Jun
20
2023
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What Is a Good Entry Level Salary?

By | Building Your Career, Life & Career, student_loan | Comments Off on What Is a Good Entry Level Salary?

Starting salaries can vary greatly based on location or line of work, so there’s no one answer to the question, “What is a good entry level salary?” The size of the paycheck will differ based on where someone lives, the industry they work in, the hiring institution or company, and other hard-to-tabulate variables.

So, how might a job seeker figure out a good entry level salary before sitting down with the new boss or an HR representative to discuss pay? Here are some helpful resources to get a handle on entry level rates across the U.S., including tips for negotiating compensation.

Understanding Entry Level Salaries

Entry level salary information changes on a regular basis, but many job-focused websites offer insights into the going rates. For instance, ZipRecruiter, a well-known American employment marketplace, lists the average U.S. entry level salary by state. In summer 2023, wages in North Carolina are $13.44 per hour or $27,956 per year, whereas New York pays $16.79 per hour or $34,933 per year, on average.

Still, even state-by-state averages don’t show the whole picture. Although more than half of U.S. states have minimum wage requirements higher than the federal minimum wage, which remains set at $7.25 per hour, the amount an early-career new hire might expect can also vary by county and city within the same state.

Recommended: The Highest Paying Job in Every State

Along with location, the industry one works in can play a big role in what kind of starting salary a new hire might expect. For instance, a data scientist at a tech company might be able to earn as much as $95,000 right out of the gate, while a newly minted journalist might expect something closer to $40,000.

One way to grasp what sort of salary that might be expected is targeted research on the specific industry, location, and even position and company. And if you’re in the early stages of college, you might want to align your eventual courses of studies with a high-paying entry level job.

Researching a Good Entry Level Salary

Recent grads wanting to understand if they’re being offered current market rates for a particular job (or location) can turn to the internet to research details. Some sites that might offer resources for those job seekers include:

•   Payscale, for example, allows employees to create custom “pay reports” based on their job title, years of experience, and city.

•   Salary.com offers a similar feature, allowing job seekers to search for positions by keyword and compare them accordingly.

•   Glassdoor is another well-known web resource that publishes employee-generated information on salary by specific company and position. It also hosts reviews by current and former employees, which may help a job applicant learn more about what it’s actually like to work there.

After researching average pay by role, location, and company, job seekers might also want to mull over how to negotiate an acceptable offer.

Recommended: Average Pay in the U.S. Per Year

Negotiating a Higher Offer

So, what can a job seeker do if their dream job doesn’t (initially) come with a dreamy paycheck? Luckily, there are ways to negotiate a higher offer both initially and once you’ve proven yourself down the line.

Negotiating a salary can be scary, especially for a recent grad who’s not used to the salary tango. Nevertheless, negotiating an offer up front can have a significant effect on one’s paycheck (and, by extension, one’s long-term earnings).

When thinking of how to negotiate your starting salary, don’t forget about the benefits package, as well. In addition to higher pay, you may want to negotiate other benefits such as tuition reimbursement, a flexible schedule, or childcare expenses into your total compensation package.

Preparing to Negotiate

How might a new hire negotiate a higher-paid entry level salary? Well, having a well-researched entry level salary forecast in mind is one place to start.

Of course, it’s not likely that an early-career new hire can simply negotiate up to an experienced data scientist’s $95,000 salary if that’s not the norm for the role or location they’ve applied for. But, it’s still possible to make the case to hiring managers for why a higher rate is merited. When preparing to negotiate, remember to:

Highlight Your Skills

When asking for a higher starting salary, it could be helpful to give concrete examples of how your current skills might benefit the company. In these conversations, it may be possible to push an offer up a few percentage points (especially when the skills required are in high demand).

Practice Your Pitch

Rehearsing what you’ll say ahead of time can help you hone a confident delivery style. What’s more, it can help you be prepared for questions that come your way regarding why you deserve a higher pay.

Negotiate Other Benefits

On top of baseline salary, it’s also possible in some roles and industries to negotiate for other valuable forms of compensation — such as fitness stipends, work-from-home time, funding for continued education, and more.

Of course, negotiating a good entry level salary is not necessarily an easy undertaking. Interviewers may put candidates on the spot, asking if they’re considering other offers or if the position is their top choice.

In an already uncomfortable situation, some candidates may stumble or misspeak if they don’t know how to justify what they’re asking for.

One simple place to start is asking whether it’s possible to negotiate the offer in the first place. Candidates may also inquire about future career growth and promotion potential, which could lead to a bigger salary later down the road.

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Navigating Post-College Life, Financially and Beyond

Navigating life after college can be exciting and challenging. Trying to make ends meet on an entry level salary might be particularly tough, especially when on the hook to pay back student loans. More than 43 million borrowers have federal student loan debt, with the average balance being $37,388 per person.

A flexible and adaptable approach to finances and where one lives could make the transition to post-college life more manageable.

Recommended: 46 Tips for College Graduates

For instance, recent graduates who are in a position to choose a new place to live might opt to move to a city with a lower cost of living.

Learning how to make a budget can also go a long way toward covering common expenses — even when one’s starting salary leaves a few zeroes to be desired. That said, there’s only so much instant ramen to eat or cups of coffee to skip out on.

Refinance Student Loan Debt

For those feeling weighed down by student loans while earning an entry level salary, additional options exist. Those with outstanding federal student loans, for example, may qualify for income-driven repayment plans, loan forgiveness for public service, or student loan deferment.

Refinancing educational debt with a private lender is another option that could save money each month — or help the borrower pay off student loans faster.

Student loan refinancing may allow recent grads to make lower monthly payments toward their existing debt, freeing up some extra cash. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.) Or, it could help a borrower to save money on interest paid on the loan as a whole, allowing them to pay off the debt total faster.

It’s important to note that refinancing with a private lender causes borrowers to forfeit certain guaranteed federal benefits, like income-driven repayment (IDR) and loan forgiveness.

SoFi refinances both federal and private student loans, offering no application fees and no prepayment penalties. Those who refinance their student loans through SoFi get access to a wide range of exclusive member benefits, including career coaching, financial advice, and more — at no additional cost.

Checking your student loan refinance rate won’t have an affect on your credit score and could be the first step toward saving thousands of dollars — or making more affordable monthly student loan payments.

See if you prequalify with SoFi in just two 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.


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

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

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

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

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Jun
16
2023
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How Does Student Loan Deferment in Grad School Work?

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

Attending graduate or professional school requires careful consideration so that you don’t end up with a heavier student debt burden than you planned for.

That means not only having a plan for graduate school loans but knowing what to do with any existing undergraduate student loans. One question many potential grad students may have is, if I go to graduate school, will my loans be deferred?

You could defer loans while in grad school for temporary relief, but loan refinancing or an income-driven repayment plan could bring longer-term help.

Read on to learn more about how to defer student loans while in grad school, and other alternatives to consider.

Deferment vs Forbearance

Graduation from undergrad or graduate school is followed by a payment grace period of six months for most federal student loans. But if you hit a snag at some point and can’t afford payments, both deferment and forbearance are designed to allow you to apply to postpone payments.

The main difference between the two: Interest accrues on only some federal student loans during deferment, whereas it accrues on nearly all of them in forbearance. Any unpaid interest is capitalized, or added to your loan balance, at the end of the payment pause, increasing the total amount you end up repaying.

To answer the question of, if I go to graduate school, will my loans be deferred?, it is possible to do, as long as you qualify for deferment.

Deferment, for up to 12 months at a time, for a maximum of 36 months, may be a better choice than forbearance if:

•   You have subsidized federal student loans and

•   You’re dealing with substantial financial hardship

If you apply to defer student loans while in grad school and don’t qualify, and your financial hardship is temporary, forbearance is an option.

If you have private student loans, many lenders will allow you to apply for a payment pause during hardship, too, though the terms and fees may be less borrower-friendly than is the case with federal student loans.

Do I Qualify to Defer My Payments?

Here’s how to defer student loans while in grad school: For federal student loans, you’ll need to submit a request to your student loan servicer, usually with documentation to show that you meet the eligibility requirements for the deferment. For private student loans, you’ll need to check the rules directly with the lender.

A variety of circumstances may qualify you for deferment. These are several of them.

Economic Hardship Deferment

You:

•   Are receiving a means-tested benefit, like welfare

•   Work full-time but have earnings that are below 150% of the poverty guideline for your family size and state

•   Are serving in the Peace Corps

Unemployment Deferment

You receive unemployment benefits or you are unable to find full-time employment.

Graduate Fellowship Deferment

You’re enrolled in a graduate fellowship program that provides financial support while you pursue graduate studies and research.

Military Service and Post-Active Duty Student Deferment

You are on active duty military service in connection with a war, military operation, or national emergency; or you’ve completed active duty service and any grace period.

Rehabilitation Training Deferment

You’re enrolled in an approved program that provides mental health, drug abuse, alcohol abuse, or vocational rehab.

Cancer Treatment Deferment

You may qualify for deferment while undergoing cancer treatment and for six months afterward.

When Interest Accrues in Deferment

If you’re looking into defer student loans while in grad school, you’ll want to check how interest would be handled during the payment pause and whether, if unpaid interest is capitalized, you’re prepared to take on a higher overall cost of the loan.

During deferment, you are generally not responsible for paying interest on:

•   Direct Subsidized Loans

•   Federal Perkins Loans

•   The subsidized portion of Direct Consolidation Loans

•   The subsidized portion of Federal Family Education Loan (FFEL) Program Consolidation Loans

With deferment, you are generally responsible for paying interest on:

•   Direct Unsubsidized Loans

•   Direct PLUS Loans

•   FFEL PLUS Loans

•   The unsubsidized portion of Direct Consolidation Loans

•   The unsubsidized portion of FFEL Consolidation Loans

•   Private student loans (if the lender allows deferment)

If you’re starting graduate or professional school or are in the thick of it, your federal borrowing options are Direct PLUS Loans (commonly called grad PLUS Loans when borrowers are graduate students) and Direct Unsubsidized Loans (also available to undergrads).

As noted above, those loan types accrue interest during a deferment.

Direct loans for graduate students currently carry a 7.54% rate (the rates are set by federal law for each academic year), with a loan fee of 4.228%.

Nongovernment lenders may offer private graduate student loans, sometimes with a fixed or variable rate and no loan fee.

Something to consider: If you pursue deferment on loans in the second category above to manage costs while in grad school, it’s a good idea to at least consider making interest-only payments during the deferment.

Options to Deferment in Grad School

There are at least two other ways, beyond forbearance, to get a handle on student loan payments in grad school.

Income-Driven Repayment

Some graduate students who have federal student loans might want to consider switching, even temporarily, to an income-based repayment plan.

Your monthly payment would be tied to family size and income, which may be low for a graduate student enrolled full time.

The four income-driven repayment plans stretch payments over 20 or 25 years, after which any remaining balance is supposed to be forgiven. After graduation, you could switch the student loan repayment plan back to the standard 10-year plan.

Though borrowers often pay less each month using one of these plans, they’ll generally pay more in total interest over the duration of the drawn-out loan.

The good news is that new federal regulations will prevent interest from accruing in certain situations with these plans. For example, previously, a monthly payment might have been less than the amount to cover interest on your loans. That unpaid interest was added to the amount you borrowed, and the amount you owed increased. However, under the new rules, excess interest will no longer accrue starting in July 2023, which could save you money.

In addition, any student debt that was forgiven used to be taxed as ordinary income, but the 2021 COVID relief package put a stop to that at the federal level, at least through 2025.

Refinancing

Another way to potentially lower your monthly payments without deferring your loans (and accruing interest) is by refinancing your student loans. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

With student loan refinancing, a private lender pays off your loans (both federal and private) with one new loan, ideally with a lower interest rate.

A decrease in an interest rate while maintaining the loan’s duration is a compelling way to both save money each month and over the life of the loan. To understand how a change of even 1% can affect how much interest you’ll pay on a loan over time, you can use this student loan refinance calculator.

Should you refinance your student loans, it’s important to first understand that you’ll lose access to federal programs such as income-driven repayment and loan forgiveness as well as future benefits applicable to federally held loans. Be sure to consider this carefully before refinancing.

Private lenders may or may not have a deferment option.

Lenders that offer student loan refinancing typically require a good credit history and a steady income, among other factors. A student loan refinancing guide can help you learn more about the process.

The Takeaway

Student loan deferment before or during grad school could bring temporary relief. It could also add unpaid interest to loans and create a bigger balance to pay off. Those looking to manage payments long term may want to look into alternatives.

One option is student loan refinancing. SoFi offers low fixed and variable rates, flexible terms, and no fees for refinancing student loans.

Plus, as a SoFi member, you’ll have access to a professional-grade list of benefits like career coaching and financial advice.

See what interest rate you may qualify for in 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.


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.

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

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

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Jun
15
2023
6 Benefits of Refinancing Student Loans

6 Benefits of Refinancing Student Loans

By | Fresh Out of School, Student Loans, student_loan | Comments Off on 6 Benefits of Refinancing Student Loans

Refinancing allows you to consolidate your existing student loans — you trade multiple loans for one student loan payment. When you refinance, you may be able to lower your monthly payments, reduce your interest rate, shorten your repayment terms, save money, and even add or remove a cosigner.

It’s a good idea to ask yourself, “Why refinance student loans?” before you start searching for the right private lender for you. Read on for a list of the benefits that may come your way when you refinance your student loans.

What Is Student Loan Refinancing?

Student loan refinancing involves consolidating your student loans with a private lender. In the process, you receive a new loan with a new rate and term. Moving forward, you’d make payments to that private lender on that one loan only.

It’s worth noting that refinancing is not the same as consolidating through a Direct Consolidation Loan. A Direct Consolidation Loan means that you combine multiple federal loans into one federal loan through the U.S. Department of Education. You usually don’t save money with a Direct Consolidation Loan, because the resulting interest rate is a weighted average, rounded up to the nearest ⅛ of a percent.

You may be able to refinance your federal student loans and private student loans all at once. However, it’s important to remember that refinancing your federal student loans means that you lose access to federal benefits and protections like income-driven repayment plans, some deferment and forbearance options, and loan forgiveness programs for certain borrowers, such as Public Service Loan Forgiveness. Federal student loans come with benefits and repayment options unique to them.

Is Refinancing Your Student Loans Worth It?

Is refinancing student loans a good idea for you? There are some benefits of refinancing student loans, like securing a lower monthly payment or a more competitive interest rate.

Continue reading for more information on when refinancing your student loans may make sense for your specific situation. Remember that not everyone will benefit from each of these advantages — it depends on your own needs.

1. Lower Monthly Payments

Refinancing may lower your monthly payments because you may lower your interest rate.

Or refinancing can lower your monthly payments if you lengthen your loan term. Extending your loan term, however, means you may pay more in interest over the life of the new loan. Some private lenders may offer lengthier repayment terms, varying from five to 25 years.

2. Reduced Interest Rates

In the context of reduced interest rates, refinancing student loans is probably worth it, especially if you choose a shorter loan term. That said, it’s important not to assume anything. It’s a good idea to take all calculations and factors into consideration before you pull the trigger on a refinance.

Private student loan lenders may offer both variable and fixed interest rates. Variable interest rates fluctuate depending on the situation in the broader market. They may begin at a lower rate but increase over time. In contrast, fixed interest rates stay the same throughout the life of your loan. If you are planning to pay off your loan quickly, you may consider a variable interest rate refinance.

3. Shorter Repayment Terms

Your repayment term refers to the number of years that you spend repaying your loan. A shorter repayment term may save you money because you’ll pay interest over a fewer number of years. In general, loans with a shorter repayment term come with lower interest costs over time but higher monthly payments. On the other hand, loans with a longer repayment term usually come with lower monthly payments.

It’s important to calculate your monthly payment and decide whether a higher monthly payment can fit into your budget.

4. Opportunity to Save Extra Money

Qualifying for a lower interest rate and either shortening your repayment term or keeping your current loan term may allow you to save money. Not only that, but when you don’t have several student loan payments to juggle, it may be easier to budget by lessening the confusion of having to make multiple loan repayments.

5. Consolidating Loan Payments

The perks of refinancing aren’t all money related. As mentioned earlier, you can simplify your loans and eliminate the confusion of having to make several loan payments every single month. Organizing your loan payments can go even further than this. Simplifying all of your bills (not just your student loans) may even give you some of the same psychological benefits of a Marie Kondo tidy-up, such as improving mental health, time management, and productivity.

Simplifying could also help you avoid missing payments, which can affect your credit score.

6. Adding or Removing a Cosigner

Applying for a cosigner release removes a cosigner from loans.

Why might you want to remove a cosigner from your loans through refinancing? You may no longer want a cosigner to remain responsible for repaying your debt if you were to default. Cosigning can also have implications for a cosigner’s debt-to-income (DTI) ratio, the ratio between the amount of debt they have related to their income. Their credit will show the extra debt they took on when they cosigned for you.

Learn more about refinancing student debt without a cosigner.

Tips for Finding a Lender

Ready to find a lender? Start by getting quotes from a few lenders, which usually just takes a few minutes online. Once you have several estimates, compare rates among lenders. Make sure you look at annual percentage rates (APRs), which represent the true cost of borrowing — they include fees as well.

Beyond getting a low-interest rate, you also want to look carefully at repayment terms. Are you looking at a shorter- or longer-term length? Choosing your current term length or a shorter term can help you save money.

Using a calculator tool for refinancing student loans can also help you estimate how much money you may save and give you a sense of what your monthly payments might be.

Life Changes That Can Make Student Loan Refinancing Worth It

Certain life changes and situations can also make refinancing worth it. For example, if you want to raise your credit score, save more money, or buy a house, you may want to consider refinancing.

•   Higher credit score: Making payments on time helps boost your credit score. One refinanced student loan payment is much easier to keep track of than multiple student loan payments. Simplifying can help prove that you’re a reliable borrower.

•   Save money for other things: If you want to save for a new living room set or for your child’s college fund, for example, refinancing can change your interest rate and help you save money over the long term.

•   Lower your debt-to-income (DTI) ratio: When you’re on the hunt for another type of loan, such as a mortgage loan to buy a home, you may discover that you need to lower your DTI. Refinancing your student loan debt can help you pay off your loans faster and therefore lower your DTI more quickly.

Learn more in our guide to refinancing student loans.

Explore SoFi’s Student Loan Refinancing Options

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

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

Photo credit: iStock/stockfour

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

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


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

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Jun
15
2023
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What Is the Average Student Loan Debt After College?

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

According to data from The College Board, college graduates from the class of 2021 graduated with an average of $29,100 in student loan debt. The amount of student loan debt a person takes on can vary based on factors like the type of school they attended, whether or not they pursued an advanced degree, and whether they received any scholarships or not. Read on for more information on average student loan amounts.

Average Student Loan Debt After College

As of March 2023, the total amount of student loan debt was approximately $1.78 trillion , and according to EducationData.org, there are 45.3 million borrowers in the country.

That means there are a lot of us trying to understand and navigate the student loan landscape. How much are we borrowing? And what can we do to decrease the amount we owe?

As earlier mentioned, The College Board found that cumulative debt levels upon graduation — meaning the debt students had accumulated over the four years of undergrad — was $29,100 per borrower for those graduating in 2021 (the latest stats available). And in 2020 – 2021, 54% of graduates carried student loan debt.

How Average Student Loan Debt Has Changed in the Last 10+ Years

It’s no secret that college is expensive and has only gotten more expensive in the last 10 years. According to data compiled by U.S. News, the cost of attending college with in-state tuition at public national universities increased by nearly 175% from 2002 to 2022.

Over roughly that same period of time (from 2010 to 2020), total outstanding student loan debt grew from $845 billion to $1.7 trillion in order to cover those costs. Though as of the third quarter of 2022, the total outstanding federal student loan debt is $1.6 trillion. This student loan debt crisis is taking a financial toll on graduating students, potentially affecting their credit and home-buying prospects.

Recommended: Scholarship Search Tool

Average Student Loan Debt

There is good news, though: the growth of student loan debt is starting to decline. The average cumulative student debt was $29,900 for 2011 graduates (with bachelor’s degrees) and $32,100 for 2016 bachelor’s degree recipients. For the undergraduate class of 2021, the average was $29,100.

Public vs Private Four-Year Schools Student Loan Debt

The College Board’s annual survey of trends in student aid found that 2021 graduates of public four-year institutions had an average college debt of $21,400, compared to private, non-profit school borrowers, who graduated with an average debt of $22,600.

It should be noted that numbers for for-profit schools are harder to come by, but what is true across analyses is that students at for-profit schools take out more in student loans and default at higher rates.

Recommended: College Finder Tool

Undergraduate vs Graduate Student Debt

Let’s look at this from a different angle. How does undergrad debt compare to grad school debt? The College Board’s annual survey of student aid trends found that on average, undergraduates took out $3,780 in federal loans in the 2021-2022 school year. That same year, graduate students took out $17,680 in federal loans.

If you are planning to get an advanced degree, prepare for a potential mortgage-sized debt load. As an example, over half of people with law degrees have at least $150,000 in student loan debt according to the American Bar Association’s 2021 Law School Student Loan Debt survey.

The Average Student Loan Debt for Borrowers Under 25

There are about 6.9 million people under the age of 24 with student loan debt. As a group, they owe just over $101 billion, according to the U.S. Department of Education’s Q3 2022 report .

Average College Debt by State

When we look at the average student loan debt broken down by school and region, it also becomes clear there is a range of highs and lows across the country. The Institute for College Access and Success (TICAS) puts together a comprehensive report on national student debt, using numbers self-reported to college guide publisher Peterson’s from thousands of colleges and universities.

The numbers reported by schools vary but it does allow for a geographic look at the average student loan debt by state.

According to EducationData.org’s report (updated in April 2022) , the highest debt states (including Washington DC) in 2021, the last year for reported numbers, were Washington DC ($54,945), Maryland ($42,861), Georgia ($41,639), Virginia ($39,165), and Florida ($38,459). The states (including Puerto Rico) where college graduates had the lowest average debt were South Dakota ($30,954), Iowa ($30,464), North Dakota ($28,604), and Puerto Rico ($28,242).

Average Student Loan Payment

A borrower’s monthly student loan payment can vary quite a bit depending on the amount of debt they carry and the type of payment plan they have selected. According to data from the Federal Reserve, typical payments for student loans can range from $200 to $299. Though, as noted, your monthly payments may be more or less depending on factors like your loan amount and payment plan.

How Long It Takes to Pay Off Student Loans

But even as the growth of new student loan debt is slowing, there continue to be outstanding student loan amounts that haven’t yet been paid off — which helps to explain why the total loan balances are hitting record highs.

If you have a federal loan when you graduate, you can choose a repayment plan. The default option is the Standard Repayment plan, which is 10 years of fixed monthly payments.

Recommended: Student Loan Repayment Options

There are a few other options that extend the repayment term or allow you to repay on an income-driven plan. Many graduates take longer than 10 years to pay back their loans, and about a third of borrowers have gone into student loan default in the past 20 years, according to survey data from The Pew Charitable Trusts .

Though, it’s worth noting that the U.S. Department of Education announced in April 2022 that it would eliminate the negative consequences for those with defaulted student loans as a part of the student loan pause that began due to Covid-19 and was extended by the Biden-Harris administration.

There isn’t a lot of data on exactly how long it takes students to pay off their student loans, partially because it varies based on how big your loan amount is and partially because some numbers count consolidation as loan repayment — when in reality you’ve taken out a new loan with different terms.

The U.S. Department of Education lists the maximum repayment timelines for Direct Consolidation loans, which for borrowers holding between $20,000 and $40,000 in student loan debt is 20 years. Direct Consolidation loans allow borrowers to consolidate their federal loans into a single loan.

Recommended: Student Loan Options: What is Refinancing vs. Consolidation?

But it is worth noting: the sooner you pay off your loan, the more you save in the long run because you aren’t accruing interest for as long. Part of the reason so many students struggle to make payments is that their student loan payments are large in comparison to their incomes.

The interest rate can be a big factor in that. While interest rates on federal student loans are fixed and set annually by the government, interest rates on private student loans are based on a number of factors and are updated as needed. Use SoFi’s student loan calculator to figure out how your monthly payments could change at different interest rates.

Refinancing Student Loans With SoFi

Those looking for options to manage student loan payments might consider student loan refinancing. This process involves borrowing a new loan from a private lender. Lenders review applicant credit history and earning potential (among other financial factors) to determine the new loan terms, with a new, hopefully, lower interest rate.

Borrowers who refinance student loans with a private lender may also be able to adjust their repayment term. Extending the term could lower monthly payments but may end up making the loan more expensive over the life of the loan.

Those who want to continue to take advantage of federal loan benefits like income-based repayment may not want to refinance with a private lender, because all federal student loan benefits are lost when a federal student loan is refinanced.

It takes just a few minutes to get a quote to see what refinancing with SoFi could do for your student loans. The application is entirely online and there are no fees.

Learn more about refinancing your student loans with SoFi.

FAQ

Is $50,000 a lot of student debt?

Yes, $50,000 is a lot of student loan debt. According to data from The College Board, the average amount of debt a 2021 graduate carried was $29,100.

How many people have student loan debt in the US?

In the U.S. as of Q3 2022, there are approximately 42.8 million people who have student loan debt, according to data from the U.S. Department of Education.

What is the average someone pays a month for student loans?

The average someone pays per month for student loans will vary based on factors like the total loan amount and the repayment plan they have selected.

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

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


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

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

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

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

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Jun
15
2023
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The Navy Loan Repayment Program Explained

By | Debt Payoff, Financial Independence, Student Loans, student_loan | Comments Off on The Navy Loan Repayment Program Explained

The U.S. Navy offers service members a proud and venerable tradition, having patrolled the seas since its inception in 1775.

Almost 250 years later, the Navy still offers its sailors a remarkable life experience, a chance to serve the country, and a host of benefits that make life somewhat easier for military personnel.

One perk that may appeal to Navy members is the Navy Loan Repayment Program, the cornerstone of the service’s student loan relief and forgiveness efforts.

The Navy Loan Repayment Program can pay up to $65,000 toward a service member’s student loans. That makes it well worth a closer look for Navy members looking for help paying down their college loan debt.

Who Qualifies for the Navy Program?

The Navy Loan Repayment Program is designed to pay up to $65,000 of federally guaranteed student loans for Navy personnel who qualify. The program is offered to members of the service’s Delayed Entry Program who eventually enlist in the Navy full time.

The Delayed Entry Program, also known as the Delayed Enlistment Program or inactive reserves, is meant to provide an onboarding experience before official enlistment. In the case of the Navy, a future sailor who signs on to delayed entry agrees to report for active duty in the next year. Currently, delayed-entry members can remain on inactive duty for 365 days. At that point, they must enlist for active duty in the Navy to receive student loan aid.

The Delayed Entry Program is only one hurdle Navy members must clear before becoming eligible for the loan repayment program. Service members must also meet the following criteria.

•   They must be “first time” military service members (meaning applicants have never served in the U.S. military before).

•   They must have a high school diploma.

•   They must have achieved a minimum score of 50 on the Armed Forces Qualification Test, which the Navy uses to measure a potential sailor’s IQ and aptitude. A test score of 35 will get an applicant into the Navy, but a higher score of 50 is needed to qualify for the loan repayment program.

•   They must have a student loan that is not in default.

How Navy Student Loan Repayment Works

Through the program, the Navy will pay 33.3% of a service member’s outstanding loan balance or $1,500 — whichever is higher — for each year of naval service, up to three years. If the student loan balance falls below the 33.3% threshold and the borrower is in good standing with the Navy, the Navy will pay the remaining student loan balance in full.

Only specific federal student loans qualify for the loan repayment program. They are as follows:

Stafford Loans, subsidized or unsubsidized. Also known as Direct Stafford Loans, these low-interest loans are made to qualified borrowers for tuition and other college expenses. The funds come directly from the U.S. Department of Education.

Federal PLUS Loans. Otherwise known as Direct PLUS Loans, these loans are offered by the U.S. government to undergraduate and graduate students to cover tuition and college costs. In many cases, Direct PLUS Loans offer funds to college students to cover expenses not covered by other financial aid programs.

Consolidation Loans. Consolidation loans bundle multiple federal loans into a single loan, streamlining the repayment process.

Perkins Loans. Perkins Loans are low-interest loans geared toward college students (both undergraduate and graduate) who demonstrate financial need. Congress stopped making Perkins student loans in 2018, but naval personnel may still have outstanding Perkins loan debt and thus are eligible for help from the Navy Loan Repayment Program.

A future Navy member may apply for the loan repayment program early in the service enrollment process. A Navy applicant is given the option to enroll in the program at the Military Entrance Processing Stations.

MEPS, the stations funded by the U.S. Department of Defense to enroll military service members, handle their applications and assess their physical, mental, and emotional health to see if they’re fit for military service.

For student loan relief purposes, the Navy recruiter on hand (also known as the MEPS classifier) will process all of a Navy recruit’s paperwork, including loan repayment application documents, and submit them for processing.

What Documents Do You Need To Apply?

All documents are available at the MEPS recruiting center or through specific U.S. government websites. You will need all of the following documents to apply:

•   A copy of the Loan Repayment Program Worksheet.

•   A copy of the Navy Enlistment Guarantee. The Navy Loan Repayment Program must be noted as a guarantee on the document.

•   A copy of the Statement of Understanding.

•   A copy of the Future Sailor’s National Student Loan Data System printout (available at the Department of Education’s website. When filing the data system form, the applicant will be assigned a PIN. By and large, it’s the same pin assigned to a financial aid applicant on the Free Application for Federal Student Aid. If the applicant doesn’t have a FAFSA® PIN, one will be assigned).

•   A copy of the Personalized Recruiting for Immediate and Delayed Enlistment.

•   A copy of DD Form 2475, Annual Application for Student Loan Repayment, completed by the student loan lender.

•   A copy of the lender’s promissory note for each Parent PLUS Loan, which clearly designates the student dependent on the note.

If you’re already serving in the military or served, Public Service Loan Forgiveness is a great option. The program is for those working for a qualified government organization (municipal, state, or federal) or many nonprofit organizations.

Filling Out the Loan Repayment Form

The key document when applying for the Navy Loan Repayment Program is DD Form 2475, which is broken down into four sections.

Section 1 is completed and approved by the recruiting officer (i.e., the verifying official). The section includes the naval office address and contact information so the lending institution can forward the proper paperwork. If the section is blank, the lender is under no obligation to complete the form. Basically, Section 1 includes the recruiter’s name and signature and the date.

Section 2 includes the applicant’s name, address, telephone number, email address, and Social Security number. This section is completed by the service member/applicant.

Section 3 includes the student loan data (including the borrower’s name, the loan amount, outstanding balance, the original date of the promissory note, the loan holder address, email and phone number, and the loan application number). The section also includes a box noting whether the student loan is in default or not, and asks for the name and address of the financial institution where the loan aid is to be sent.

Section 4 is a grid where more information on the loan can be included to expedite processing. Sections 3 and 4 are filled out by the student loan lending institution.

The Navy mandates that Form 2475 be completed, signed, and transmitted to the lending institution within 60 days of the recruit’s arrival in the Delayed Enlistment Program.

If the recruit/applicant doesn’t know his or her current student loan servicer, the U.S. Department of Education can lend a hand by phone or online.

Important Things to Know

Loan repayment program applicants may want to know several key features and rules governing the Navy student loan program.

Payment dates. Annual loan relief payments are issued to the service member on the original enlistment day during the first, second, and third year of enlistment in the Navy.

Payments are taxable. Any payments made by the Navy to the service member are taxed, as the Internal Revenue Service deems loan relief as taxable income in the year the money is paid out. Expect to have between 25% and 33% of the payment withheld in both federal and state taxes (the amount depends on the state where the applicant resides).

Lenders only. The Navy will not refund any loan amount that is paid out by other parties (aside from the qualified student loan lenders).

If a Navy recruit has any questions about the loan repayment program, the Navy urges him or her to contact the loan repayment manager at Naval Command. The manager is directly responsible for managing the loan program.

Contact the manager at:

Navy Recruiting Command
Attn: LRP
5722 Integrity Drive, Building 784
Millington, TN 38054

Email: [email protected]

Other Ways to Repay Student Loans

Former students who are on the fence about a military commitment or who may be struggling to make student loan payments, have alternatives to military-supported repayment.

One is student loan refinancing with a lender like SoFi®. Someone with a combination of private and federal student loans can refinance both types into one single loan with one monthly payment.

While there are many advantages to refinancing student loans, there are disadvantages, as well. If you are thinking of taking advantage of federal benefits like income-driven repayment or Public Service Loan Forgiveness, refinancing may not be right for you because you’ll lose your eligibility for federal programs.

Borrowers who do not plan on using federal benefits and choose to refinance may qualify for a lower interest rate or lower monthly payments. They’ll have only one payment a month and may be able to either lengthen or shorten the term. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

SoFi offers an easy online application, no fees, and competitive rates. It takes just two minutes to see if you prequalify and checking your rate will not affect your credit score.

Interested in student loan refinancing? Get started with SoFi 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.


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.

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

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

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