dual degrees in material science and mechanical engineering.

Veronica Scafe found herself in a similar situation after graduating with $99,800 in student loans from obtaining her Doctor of Pharmacy degree. Even though Scafe had only expected to leave graduate school with $80,000 in loans, she was able to pay off the balance in an incredible three years and eleven months.

Their Personal Strategies For Paying Off Student Loans

Right out of school, Gould and Scafe deployed similar strategies for paying off their student loans fast; they both worked hard at keeping their expenses low, even with their new, higher salaries.

When Gould graduated from school, she avoided “lifestyle inflation” even though she was making more money than she ever had before. “Not very much changed for me after graduating. I am a saver by nature. I kept driving my old car, living with roommates, shopping at thrift stores, taking local vacations.”

And Gould didn’t stop there. “I bought a bicycle to get around town, tried gardening, and cooked my own food most of the time. I said no to plenty of things, but most never felt like a sacrifice.”

It helped Gould that she didn’t have expensive tastes to begin with: “Festivals were a big thing I never knew about. I was shocked that people pay $300+ to go to weekend music festivals.”

Scafe recounts an experience similar to Gould’s. She and her husband “never expanded our lifestyle to fit our salary so we never had to make cuts.” Scafe added, “We live pretty frugally. We have a modest home. We cooked most of our meals at home and took leftovers for lunch the next day.”

Just as keeping expenses low was an important tactic for both women, so was making additional payments towards their student loans. Neither wanted the emotional burden of paying back loans for longer than they had to, nor did they like seeing so much of their loan payments go towards interest payments and not the principal.

Simply having a long, hard look at how much you’re spending in interest payments every day, week, or month, may be the motivation you need to pay your loans off faster than the standard ten-year repayment schedule.

“I sometimes calculated how much interest I owed every morning just for waking up,” says Gould. From this exercise, she noticed that the daily interest charges on her student loans cost her “more than eating out every day, which I considered pretty indulgent,” and this motivated her to take action, and fast.

Gould and Scafe also refinanced their student loans, which provided them both the extra boost they needed to pay their loans back on such short timelines. By refinancing and qualifying for lower rates, more of each payment could be applied to the loan’s principal and not just interest.

What pushed them to pull the trigger on refinancing?

When Gould started her first corporate engineering job, the company was in the midst of layoffs. Luckily, she kept her job, but she says that “the layoff had a huge impact on me.” This experience at work pushed her to explore even more options for lowering her student loan bill.

The concern of how she’d make payments if something were to happen to her job, along with interest rates that she felt were far too high—some of them at 8.75%—inspired her to tackle her debt through extra payments and refinancing.

Gould refinanced around $36,000 of her debt through SoFi. She said, “Getting out of a higher interest rate was really helpful to pay down my remaining student loan balance. I feel a lot more in control of my future and how I chose to spend my time. It’s steered my life in a direction I never anticipated.”

Scafe also knew the feeling of wanting her loans long gone, and fast. “I obsessed over them and I think that’s what motivated me to get rid of them ASAP.” Having multiple loan payments scattered throughout her month was a nuisance.

“I refinanced to lower my interest rate,” she says, but also desperately wanted to have only one monthly payment. Paying down multiple loans faster than their scheduled repayment terms was a logistical hassle, and required significant manual maneuvering. “It got really frustrating.”

Both women refinanced their loans with SoFi, lowering their interest rates and saving them money on interest while consolidating their multiple loans—both federal and private—into one loan with one easy payment.

Tips to Help Pay Off Student Loans Early

“Tracking your spending is a must,” says Gould. She used Mint to track her spending, though there are many methods of doing so. The important thing, says Gould, is to do it. “The difference between months I looked at my budget frequently and months I didn’t was about $300 to $500 of savings, just from being more aware.” And putting those savings towards a student loan payment seriously expedited her loan payoff journey.

When it comes to spending money, try to cut whatever doesn’t bring you true joy. “There is always something forgettable that you are spending money on every month that you can cut.” For Gould, one of these things was dining out. For you, it could be something different, but the lesson here is to identify what really doesn’t produce joy for you, and ruthlessly eliminate it. Spend on only what you love.

“There is no way you can cut out all your expenses, and you need to let yourself have a little leeway to feel like you are living a great life. Some treats I got myself were evening classes in things I found interesting.

I took calligraphy, pottery, Arabic, essay writing. I also have some nice camping gear. I always equated these extra things to lunches—a $10 expense that I wouldn’t miss.”

Scafe, on the other hand, extols the virtues of paying yourself first. Whether you’re paying off loans on an expedited schedule or saving up an emergency fund, it’s wise to spend what is left over after saving and not vice versa.

While you should always keep a buffer in your checking account, too much cash lying around could be just asking to be spent. You can move it towards your loans or a savings account as soon as payday hits instead.

For both women, seeing the light at the end of the tunnel was crucial to their perseverance. They stuck with it, even when it felt like student debt freedom would never become a reality.

For Scafe, having her debt eliminated has been a big stress relief. Gould says that she feels in control of her future and how she chooses to spend her time, and that nothing compares to the feeling of paying off her student debt. And while neither claim that the process was easy, or entirely possible for many on their relatively short timelines, both believe that it was totally worth it.

If you have student loans like Scafe and Gould, keep pushing to reach your goal of being debt free. You can use our student loan payoff calculator to get an idea of when your loan payoff date could be, and it’s never too late to start putting strategies in place to help accelerate your loan payoff—even if it’s just a little at a time.

Also, you can consider refinancing your student loans with SoFi to potentially lower your interest rate and get a shorter term, and therefore help to expedite your own loan payoff journey.

Refinance today! It only takes two minutes to check your rate.

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Disclaimer: The savings and experiences of members herein may not be representative of the experiences of all members. Savings and experiences are not guaranteed and will vary based on your unique situation and other factors.
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.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Graduating from college can feel like the end of an era. You’re leaving behind the safety of school, and in theory, you now have all of the tools you need to make it in the real world.

While you may be ready to job search, kill it at an interview, or even start a business, many new grads aren’t sure of the best ways to manage their financial health. Here are five financial tips for new graduates.

1. Making (and Sticking to) a Budget

Make a budget. Hear us out. The b-word might make you cringe, but setting a budget is one of the most important things you can do to help set yourself up for financial success.

That doesn’t mean, however, that you need to hire CPA and create a complicated spreadsheet you’ll never look at again. Think of a budget as a tool that helps you get what you want instead of something that limits you.

For example, whether you want to start saving for retirement ASAP, or just want to save enough money to buy a couch, the first step to getting there is usually setting a budget. A key to creating a budget you’ll actually follow?

Make sure that it not only accounts for necessities like housing and student loan payments, but also includes the things you actually like to spend money on, whether it’s weekly cocktails at your favorite neighborhood bar or online auctions for rare action figures.

If you try to go cold turkey on the things you normally spend your money on, you might not have the motivation needed to set aside some of that cash for your larger goals.

One other important thing to remember is that if you accidentally spend more than your budget at first, don’t give up. Financial health is typically a process, and no one is perfect. The most important thing is that you keep trying.

If you keep struggling to stick with a budget, it may be time to take a look to see where most of your money is going and adjust your budget to make it more realistic to your individual circumstances. For better insight into your spending, get started with SoFi Relay. You’ll be able to keep tabs on your cash flow and spending habits, plus find ways to save.

2. Planning For Emergencies

Many of the financial tips for college graduates focus on saving but can leave out what, exactly, you ought to be saving for. This brings us to our second money tip for college graduates: Creating an emergency fund.

By now, almost everyone knows that most Americans don’t have enough cash saved to navigate a $500 emergency . Scary, right? $500 could be one major car repair, hospitalization, or even just an unexpected security deposit on a new apartment.

When you don’t have cash on hand to pay for emergencies, it may be tempting to put it on a credit card, which, if not paid off right away, can spiral into increasing debt.

One easy way to start is to make an initial goal, say $500. As part of your budget (See? Budgets are important!), you could set aside a certain amount monthly towards your emergency fund. Once you reach $500, take a minute to celebrate, but don’t stop saving.

Your emergency fund should ideally be able to cover about six months of expenses so that you can protect yourself if you ever face extended unemployment or serious illness.

Those numbers can certainly sound daunting, so some savers might find it is easier to set incremental goals, like aiming to first save $500, then $1,000, then $1,500, and so on.

3. Putting Down that Credit Card

We know that not everyone has a job lined up right after graduation. Post-college life can be pretty rough. We see you, recent grads crashing with friends and surviving on instant noodles while you job search. It can be tempting to rely on a credit card during times of financial uncertainty, but overusing your credit card can have serious consequences.

Unless you pay off your credit card debt right away (that is, in full every billing cycle), it continues to accrue interest, which in turn increases the amount you owe. That means that, for example, a $900 couch you charged could balloon in cost the longer you take to pay it off. On top of the extra costs of fees and interest, carrying a large balance on your credit card(s) can impact your credit score.

Instead of relying on your credit card, you may opt to save up for big purchases like new furniture, and keep spending in check by following your budget. If you must put expenses on your credit card, you can help keep added interest at bay by prioritizing paying off your balance in full every month.

4. Learning About Investing

Okay, so you’re on board with a budget and have even started to save for an emergency fund. What’s next? Financial tips for recent graduates often focus only on how to manage your money for right now, but a huge part of financial health is putting your money to work for your future.

Right after graduation can be a great time to consider dipping your toes into investing. Investing is not just for super rich old guys in suits. In fact, getting started on investing while you’re younger can allow you to grow your portfolio over time.

One other common misconception about investing is that you need a ton of spare money available to get started.

The truth is that you may be able to start investing with small amounts of money—SoFi lets you start with as little as $100 a month—and grow your portfolio over time. Intimidated by the process? Talk with an advisor who can help guide you toward the right mix of investments for your goals.

5. Making a Plan For Loan Repayment

Finally, perhaps the most timely tip for new graduates: Make a plan for repaying your student loans. You may have a grace period after you graduate. If you do, you can use that time to figure out exactly how you plan on making those monthly loan payments.

Planning for your loan payments in your budget is a great place to start, but if the monthly payment seems too high to manage, there are a couple things to do that may help keep things in check.

First, make sure that you’re on the right loan repayment plan for your personal circumstances. Federal loans offer several different options for repayment , whether you want to pay your loans off as soon as possible or keep your monthly rate as low as possible. Just remember: If you aren’t making payments to at least cover your monthly interest, your loan might actually end up getting bigger!

If the federal repayment plans aren’t doing it for you, refinancing your student loans may be another option. Refinancing your student loans is a process by which you apply for a brand new refinancing loan to pay off all your existing student loans at once. Why trade in one type of debt for another?

Student loan refinancing may help you secure a lower interest rate or better repayment terms—and that can add up to major savings over the life of your loan. Loan refinancing may be especially beneficial to new grads who have secured a well-paying job or have a better financial situation and credit score than they did when they originally took out their loans.

Recommended: 46 Tips for Recent College Grads

Whether you’re ready to take on the real world or are still trying to get your feet underneath you, taking steps to protect your financial health during this time is crucial.

Congrats, grad: You’ve got this!

Considering refinancing your student loans? With SoFi, applying is quick, easy, and all online. You could get pre-qualified within two minutes. Learn more today.

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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.
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 on credit.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .
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Dreaming of climbing the ladder at a prestigious finance institution? Or maybe you’re committed to starting a socially-responsible environmental consulting firm. The chances are that if you’re interested in the business world, you’ve considered getting an MBA.

An MBA, or Master’s in Business Administration, is a graduate level degree that confers grads with flexible and expansive knowledge about the business world, from business development to accounting. Internationally recognized, an MBA can set you up for a career in the United States or abroad, in the private sector or even in the NGO and non-profit sector.

Designed to help you hone critical business skills, MBA programs cover a wide variety of topics, from the basics of economic theory to practical seminars on topics like sustainable development. The flexibility of an MBA means that you will be able to tailor your graduate degree to your specific interests, whether that is learning how to rise to C-suite executive or learning how to manage an international non-profit staff.

If you’re wondering “what jobs can you get with an MBA?”—know that each MBA program has different specialties and electives that allow you to hone your business leadership skills in a context that will help push your career forward.

An MBA is one of the most lucrative master’s degrees . But as more and more students pursue graduate degrees, many students may wonder: is an MBA really worth it?

How Much Does an MBA Cost?

The biggest downside to getting an MBA? The cost. The cost of an MBA degree can vary widely by school and program, but many MBA programs will cost you a pretty penny out of pocket , even if you earn some scholarships.

MBA programs can be some of the most expensive master’s degrees out there, landing grads with more than $70,000 of debt, on average. Top schools, like the University of Pennsylvania and Columbia, can cost upwards of $100,000 in tuition alone. Add in the cost of living, and you’re looking at an even higher number.

Of course, there are more affordable MBA programs. For example, the highly ranked University of Wisconsin-Madison has an annual in-state tuition of $19,162. But regardless of which program you choose, you may be looking at taking out hefty student loans to cover the cost of attendance. If you’re going to invest that much money in your degree, you want to make sure that it will pay off.

Is Getting an MBA Worth the Cost?

Even though getting your MBA is expensive at the outset, it is essential to think about how much actual value having that MBA can add to your life and finances.

Your MBA degree sends an automatic signal that you are a professional and an expert. While many business leaders rise through the ranks without an MBA, having the degree is a bonus for employers showing them you are competent and ready for the business world.

Getting your MBA can come with a serious cost, but it can also have a beneficial impact on your earning potential. In fact, the average MBA salary for 2017 graduates was $105,146 .

It’s important to calculate the return on your investment because some MBA degrees might actually cost way more than you can expect to recover in the boost to your salary. Luckily, we’ve helped take some of the work out of it for you with our annual “No BS” MBA rankings, where we surveyed SoFi members to help break down the return on investment for top MBA programs. Picking an MBA program that could give you the most bang for your buck can help make an MBA worth it.

Of course, not all business professionals need or want an MBA. MBA programs typically take two years of full-time study, which can make them impractical for many people who don’t want to (or can’t) stop working for such a long time, especially if they are already moving up the ladder in the business world.

There are some alternatives to full-time MBA programs, some offer online-only classes, while others offer part-time programs that are designed to work with your schedule while you are still working full-time.

Can You Increase the Value of Your MBA?

The bottom line? Look for a program that fits your interests and offers a great debt-to-value ratio. In addition to choosing the right MBA program, you can help increase the value of your MBA degree by thinking smart when it comes to student loans.

One significant benefit of an MBA is that it can seriously boost your salary and your finances. If your financial picture has improved with things like a solid income and consistent credit history, you may be a good candidate for refinancing. Refinancing your student loans after obtaining an MBA can help you lower interest rates, which means that you could pay less interest on your student loans and voilà—that MBA becomes even more valuable.

When you refinance your student loans, you’re taking out a new loan with a private lender which will in effect pay off your existing loans. Refinancing gives you a new, hopefully lower, interest rate, a new term length, and new monthly payments.

Instead of paying multiple student loans, you end up with a straightforward loan payment, ideally with more favorable student loan repayment terms based on your current financial situation. That means that refinancing offers take into account your new degree, your new salary, and your new financial reality.

You can maximize the value of your MBA program by minimizing the amount of debt you take on through finding a high-value program and considering refinancing your loans after graduation. In the end, getting an MBA can help advance your career if you’re dedicated to pursuing a career in business.

Whether you need help paying for school or help paying off the loans you already have, SoFi offers competitive interest rates and great member benefits as well. See what you’re pre-qualified for in just a few minutes.

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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.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The 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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Geography matters. Where you live can have an impact on your income, expenses, and overall household budget. By extension, this can affect how much you have to put toward your student loans every month—and how quickly you’re able to pay them off.

Many Americans move around a lot, with the average person changing homes more than 11 times over his or her lifetime. Perhaps you’re contemplating a move to find a new job, be closer to family, pursue graduate school, or find a more affordable locale. When doing your research, it’s worth exploring which states boast conditions that may help you pay off your loans.

A state that lets you keep more of what you make is also likely to leave you with more funds to put toward your student loans.

A state that lets you keep more of what you make (e.g., low income or sales taxes) is also likely to leave you with more funds to put toward your student loans.

If you use extra disposable income to accelerate your student loan payments, as opposed to extra shopping or travel, your loans have a better chance of disappearing more quickly.

Other factors can also speed up loan repayment— increasing your payments, or shortening your term by refinancing your student loans—but living in a state that offers opportunities to increase your income or reduce your bills can be a boon.

Here are some of the top states to live in that may make it easier to pay off student loans quickly, based on the perks they offer. Even if you’re not moving anytime soon, it’s worth knowing how your state stacks up.

No or Low-Income Taxes

Every working American has to pay federal income taxes. But not having to pay anything, or much, in state income taxes can go a long way toward leaving you with more cash to pay your loans off with.

Seven states don’t make you pay any income tax at all. As of 2019, these states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee come close: You only pay state income taxes on income from dividends and investments—not wages. In contrast, the highest personal income tax state is California, which charges 12.3%.

No Sales Tax

Even if you save on income taxes in certain states, you could end up paying more at the register through sales taxes . Five states don’t charge any sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. (Alaska and Montana do allow local—rather than state-level—sales taxes).

You may have noticed that Alaska also doesn’t charge income tax, so that’s double the savings in one state. In Colorado, the sales tax is just 2.9% .

Some states charge sales taxes no higher than 5%, which in 2018 included Alabama, Georgia, Hawaii, Louisiana, Missouri, New York, North Carolina, North Dakota, Oklahoma, South Dakota, Wisconsin, and Wyoming. The cash you save on sales tax can add up and help you pay off your student loans.

Lowest Cost of Living

Paying less for daily expenses, such as housing, transportation, food, and utilities, would potentially leave you with more cash for your student loans. According to a CNBC study from 2018 , the 10 states with the lowest cost of living are (starting with the most affordable): Mississippi, Arkansas, Oklahoma, Michigan, Tennessee, Missouri, Kansas, Alabama, Georgia, and Indiana.

The study took into account prices of housing, food, energy, and other goods. In the cheapest state, Mississippi, the average home costs $214,217 and the average doctor’s visit will set you back $87.58. With prices like those, you could have more room in your budget for paying down your student loans.

Highest Incomes

Earning more money is the obvious way to have more funds for student loans. Although incomes obviously vary by profession, level of education, and other factors, some states have higher-than-average salaries.

These states had median household incomes that were far higher than the 2016 national median of $58,552: Washington ($67,106), California ($67,739), Virginia ($68,114), New Hampshire ($70,936), Connecticut ($73,433), Hawaii ($74,511), Massachusetts ($75,297), New Jersey ($76,126), Alaska ($76,440), and Maryland ($78,945). Of course, high incomes can come with a high cost of living, as well.

Best Job Prospects

High median incomes don’t matter much to you if you’re having trouble finding a job in the first place. According to U.S. News & World Report , these are the 10 best states for employment based on a combination of having a low unemployment rate, high labor-force participation, and high job growth: Hawaii, North Dakota, Colorado, Utah, New Hampshire, Nebraska, Minnesota, Iowa, Massachusetts, and Wisconsin. You may notice that a few of those states overlap with with the highest-income rankings, so you could be more likely to find a job there that also pays well.

Best Cost-of-Living-to-Income Ratio

A high income can disappear quickly in a place with high living costs; conversely, a cheap state becomes less affordable if you can only earn a low income there. One way to gauge true affordability is to compare the “real income” in each state by taking the median household income and accounting for cost of living.

When Money Magazine did this, it found that the states with the highest real incomes were: Alaska ($69,465), Maryland ($69,203), New Hampshire ($66,955), Massachusetts ($66,069), Connecticut, ($65,636), North Dakota ($65,609), Minnesota ($65,183), Utah ($64,858), Virginia ($64,646), and the District of Columbia ($64,639). Some of these overlap with the highest-income states, but in others the cost of living makes a big difference in making incomes stretch further.

Another study revealed the cities that offer the best combination of high wages and affordable expenses. The highest-ranking city was Oklahoma City, where the average annual income is $72,385, while the median monthly rent is $1,070, and annual necessities cost an average of $18,701.

The other cities on the list, starting from the highest ranked, are: Kansas City, Missouri; Lexington, Kentucky; Phoenix, Arizona; Durham, North Carolina; Omaha, Nebraska; Bakersfield, California; Tampa, Florida; Dallas, Texas; and Charlotte, North Carolina. Living in states with the best cost-of-living-to-income ratio can help make your dollars go further.

Other Perks

Besides high incomes, affordability, and low taxes, some states offer other perks that can help you pay off your loans more quickly. Alaska pays each eligible resident a fixed amount of cash every year through the Permanent Fund Dividend, created to share revenues from the state’s oil reserves.

The amount was $1,600 per man, woman, or child in 2018 and could be used for anything, including paying off loans. Colorado and Kansas pay up to 4% of your first mortgage if you meet income and credit requirements.

Other states may help you pay off student loans if you enter certain fields. For example, the Washington Student Achievement Council repays up to $75,000 in student loans for health professionals in rural or disadvantaged areas, and New York repays up to $20,400 in loans for eligible residents working as public interest lawyers. The American Bar Association maintains a full list of state-level loan repayment assistance programs (LRAPs) for attorneys.

How Student Loan Refinancing Can Help

If you’re looking to pay off student loans more quickly, you don’t have to move across the country. Refinancing your student loans can also be a great way to potentially reduce your interest rate. When you refinance, you take out a new loan from a private lender, like SoFi, and use it to repay your existing federal or private loans.

The new loan may offer a lower monthly payment or lower interest rate, especially if you have a solid credit and employment history (among other factors). A lower interest rate can help you pay less in interest over the life of the loan.

If you qualify to refinance, you may also have the option to shorten the length of your loan term. This would likely mean higher monthly payments, but if you’re in a financial position to take on a higher monthly payment, that’s another way you could pay off your student loan debt more quickly.

At SoFi, you can apply for pre-qualification online and find out whether you qualify in two minutes. And keep in mind that if you pay off your refinanced student loan early, SoFi has no prepayment penalties.

Want to pay off your student debt more quickly? Check out whether refinancing your student loans with SoFi can help.

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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.
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.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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Almost 20 million students entered the American higher education system this year. And most of them are faced with yearly expenses averaging nearly $26,000 for in-state public colleges and up to double that for private schools.

Tuition, books, supplies, room and board, fees, and transportation can all contribute to the final bill, and seeing that total for the first time can lead to some serious sticker shock. But it doesn’t mean you have to hand over cash in order to enroll. There are a number of ways to help pay for college. But what’s the difference between grants, scholarships, and loans? Here’s what you need to know.
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Student Loans vs Scholarships

The biggest difference between student loans and scholarships is that loans do not reduce the cost of college, they just help you afford it upfront. Eventually, they need to be paid back. Scholarships , on the other hand, are need-based or merit-based awards that actually help make college more affordable because they go directly toward the cost of your education and you don’t need to pay them back. There are quite a few other differences between the two as well.

Getting the Money

If you take out a student loan, the total amount is divvied up by semester or year and that amount is typically disbursed to your school to cover your tuition.

The remaining money is often disbursed to you directly so you can cover costs like housing off campus, food, and school supplies.

Scholarships, on the other hand, are often paid straight from the college, or straight to the college in the case of third-party awards. Your scholarship money may go directly to your tuition or other school fees, or it may be sent to you directly (depending on the scholarship).

Restrictions and Qualifications

Both scholarships and student loans come with strings attached. Scholarships, whether merit-based or need-based, can come with GPA requirements or other academic qualifications. You can win scholarships from either the government, your school, or one of a large number of private organizations. (Here’s a giant scholarship database to aid your search.)

Even if you earn a scholarship that’s more lenient, it’s not the green light for a free for all. How you spend your scholarship money could affect everything from your taxes to your loan eligibility (definitely talk to a tax professional if you have any questions about that), so it’s important to ensure that scholarships are spent only on tuition or other school-related expenses.

Whether the student or the parents apply for federal loans, the process starts with a FAFSA® (Free Application for Federal Student Aid). Even if you don’t think you’ll qualify for a student loan or other financial aid, it’s still a good idea to fill out the FAFSA, because some states and schools use it to determine their awards as well.

The minimum qualifications for federal student aid include (but are not limited to) U.S. citizenship or eligible non-citizenship, a high school diploma or GED, and acceptance into an eligible degree or certificate program.

Beyond that, the FAFSA determines eligibility based on your financial situation, the school you’ll be attending, and other factors. Student loans are widely used to help pay for college. In fact, Americans currently share a student loan burden that’s over $1.5 trillion (with a T).

How Are Grants Different from Scholarships?

Like scholarships, grants help reduce the cost of higher education for the individual student because they don’t need to be repaid. They also have certain minimum requirements for maintaining your eligibility. The primary difference between the two is that grants are typically need-based, whereas scholarships are typically merit-based.

The largest provider of grants from the federal government is the Pell Grant program, which awards a fluctuating maximum (currently $6,095 for the 2018–19 award year) per year based on your financial circumstances. State governments may also fund grants for residents who attend in-state colleges or universities.

Can You Win a Scholarship and Still Take Out a Loan?

If you are awarded a grant or a scholarship, you can still apply for student loans. However, the money you receive from that grant or scholarship can affect your loan eligibility, sometimes in a big way.

For example, the schools or programs you applied to will use your completed FAFSA to determine your financial need , which is the difference between your total Cost of Attendance (COA) and your Expected Family Contribution (EFC) . Earning scholarships can reduce your costs, which in turn can leave you eligible for less financial aid—which includes both need-based and non need-based aid.

To complicate matters, some scholarships are awarded as “first-dollar ,” meaning they are made either according to set guidelines or without regard for any other aid you receive, and some are “last-dollar,” meaning they cover any remaining gaps after all your other aid has been applied. If you’re awarded several forms of student aid, be sure to do the overall math and determine if one is a better opportunity.

A Word About Work-Study

Another way some students choose to pay for college is the Federal Work-Study program , which provides part-time jobs for students while they are enrolled in classes. It’s available to students at all levels of higher education and aims to employ students in community service work or work related to their degree.

For students whose chosen career paths require lots of hands-on work, this can be an attractive option to not only help earn money for school, but gain real world experience at the same time. Check with your school’s financial aid office to see if they participate.

We want to help you focus on your degree, not your debt. Our mission is to help students get low-rate loans they can pay back on their own terms. Learn more.

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When the time comes, SoFi can help you refinance your student loans and potentially put more money back in your pocket.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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 about bankruptcy.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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