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May

2025

Where to Get a Student Loan for College

By Kelly Boyer Sagert | Going to College, Student Loans, student_loan | Comments Off

With the rising price of tuition, fees, and room and board at four-year public colleges and private nonprofit institutions, more students in all income brackets have been taking out student loans.

If you’re wondering where to get a student loan for college, you have two options. The first is getting a federal student loan through the government. Federal student loans account for more than 93% of all student loan debt. The second option is a private student loan, which is given by a bank, credit union, or online lender. Private student loans are not based on need, but rather your college’s cost of attendance, your credit profile, and your income (or your cosigner’s income).

Keep reading for more on where to get a student loan, including both federal student loans and private student loans.

Key Points

• Students can get federal student loans through the government and private student loans through banks, credit unions, and online lenders.

• To get a federal student loan, students must complete the Free Application for Federal Student Aid (FAFSA®), which determines eligibility for various federal aid programs.

• Private student loans are based on creditworthiness and income, often requiring a cosigner, and may have varying interest rates and terms.

• Private student loans should be prioritized after all federal aid has been exhausted, as private loans don’t offer the same borrower protections as federal loans.

• It’s crucial to understand the terms of any loan, including interest rates (fixed vs. variable), repayment schedules, and potential fees. Comparing different loan options ensures that borrowers choose the most suitable and affordable financing for their education.

Prioritizing a Plan

When creating a plan to fund college education, it’s wise to first explore any avenues for free money in the form of grants and scholarships.

By taking a look at the remaining balance after any free money has been found, exploring federal loans can be a smart next step. They come with income-based repayment options and the ability to request loan forgiveness under some circumstances. There are also work-study programs that can help students earn money while attending college.

If all needs are not covered, then there are private student loans to consider, along with Direct PLUS Loans that parents can apply for to get funds for their children.

After that, some people may seek out personal loans to cover living expenses while in school and/or emergency loans from the college.

Here are more specifics about these options.

Where to Get a Federal Student Loan

To obtain any kind of federal student loan, a student must first fill out the Free Application for Federal Student Aid, commonly called the FAFSA®.

After filling out this form, a student will have insights into what federal funding is available for them, along with work-study options. More specifically, each school that a student applies to can send a financial aid offer letter, which includes information about how to apply for student loans that they qualify for.

Two broad types of federal loans are:

• Direct subsidized loans: Direct Subsidized Loans are for undergraduates that demonstrate financial need. With this loan, the U.S. Department of Education pays the interest while the student is enrolled at least half-time, during the grace period after leaving school, and during any deferment periods.

• Direct unsubsidized loans: Direct Unsubsidized Loans are available for undergraduate students, as well as graduate and professional ones, that do not demonstrate financial need. Interest begins accruing right away.

Where to Get a Private Student Loan

A variety of financial institutions offer private student loans and have their own criteria for qualification. Some allow students to apply online and can give quick responses, while others go a more traditional route with in-person applications.

Private lenders will typically review a student’s income, plus that of any cosigner, along with credit histories and more to make lending decisions. A lender might grant a private student loan to someone whose credit isn’t stellar, but charge a higher interest rate.

When applying for a private student loan, it’s important to understand the loan terms before signing the note. This includes the interest rate and whether the rate is fixed (staying the same over the life of the loan, with the principal and interest payments also staying the same) or variable.

Pros of Private Student Loans

Benefits of private student loans can include the following:

• They can bridge the gap between what is owed after federal student loans are applied to the balance and what is needed to attend college.

• Students can apply for them any time of the year, without the strict deadlines associated with federal loans.

• Borrowers may have more choices in interest rates and terms.

• The loans may not include origination fees or prepayment fees, although that isn’t universally true.

Cons of Private Student Loans

Potential cons can include these:

• It isn’t unusual for a private lender to require a cosigner because college students often don’t have enough income to qualify or have established a good enough credit profile to get the loan on their own.

• Students who are considered a higher credit risk may pay more in interest.

• Private student loans don’t come with many of the benefits associated with federal loans, such as forgiveness programs and income-based repayment plans.

• Students may borrow more than they can ultimately afford, and these loans are typically not dischargeable in bankruptcy proceedings.

Recommended: A Complete Guide to Private Student Loans

Other Types of Loans

In addition to federal and private student loans, students and their families may consider other borrowing options to cover educational expenses.

Parent PLUS Loans

Students and parents can consider the Parent PLUS Loan, in which parents can apply for federal funding to help their children attend college.

Eligibility for a Parent PLUS Loan isn’t based on financial need, but credit is checked. If applicants have a credit history that’s considered “adverse,” they “must meet additional requirements to qualify.”

According to the Federal Student Aid office, adverse credit can include:

• Having accounts that, in total, have an outstanding balance of more than $2,085 and are at least 90 days delinquent.

• A default or a bankruptcy discharge during the previous five years.

• Involvement in a foreclosure, repossession, or tax lien situation in the previous five years.

• Write-off of federal student loan debt or wage garnishment during the past five years.

Qualifying parents of a dependent undergraduate student can receive funding through this loan program to cover education-related costs that are not covered by other financial aid.

Personal Loans

It’s also possible to apply for personal loans from financial institutions to cover living expenses during college or to address an emergency. There are downsides to this, though, including:

• Interest rates will likely be higher than student loans, along with shorter payoff periods (which means principal and interest payments can be higher).

• There isn’t typically a grace period, which means repayment starts right away.

• These loans don’t come with deferments or forbearance, as can be available through federal student loans.

Emergency Loans

In an emergency, a student might want to reach out to the college financial aid center to see if the school offers emergency loans for those in need. These loans would not typically be large, perhaps $1,000 to $1,500, but might be enough to address a dire situation.

Each college has its own guidelines, so check them out carefully. Some charge interest; others may not. Some may charge a service fee; others may not. As with personal loans, repayment may start immediately, so factor that into budget planning.

The Takeaway

When exploring options to finance a college education, it’s essential to understand the various student loan avenues available and where to get them. Federal student loans, accessible through the Free Application for Federal Student Aid (FAFSA), often offer lower interest rates and flexible repayment plans. Private student loans, provided by banks, credit unions, or online lenders, can help bridge funding gaps but may come with higher interest rates and less lenient repayment terms.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What are the main sources for obtaining a student loan?

The two primary sources for student loans are federal student loans provided by the government and private student loans offered by banks, credit unions, and online lenders. Federal loans account for over 93% of student loan debt and are typically based on financial need, while private loans depend on creditworthiness and income.

How do I apply for a federal student loan?

To apply for a federal student loan, you must complete the Free Application for Federal Student Aid (FAFSA). After submission, you’ll receive information on the types and amounts of federal aid you qualify for, including work-study options. Each school you apply to will send a financial aid offer letter detailing your eligible loans.

When should I consider private student loans?

Private student loans can be considered after exhausting federal aid options. They can bridge the gap between the remaining cost of attendance and the amount covered by federal loans. Private loans are based on creditworthiness and may require a cosigner. They often lack the benefits of federal loans, such as income-driven repayment plans and loan forgiveness programs.

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

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

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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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SOISL-Q225-044

May

2025

Angel Investors: What They Are and How to Find Them

By Kate Ashford | Growing Wealth, invest, Investing | Comments Off

An angel investor is typically a high-net-worth individual or a group of individuals who invest their own capital in early-stage startup companies, usually in exchange for an equity ownership stake.

An angel investor may provide a one-time investment in a company, or they may provide ongoing support. They may also be called private investors, seed investors, or just “angels,” for short. Like any other type of investor, angel investors seek projects that have the potential to become profitable, in order to see a return on their investment.

There are several ways a new business might try to secure money for expansion or growth, from friends to bank lenders to joining a startup accelerator program. Angel investors are another option that can provide a capital infusion, but there are trade-offs when accepting funds in exchange for a stake in a new company.

Key Points

• Angel investors provide seed capital for early-stage startups, typically in exchange for equity in the company.

• Unlike Venture Capitalists, which work for bigger firms, angels invest their own money.

• In addition to funding, angel investors may also provide business advice, mentorship, and networking opportunities.

• Some angel investors are professional, and fund multiple projects at once. But some startups obtain funding from angel investors who are friends or family.

• Because most startups are high risk, angel investors must be prepared to lose money.

What Is an Angel Investor?

If you’ve ever watched the show “Shark Tank,” you’ve seen one type of angel investor in action. On the show, a group of wealthy investors listen to pitches from entrepreneurs who are looking for funding for their small business or startup. In exchange for providing seed money, these investors generally get an ownership share in the business.

Angel investors can also be personal friends or colleagues of the entrepreneur. Typically they’re wealthy enough to provide a significant amount of money, despite the risks the startup could fail.

Again, angel investors use their own funds when investing in new projects. Venture capitalists, by contrast, work for firms that supply funding for new ventures.

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Who Can Be an Angel Investor?

Angel investors were once required to be accredited investors, which demanded, among other things, that they have a net worth of $1 million in assets, not including personal residences — or yearly income greater than $200,000 alone, or $300,000 for a household for the previous two years. (Anyone who holds a Series 7, Series 65, or Series 82 in good standing also qualifies).

This was meant to limit angel investing — which is a risky practice — to those who ostensibly had enough assets to safely dabble in it. In recent years, however, virtually anyone can be an angel investor, as long as they have the capital and the willingness to take certain risks.

Recommended: What Is Active Investing?

Ways to Become an Angel Investor With Less Cash

These days it’s possible to get involved in angel investing via a crowdfunding-type of platform, without putting tens of thousands of dollars on the line. A smaller investment won’t reduce the risk, but it may reduce an investor’s total loss. These crowdfunding platforms enable smaller investors to dip their toes in the water (picture a GoFundMe for your business idea):

Republic, StartEngine, and WeFunder are among the bigger platforms that provide investment opportunities for accredited and non-accredited investors — and potential funding options for entrepreneurs. Some platforms act as a marketplace of sorts, helping to match potential funders with the right project.

Would-be investors who are non-accredited would do well to familiarize themselves with Reg CF, or Regulation Crowdfunding, which dictates the terms and conditions for non-accredited investors (e.g., investing limits, income rules, and so on).

Recommended: Tips for Investing in Tech Stocks

What Are the Pros of Using Angel Investors?

There are a number of benefits to using angel investors to help finance a venture.

Less risk

If you take out a loan to finance your business, you’ll still be expected to pay it back, whether or not your venture is a success. Angel investors generally understand the risk of investing in a startup business, and may not expect any return on capital if the business goes south.

Expertise

If angel investors also happen to be experts in your business, they can offer advice and guidance based on their years of experience.

Credibility

Angel investors are often well-known in their field, and if they invest in your idea, it can boost your reputation and status to have them on board.

They’re Willing to Take a Leap

Unlike a bank, which may need more concrete proof that you’re onto something big, an angel investor might be more willing to gamble on a solid idea.

Better Chance of Success

Companies with angel investor interest stand a greater chance of survival than those with less angel investor interest, according to findings from the National Bureau of Economic Research. Having angel investment doesn’t mitigate the risk of starting a business, but it’s possible that having angel investors on board can provide some oversight or accountability that might be beneficial.

What Are the Cons of Angel Investors?

There are also some potential disadvantages to having angel investors.

Loss of Full Ownership

Angel investors often provide funding in return for a share of the business, so involving angel investors means giving up some of your control. It also means that if the business succeeds, they’ll share in the proceeds.

They May Add Pressure

Angel investors aren’t giving you money out of kindness and good will. They may be aggressive investors who expect to see a high return on their investment. If they’re sinking money into your venture, it may feel there’s more riding on your success or failure, and seek to influence business decisions.

Funding May Be Slow

Finding angel investors can take time, and the process of securing backers — and for the cash to find its way to your venture — can take even longer.

It’s a Competitive Market

Even if you have a brilliant idea, there’s no guarantee that you’ll be able to find backers for it. According to the University of New Hampshire Center for Venture Research, which focuses on trends in angel investing, in 2023 only about 24.4% of projects received angel investment. That said, there were 54,735 new ventures that did get funding in 2023 (although that was a 12.2% decrease over 2022 projects funded).

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Where to Find Angel Investors

Startups looking for early-stage investors can look in several places.

Friends and Family

In many cases, startups get some or all of their initial investment from friends and family who believe in their idea and want to support the venture.

High-Net-Worth Individuals

Networking within your business community may allow you to make connections with people who’d be interested in helping to back your idea. It can be helpful to join local business, trade, and community organizations. Attend meetings and trade fairs, and have your elevator pitch well-honed.

Angel Funding Groups

There are a number of sites that seek to match entrepreneurs with angel investors, including:

Angel Capital Association: A collective of accredited angel investors

Golden Seeds: A group whose members focus on women-led ventures

Angel Investment Network: A network that seeks to connect entrepreneurs with business angels

Crowdfunding Sites

While traditional angel groups seek to match entrepreneurs with accredited investors, as noted above, some crowdfunding sites allow lots of smaller investors to pitch in to move your venture along. You’ll likely have to apply to have your idea or business vetted by the site before they’ll present your project to their members.

The Takeaway

Angel investors are typically high-net-worth individual or group backers that support startup and early-stage business ventures. But lately, opportunities have opened up for individuals of all types to invest in companies that have recently launched.

For entrepreneurs, an angel investor can be an enormous help, both in terms of financing their dream as well as providing guidance if they have relevant business experience. On the flip side, some entrepreneurs may find there is added pressure to deliver when an angel investor is backing their startup.

Whether you’re interested in finding an angel investor for your own startup idea, or thinking of becoming one, there are a number of risks associated with this type of business. Consider the pros and cons in light of your own financial goals, as there are many different paths forward.

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FAQ

How much do angel investors usually invest in a business?

The amounts vary, and are influenced by the angel investor’s own status as either an accredited or non-accredited investor: SEC designations that set net worth and income criteria for investors. Angel investors tend to invest in the $25,000 to $100,000 range. Venture capital funds may be higher.

How do you pay an angel investor?

Most angel investors get an equity stake in the company in exchange for seed capital. If the company succeeds; that equity stake may provide a profit. If the venture fails, angel investors usually don’t expect the funds to be returned. These terms are set when the deal is made with the entrepreneur.

Do angel investors pay tax on any profit they earn?

Yes. The profit from a successful venture is taxed under capital gains rules. However, if the angel owns Qualified Small Business Stock in the company, the profit from QSBS is not taxed. Taxes are complicated, especially with high-risk angel investing, and it’s best to consult with a professional.

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SOIN-Q225-049

May

2025

Do I Need a Student Loan Cosigner? A Guide

By Kayla McCormack | Going to College, Student Loans, student_loan | No Comments

Whether you’ve been turned down for a private student loan or you’re applying for the first time, it’s important to understand how a cosigner can impact your loan application.

Having a cosigner on a student loan is a bit like a letter of recommendation to get into college. A cosigner can reassure the bank or lender that you are capable of repaying the loan. A cosigner is not always required for student loans, such as with most federal student loans. Depending on a student’s financial history, employment, and what type of loans they’re applying for, the likelihood of requiring a cosigner will vary.

Read on to learn more about what a cosigner is and when it may make sense to add one to your student loan application. This article will also discuss some of the risks involved with being a cosigner, and some tips on how to ask someone to be a cosigner on a student loan.

Key Points

• A student loan cosigner is someone — often a parent or guardian — who agrees to take equal responsibility for repaying the loan if the student borrower is unable to do so.

• Most federal student loans, such as Direct Subsidized and Unsubsidized Loans, do not require a credit check or a cosigner.

• Direct PLUS Loans, available to graduate students and parents, do require a credit check and may necessitate an endorser (similar to a cosigner) if the applicant has adverse credit history.

• Private lenders usually assess creditworthiness, and students with limited credit history or income may need a cosigner to qualify.

• Some lenders offer cosigner release options after the primary borrower meets certain criteria, such as making a series of on-time payments and demonstrating financial stability.

What Is a Student Loan Cosigner?

A cosigner is a person who agrees to repay the loan if a borrower defaults or is otherwise unable to pay their debt. Adding a cosigner to a student loan application could help the primary borrower secure a lower interest rate, depending on the cosigner’s financial and credit history.

When a cosigner takes on a student loan with the borrower, they’re assuming equal responsibility to repay the loan. Any negative actions on the loan, such as a late payment or defaulting, could harm the cosigner’s credit.

How to Decide If You Need a Cosigner on a Private Student Loan

Before deciding whether you need a cosigner on a private student loan, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA®). This will determine how much aid you’ll receive, and help you and your family determine how much of a gap you’ll need to fill with other sources of funding.

Once all other options are exhausted, students could look into private student loans and consider a cosigner. When considering a cosigner, there are several factors to evaluate, including the type of loan you’ll be applying for, your credit history, credit score, income, and any history of missed payments. Continue reading for a more in-depth discussion of these factors.

1. What Type of Student Loans Are Being Considered?

The type of loans you’re applying for may affect your need for a cosigner.

Federal Student Loans

For the most part, federal loans do not require a credit check or a cosigner. The federal loan types that do not require a cosigner include:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct Consolidation Loans

The exception is a Direct PLUS Loan, which does require a credit check. Borrowers interested in a Direct PLUS Loan may need an “endorser” for the same reasons they may need a cosigner for a private student loan: if their credit history and other financial factors are lacking.

A Direct PLUS Loan can help graduate students and parents of undergraduate students pay for the entire cost of school attendance, minus any other financial aid. Direct PLUS Loans are the only federal student loans that look at an applicant’s credit history, thus the potential need for an endorser.

An endorser is the equivalent of a cosigner — they agree to repay the Direct PLUS Loan if the borrower defaults or is delinquent on payments.

Private Student Loans

IIf an applicant doesn’t meet the lending requirements on their own, they might need a cosigner to obtain any private student loan. To qualify for a private student loan, you typically have to check more boxes regarding financial history than you would for a federal student loan.

Having a cosigner on a private student loan is incredibly common. More than 90% of private student loans for undergraduates require a cosigner, and more than 75% of graduate and professional students need a cosigner for their student loans.

Recommended: A Complete Guide to Private Student Loans

Both Federal and Private Student Loans

Once a student has a full understanding of the financial aid they qualify for after submitting their FAFSA, they can determine if federal student loans and other federal aid like scholarships and grants will cover the cost of their education or if they need to supplement the amount with a private student loan. While the borrower might not need a cosigner for federal loans, they might require one for private student loans they might take out.

2. Are You an Undergraduate or Graduate Student?

The necessity of a cosigner may vary depending on whether a person is applying for graduate or undergraduate private student loans.

Undergraduate Student

Undergraduates are generally more likely to need a cosigner on their private student loans because they typically haven’t established a lengthy credit history. Without an established credit history, there is no track record for lenders to evaluate. In addition, undergrads might not have a steady income, which can also affect whether they are approved for a loan without a cosigner.

Graduate Student

The type of schooling a person is pursuing won’t have an impact on the need for a cosigner. However, a person’s credit history and income will still factor into the decision.

3. How Does Your Credit Score Factor into the Decision?

Most private lenders will look at an applicant’s credit score (among other factors) to determine eligibility. Having a lower credit score may make it more challenging to get a loan without a cosigner.

FICO® Scores (the most common credit scores used by lenders and financial institutions) range between 300 and 850. If a person wants to check their score, many websites offer free credit scores or credit score monitoring (just be sure to read terms and conditions carefully).

Ultimately, it’s up to each individual lender to consider the credit score and other financial factors before approving a loan, and every lender has different criteria.

4. How Long Is Your Credit History?

A person’s credit history gives lenders a sense of their ability to pay on time, or ability to pay off debt in full. The length of a person’s credit history makes up about 15% of their FICO Score.

Length of credit history is determined by average age of accounts (AAoA). Lenders take the lifespan of a person’s accounts and divide by the number of accounts that person holds. A potential borrower can determine this number by figuring out how long they’ve had each account in their credit history, then dividing by the number of accounts.

The real sweet spot for credit history comes at the seven-year mark. From that point, early negative marks on accounts might have faded away. It shows lenders that a borrower can pay loans and maintain accounts over time.

There are a number of factors at play in lending decisions, but a short credit history could mean that adding a cosigner is beneficial.

5. What Is Your Employment Status?

Lenders want to be sure that you can repay your debts, so they’ll generally also evaluate an applicant’s income.

Employed Full-Time

Generally, if a person is employed full time at a salaried job, it shows lenders they have the capability to repay the loan they’re borrowing. Lending requirements vary based on the lender, but having an established income history may help an applicant avoid needing a cosigner.

Employed Part-Time

While part-time employment can still be beneficial for a loan application, it’s possible that a cosigner might help boost the application. The applicant’s debt-to-income ratio will come into play — that is, how much debt a person owes (credit cards, rent, other bills) divided by the income they earn before taxes and other deductions.

Of course, all lender requirements vary, but significant, consistent income can factor into whether the applicant will still need a cosigner.

Only a Student (Not Employed)

If an applicant is not employed, lenders may be more inclined to approve a loan if there’s a cosigner who is able to show stable income.

6. Have You Ever Declared Bankruptcy?

Lenders can and do consider all aspects of a person’s financial history before granting a loan, bankruptcy included. Declaring bankruptcy negatively affects a person’s credit score, which private lenders pay close attention to with a loan application. A bankruptcy filing can stay on a person’s credit history for a decade.

Bankruptcy filings can affect a credit score in a number of ways, and depending on how long ago it took place, the effects on a person’s score will vary.

7. Have You Defaulted on a Loan?

The terms of each loan are different, but after a period of nonpayment, the loan enters default. Defaulting on a loan stays with a person’s credit history for at least seven years and typically negatively affects their credit score.

If a person has defaulted on a previous loan, they’ll likely need a cosigner on their student loan to potentially improve their chances of approval.

8. Have You Ever Missed a Payment?

On-time payments each month can help show lenders that a person is a responsible borrower. Missing payments or consistently making late payments can have a negative impact on a person’s credit score. Payment history accounts for approximately 35% of an individual’s FICO Score.

Consistently missing payments that have affected a person’s FICO Score might cause a potential lender to require a cosigner. It could also cause concern for a potential cosigner, so students might want to keep that in mind.

A solid history of on-time payments shows a lender that a person is a responsible candidate for a loan and might not need a cosigner.

Choosing a Cosigner

As stated above, the majority of private student loan borrowers have a cosigner. But not all cosigners are built the same, and choosing the right person to cosign a loan could be as important as the terms of the loan itself.

A cosigner should not only have a strong financial history, but also a strong relationship with the applicant. A cosigner might be a parent or blood relation, but they don’t have to be. A cosigner ideally has a stable financial history and a relationship to the applicant where they feel comfortable discussing money.

Asking Someone to Be a Cosigner

There’s a common misconception that cosigning on a loan is as easy as signing a contract, but it actually means more than that. When a person asks someone to be their cosigner, they shouldn’t shy away from discussing the challenging topic.

It may make sense to talk about worst-case scenarios with a cosigner, and make it clear it would be their responsibility to take on the payments if you default. Discuss how you could repay the cosigner in the event that you can’t make payments.

Risks of Cosigning

Beyond the worst-case-scenario discussion, cosigners should know the additional risks they take on when cosigning a student loan:

• Credit score. Cosigning a loan will affect a person’s credit score, since they’re taking on the debt as well. Even if the borrower makes on-time payments and doesn’t default, the cosigner will see a change in their credit score by taking on the additional debt. On the upside, though, it could potentially benefit their score.

• Liability. If the borrower defaults on the loan, it becomes the cosigner’s responsibility to pay for it. A lender can come to collect from the cosigner, seizing assets and garnishing paychecks to cover missed payments.

However, the cosigner doesn’t need to stay tied to the loan forever. Private student loans may have a cosigner release policy in place. After a duration of on-time payments and additional paperwork, a lender may release the cosigner from the loan, leaving the borrower on their own.

It might sound easy, but a cosigner release isn’t a guarantee and not all private loans will offer this option. Read the terms of your loan carefully to understand the requirements for cosigner release.

The Takeaway

Like every college application, each loan application is a little different. Certain aspects of a person’s credit history or employment might make them more compelling to a lender. Other elements, like late payments or a limited credit history, might make a person less compelling to lend to.

Adding a cosigner to a private student loan is common and can improve your chance of approval, sometimes even with a lower interest rate than if you applied on your own.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What is a student loan cosigner, and when might I need one?

A student loan cosigner is someone, typically a parent or close relative, who agrees to share legal responsibility for repaying your loan. You might need a cosigner if you’re applying for a private student loan and have limited credit history or income, as their strong financial background can improve your chances of approval and potentially secure a lower interest rate.

Do federal student loans require a cosigner?

Most federal student loans, such as Direct Subsidized and Unsubsidized Loans, do not require a cosigner or a credit check. However, Direct PLUS Loans, available to graduate students and parents, do require a credit check and may necessitate an endorser (similar to a cosigner) if the applicant has adverse credit history.

What are the benefits and risks of having a cosigner on a private student loan?

Having a cosigner can increase your chances of loan approval and help you secure a more competitive interest rate. However, it’s important to note that the cosigner is equally responsible for repaying the loan. If you miss payments or default, it can negatively impact both your and your cosigner’s credit scores, and the cosigner may be required to repay the loan.

SOISL-Q225-042

May

2025

Ways to Avoid Student Loan Fees

By Kayla McCormack | Going to College, Student Loans, student_loan | Comments Off

Many students rely on student loans to help them pay for college. In addition to charging interest, student loans may also have other fees associated with them. Fees charged may include origination fees — a fee charged by the lender for processing the loan — or late payment fees.

When students sign up for loans or are in the midst of repayment, they may not even be aware of fees that accompany many private and federal student loans. But by learning about these fees, they can better prepare themselves financially and avoid headaches.

Keep reading to learn more on student loan fees and how you may be able to avoid them.

Key Points

• Both federal and private student loans may come with fees, including origination fees and late payment fees.

• Federal student loans come with origination fees: approximately 1.057% for Direct Subsidized and Unsubsidized Loans, and about 4.228% for Direct PLUS Loans.

• Private lenders may charge various fees, including late payment fees, returned check fees, and forbearance fees.

• Late payments on student loans can incur fees up to 6% of the missed payment amount.

• If you’re facing financial difficulties, proactively contact your loan servicer to discuss options like deferment or forbearance.

What Are Student Loan Fees?

Student loan fees are additional charges that may be applied when borrowing or repaying student loans. They may include:

Student loan fees may include:

• Origination fees

• Late payment fees

• Returned-check fees (aka insufficient-funds or non-sufficient-funds fees)

• Loan collection fees

• Forbearance and deferment fees

Can a Student Loan Fee Be Waived?

For the most part, student loan fees cannot be waived. In some instances, lenders may be willing to waive late payment fees for borrowers who have not previously made a late payment. Fees and policies may vary by loan type and lender, so contact your lender with specific questions. Continue reading for an explanation of different types of fees that may be associated with a student loan.

Origination Fees

Origination fees cover the cost of processing the loan. They are typically a small percentage of the loan amount.

How Are Student Loan Origination Fees Assessed?

Student loan origination fees are charged as a percentage of the loan amount. Federal student loans have an origination fee, and the information will be included in the Master Promissory Note. The origination fee is deducted from the amount borrowed, so when you receive the loan, it will actually be for less than the amount you borrowed.

Private student loans may or may not charge an origination fee; the policy will depend on the lender.

How Much Are Student Loan Origination Fee?

For federal student loans, the origination fee (also known as disbursement fee) is dependent on the loan type. Direct Subsidized and Unsubsidized Loans disbursed between October 1, 2020 and October 1, 2025 have a 1.057% origination fee. During the same timeframe, Direct PLUS Loans have a 4.228% origination fee.

The origination fee on private student loans will vary based on the lender, and not all private lenders charge an origination fee. Review the terms and conditions closely and contact your lender with any questions.

Recommended: Avoiding Loan Origination Fees

Late Payment Fees

Making a loan payment past the due date for a federal student loan can result in a late fee. After 30 days, the late fee may be up to 6% of the loan amount due. Review your Master Promissory Note or contact your loan servicer with questions.

The late fee for a private student loan depends on the lender and loan program. Some private student loan lenders do not charge late fees.

Returned-Check Fees

If a borrower pays using a check that bounces, the student loan servicer could charge a returned-check fee.

Loan Collection Fees

If a borrower defaults on a loan by not making payments for a certain amount of time (270 days for most federal student loans), the loan may be placed with a collection agency and be subject to loan collection fees. Any fees incurred will be in addition to the outstanding principal balance, interest, and fees.

Private student loan companies may charge even higher loan collection fees. Generally, private student loans also enter default sooner than federal student loans. The default period is described in the loan contract.

Forbearance and Deferment Fees

Borrowers who cannot make payments temporarily can request student loan forbearance or deferment. Typically, loan holders can avoid a fee, but they will need to contact their loan provider.

Forbearance and deferment are available for most federal student loans. Private lenders are not obligated to offer either program, but may offer some forms of deferment. If you are struggling to make payments on a private student loan, contact your lender to evaluate the options available to you.

Federal Student Loan Fees

When students want to apply for a loan, they can do it through the federal government or a private company, depending on their circumstances. The loan providers charge different types of fees.

Students will pay an origination fee for a federal student loan. As mentioned previously, for Direct Subsidized and Unsubsidized Loans, the fee is 1.057% of the loan amount. For Direct PLUS Loans (including Grad PLUS and Parent PLUS Loans), the fee is about 4.228% of the loan amount.

A late payment fee will typically be charged within 30 days after the payment is due. The late fee could be up to 6%. At that rate, if your monthly minimum payment is $250, your fee would be $15.

Private Student Loan Fees

Private lenders may not charge origination fees, though there may be an origination fee for a specialty loan, like a loan for medical school.

Some lenders charge late fees — generally a percentage of the late payment amount or a flat fee. They also typically charge for returned checks.

Additionally, most private student loan companies charge a fee for forbearance, a flat fee determined by the lender.

Collection fees will vary from lender to lender. If there is a collection fee on a private student loan, it will typically be included in your loan agreement.

How to Avoid Student Loan Fees

If students need to take out private or federal student loans, they may be able to avoid some of the fees (with the exception of origination fees for federal student loans). Ways to avoid student loan fees include:

Paying on Time

Paying on time is always recommended, not only to avoid late fees but to keep a credit report healthy. To avoid late fees, returned-check fees, and collection fees, borrowers can set up automated payments from a bank account. Otherwise, they can set up reminders on their phones and calendars that go off when their payments are about to come due.

Communicating with Your Lender

In terms of deferment fees, borrowers having trouble making payments on time can call their student loan servicer and ask for extensions or other options so that they don’t go into default.

Students shouldn’t be afraid to reach out to their loan servicer as soon as they can’t make a payment.

Choosing No-Fee Lenders

Some private lenders offer student loans with no origination, application, or late payment fees. Comparing lenders and reading the fine print can help you steer clear of unnecessary charges.

Paying for College

Paying for college may require a combination of resources. One of the first places for students to start their financial aid journey is by filling out the Free Application for Federal Student Aid (FAFSA®) every year. This application allows students to find out if they are eligible for federal financial aid, including federal student loans, grants, scholarships, and work-study. Additional ways to pay for college include private student loans and personal savings.

Private Student Loans

Private student loans are offered by private lenders such as banks, credit unions, and other financial institutions. To apply, potential borrowers will need to file applications with individual lenders. The interest rate and loan terms are generally determined based on the applicant’s personal information, such as their income and credit score. It’s generally worth shopping around to find the best rate and loan terms for your personal situation.

Private student loans can be helpful tools to pay for college. However, when comparing private student loans vs. federal student loans, it’s important to note that private student loans lack the borrower protections afforded to federal student loans — things like income-driven repayment plans or deferment options. For this reason, they are generally considered an option after all other financial resources have been depleted.

Personal Savings

Some students may have the money saved to go to college, or someone in their family might be able to finance their education. For instance, perhaps their parents or grandparents opened a 529 savings plan for them when they were younger and funded it with money to put toward college.

Grants

Grants are a type of funding that typically don’t need to be repaid. Grants are generally awarded based on financial need and can be found from sources such as the federal or local government, college, or even nonprofit organizations.

Each grant application may have different application and eligibility requirements so be sure to read the instructions closely.

Scholarships

Scholarships are another type of aid that recipients are not required to repay. Often, they are awarded based on merit, though they can be awarded based on other criteria, as well.

Students can look for scholarships in schools, nonprofit and community organizations, companies, and more.

Take a look at your school’s financial aid website to see what scholarships are available. There are also online databases that aggregate information on available scholarships, as well.

The Takeaway

Student loan fees, like an origination fee or late payment fees, can increase the total cost of the loan. The types of fees on student loans will vary based on the loan type. Federal student loans, for example, charge an origination fee which varies based on the type of federal loan, and there are late payment fees associated with payments that are 30 days late or more.

Private loans may or may not have an origination fee or late payment penalties. The policies will vary by lender.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much is the origination fee for student loans?

The origination fee on a student loan will likely vary depending on the loan type and lender. For federal student loans, the origination fee from October 1, 2020 through October 1, 2025 is 1.057% for Direct Subsidized and Unsubsidized Loans and 4.228% for Direct PLUS Loans.

The origination fee on a private student loan will vary by lender.

Do unsubsidized student loans have an origination fee?

Yes, unsubsidized loans through the federal government’s Direct Loan Program do have an origination fee of 1.057% for loans disbursed between October 1, 2020 and October 1, 2025.

Can a student loan origination fee be waived?

Federal student loans have an origination fee and it’s unlikely to have this fee waived. Some private student loans may not charge an origination fee and lenders that do may be willing to negotiate with borrowers.

SOISL-Q225-041

May

2025

How to Write a Check: A Step-by-Step Guide

By Emily Greenhill Pierce | Family Finances, Life & Career, money | Comments Off

The basic steps of check-writing sound pretty straightforward: Fill out the date, amount, payee name, and add your signature.

There are, however, right and wrong ways to complete this process. And, despite the current age of online banking, there may still be times when you need to write checks and want to do so correctly. Make an error, and your check may not be cashed, which can lead to hassles and fees.

By learning the simple step-by-step process, you can fill out a check properly when you need to.

Key Points

• Writing a check involves filling out the date, amount, payee name, and your signature.

• Errors in check writing can lead to uncashed checks and potential fees.

• Postdating a check allows it to be deposited at a future date.

• Writing the dollar amount in words and numbers helps prevent fraud.

• Signing the check is crucial as an unsigned check is invalid.

1. Date the Check

First things first: Write today’s date on the space provided in the upper right-hand corner of the check. Putting the date on your check will provide evidence of when you wrote the check.

You can also postdate a check and request for the recipient not to deposit the amount until on or after that future date.

filling out date on a check

2. Add the Recipient’s Name

In the line, “Pay to the order of,” write the name of the individual or company you are paying. Be sure to double check the spelling of the person’s name and the official vendor name to avoid any payment mishaps.

You can also make a check out to “cash,” but this poses a security risk. If you or the payee loses the check, anyone who finds it will be able to cash it. You can also write a check to yourself if you need to transfer funds from your checking account to another personal account.

adding recipients name to check

3. Write the Payment Amount in Numbers

Write the dollar and cents amount in the rectangular box, located to the right of the payee line. (Example: $156.99.) It’s essential to write the payment amount clearly for the ATM or bank worker.

filling in payment amount on check

4. Write the Payment Amount in Words

To help prevent error or fraud, write the check amount out in words on the line provided.

How to Write a Check with Cents

To write a check with cents, you’ll express the cents amount as a fraction. For example, $156.99 would read as “One hundred and fifty-six and 99/100.”

How to Write a Check with No Cents

If the dollar amount is whole ($156.00), it should read “one hundred and fifty-six and 00/100.” A banker or ATM will check that your numerical amount matches the spelled-out amount.

Recommended: What Is an Outstanding Check?

writing payment amount on check

5. Sign the Check

One of the biggest mistakes check writers make is forgetting to sign the check. Neglecting to do so makes the check invalid and uncashable. Be sure and write your signature on the bottom right-hand line of the check.

adding signature to a check

6. Add a Memo

Adding a note in the memo line on a check is optional, but it’s a good idea. Doing so will help you remember why you wrote the check in the first place: “July 1st rent” or “Beyoncé tix reimbursement.”

Some payees may require additional information which you can put on the memo line on the bottom-left corner. The IRS, for example, will ask you to write your Social Security number on your check.

adding a memo to a check

Example of Writing a Check

Now that you’ve read about writing a check, here’s what a properly filled out one looks like:

example of a filled out check

Tips for Filling Out Checks

The steps on how to write a check are pretty clear. But there are additional tips that can help protect your account and ensure a successful transaction.

Use a Pen

Protect your money. Always fill out a check in ink — preferably blue or black ink for easier readability. Using a pencil is a recipe for theft. You don’t want your payee and dollar amounts being erased and rewritten (aka an altered check).

Don’t Sign a Blank Check

Don’t sign your name on the bottom of the check until it is completely filled out. If a check has your signature, but no payee name or dollar amount, you are leaving yourself wide open for any thief with a pen to fill in the blanks.

Keep Your Signature Consistent

Maintaining a consistent signature can help a bank teller or ATM detect signs of identity fraud. You’ll be better able to prove someone other than you signed your check if you have clear signature samples.

Save a Copy of Your Check

Having a copy of your check can act as proof of payment. You can take a picture of it with your cell phone. Some banks will issue checkbooks with carbon copies—a duplicate check attached to the back of a paper one. If you press down hard enough, your writing will transfer onto the duplicate check.

How to Protect Your Accounts When Writing Paper Checks

After mailing or handing over a check, it’s wise to keep tabs on its path and your bank account. Here are some smart moves that can help keep your records straight.

Record the Payment

Most checkbooks come with a check register — a place to record your check usage and current bank balance. It’s important to dot down:

• The check number

• The date you wrote the check

• The payee information

• The dollar amount

Doing so will help you balance your checkbook and avoid ending up with a negative balance.

Monitor for Fraud or Lost Checks

Having a record of your checks will help you avoid overdraft fees and keep track of any outstanding checks that payees have yet to cash. When you receive your monthly statement, compare it against your check register to catch any suspicious activity.

This can reveal a check that might have been cashed for a different amount than what you filled it out for. This could indicate a kind of fraud called “check washing,” in which a criminal gets a hold of your check, erases information, and fills it out to themselves.

Or you might spot that a check hasn’t been cashed in a timely manner, indicating that it’s a lost check, worth following up on.

Check Your Available Balance

You don’t want to write a check for more money than you currently have, so keep an eye on your bank balance to avoid bouncing a check. Whether you have a traditional or online checking account, you should be able to easily monitor this on your financial institution’s website or app.

Consider Automated Payments

While checks can still have their time and place in your financial life, online and mobile banking can make it easy to pay bills and otherwise send funds to other accounts. This can be accomplished quickly, easily, and securely by automating your finances.

For example, instead of writing paper checks, you could set up recurring transfers to pay bills online every month or make one-off payments as needed. These actions can be done safely and simply, and they eliminate the need for envelopes and postage stamps, too.

Recommended: ACH vs Checks: Key Differences

Test your understanding of what you just read.

The Takeaway

It’s possible that check payments could eventually become a thing of the past. Until then, it’s important to know how to write a check and avoid making little errors that could result in big headaches.

Most bank accounts come with checks, but that’s not the only feature to consider when shopping for a new account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What makes a check invalid?

Banks can refuse to cash a check due to a missing signature, insufficient account funds, invalid or illegible account numbers, or if too much time has passed since the check was dated (typically six months).

Can someone steal your identity with a check?

It is possible for criminals to use the information on your check — your name, your address, your routing number — to steal your identity. They might be able to apply for loans in your name or open bank accounts.

Where is the bank routing number on a check?

The bank routing number is at the bottom of the check, to the left. Just to the right of it is your account number, and then at the far right, the check number.

Who signs the back of a check?

The payee endorses the back of the check in order to make a deposit or cash it.

Photo credit: iStock/payphoto

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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.

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

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