InvestSLR Archives | Page 9 of 81

Jan

2024

Guide to Refinancing Student Loans With Bad Credit

By Melissa Brock | Fresh Out of School, Student Loans, student_loan | Comments Off

It’s possible to refinance your student loans with bad credit, but you may face challenges getting approved with a low credit score. This may also lead to a higher interest rate.

When you refinance your student loans, a private lender will take a look at your credit score to evaluate how well you’ve paid off debt in the past. A higher credit score may improve your chances of approval and could help you secure a more competitive interest rate. But your credit score isn’t the only factor lenders review. Lenders typically also take a look at your income, current employment situation, and financial history.

Read on for strategies to refinance student loans with bad credit.

What Is Student Loan Refinancing?

Refinancing student loans means that you take some or all of your student loans and replace them with one new loan to achieve a repayment advantage. For example, you may refinance in order to get a lower interest rate and, as a result, pay less over the life of your loan. You may also refinance to extend your loan term, which will lower your monthly payments (but doing so will also result in paying more interest over time).

You can refinance both private and federal student loans. As you are deciding when to refinance student loans it’s important to understand that if you refinance federal student loans, you lose certain benefits with your loan, such as deferment and public service-based loan forgiveness.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Is Considered Bad Credit?

Your credit score is a three-digit number that shows how well you pay back debt.

What is a bad credit score? The definition of “bad credit” varies depending on the credit scoring model used. A credit scoring model is a statistical analysis used by credit bureaus to evaluate your creditworthiness. “Bad credit” simply means that your credit reports, or records of how well you’ve paid off debt, reveal negative credit actions that you’ve had in the past.

According to FICO®, one of the most popular scoring models, a bad credit score is anything below 670. Another popular scoring model, VantageScore, considers a bad credit score below 661. To put it in perspective, a credit score ranges from 300 to 850.

Some lenders require a minimum credit score to refinance student loans. Requirements vary by lender, so check in with the lenders you are considering to understand their minimum requirements. And keep in mind that lenders evaluate factors beyond just your credit score when making lending decisions.

Strategies for Refinancing With Bad Credit

If you plan on refinancing student loans with bad credit, you may want to consider backtracking and checking your credit reports. There may be mistakes on your credit reports that are hurting your credit score. For example, you have already paid off a particular loan but your credit report shows that you haven’t yet.

You can obtain a free copy of your credit report at AnnualCreditReport.com from each of the three major credit bureaus — Equifax, Experian, and TransUnion — which track your credit.

There are other strategies you can consider as well: refinancing with a cosigner, improving your credit score or debt-to-income (DTI) ratio, looking into credit unions, considering nonprofit debt consolidation, checking into secured loans, and looking for lenders with lower credit requirements. Let’s take a look at each option for student loan refinance for bad credit.

Refinance With a Cosigner

If you have a relatively low credit score, applying with a cosigner increases your chances of getting approved for a student loan refinance.

Refinancing student debt with a cosigner means that you ask someone else to agree to help you repay a loan along with you. Cosigners are equally obligated to repay a student loan and are liable if you fail to repay your loan. Any missed payments will affect both you and your cosigner’s credit history.

Build Your Credit Score

You can build your credit score by making payments on time to your creditors, catching up on accounts for which you still owe money, and limiting credit applications. Let’s take a look at all of these student loan refinance need to know opportunities to build your credit score:

• Make on-time payments: Making all payments on time is one of the best ways to improve your credit score. You may want to consider setting up auto pay to avoid missing or making late payments.

• Pay off delinquent or defaulted accounts: If you have accounts for which you still owe money, pay them off. Pulling all accounts up to “paid” status can help your credit score. If you think you need help organizing and prioritizing, you may want to reach out to a credit counselor for assistance. It’s also a good idea to get current on revolving credit balances (such as credit cards and other lines of credit) because paying late or skipping payments can hurt your credit as well.

• Limit credit applications: Continually applying for credit can hurt your credit score because every time a lender does a hard credit check, your credit takes a small hit. All of those credit checks can slow your progress in improving your credit score.

Building credit by doing things like making on-time payments is one of the best ways to improve your credit score. Use credit cards responsibly and pay off the balance each month, get a secured credit card, or become an authorized user on another individual’s credit card.

Improve Your Debt-to-Income Ratio

What is a debt-to-income (DTI) ratio? DTI refers to your monthly debt payments divided by your gross monthly income — the amount of money you have coming into your household.

The best way to improve your DTI is to reduce your debt payments each month or add more income to your household each month. There are several ways to make this happen: paying off your debt (including credit cards, personal loans, auto loans), adding a second or side job to your already-existing income, negotiating a raise at work, working overtime, or applying for a higher-paying job.

Recommended: Why Your Debt to Income Ratio Matters

Check Credit Union Requirements

In addition to banks, online lenders, and other types of lenders, credit unions also offer student loan refinancing opportunities. A credit union is a non-profit financial services cooperative that exists to serve its members. You must be a member of a credit union in order to borrow money from it.

If you already belong to a credit union, consider finding out the credit qualifications necessary for refinancing student loans with that credit union. Shop around among credit unions or other alternative banking solutions to learn more about interest rates, overall payoff amounts, repayment flexibility, and how well each institution treats its customers.

Nonprofit Debt Consolidation

Nonprofit debt consolidation can help you put all of your debts into one manageable payment. It offers a two-pronged advantage: You lower your monthly payment and eventually eliminate unsecured debt, which is debt that isn’t backed by collateral.

Credit card debt is a good example of a debt not backed by collateral. A mortgage, on the other hand, is backed by collateral — the collateral is the home that you borrowed money to purchase. A student loan is a type of unsecured debt because it is not backed by collateral.

Why tap into a nonprofit credit counseling agency for help? They must act in your best interest, though you will have to pay fees for the service. Trained debt counselors can help you come up with a debt payment plan, debt settlement plan, debt consolidation loan, or, if absolutely necessary, declare bankruptcy.

It’s important to note that only unsecured debt is eligible for consolidation.

Secured Loans

Secured loans are backed by collateral, such as a car (in the case of an auto loan) or a house (in the case of a mortgage). If you stop making your payments, the lender can take the collateral backing your loan (the auto or home) to satisfy the debt.

Generally, personal loans are unsecured and can be used for almost any expense. However, some personal loans may be secured by some form of collateral. When evaluating a secured vs. unsecured personal loan, look at things like the interest rate and the type of collateral required to back the loan. Keep in mind that collateral can be seized by the lender if there are issues with repayment.

However, you can use a secured loan to pay for a student loan refinance if you find better terms through a secured loan. For example, you could choose to get a second mortgage to pay for educational expenses.

Unsecured debt is usually considered riskier by lenders (because it isn’t backed by collateral) and may come with a higher interest rate, which is why secured debt may seem more appealing.

Look for Lenders With Lower Credit Requirements

Think you’re ready to pursue a student loan refinance with lower credit requirements? Let’s take a look at the pros and cons of doing so.

Pros	Cons
Can help with debt management by consolidating all loans into one loan	You may have trouble qualifying for a refinance due to bad credit
You may save money by qualifying for a lower interest rate, which often reduces the amount of money you pay toward your loans over time	You may pay more for your loan due to higher interest rates for those with bad credit
You can transfer Parent PLUS Loans (a federal loan that parents can take out to finance the cost of college) to the student instead of keeping it in the parents’ name	You will lose access to federal benefits if you refinance federal student loans

In order to get the best rates and terms, you may want to consider beefing up your credit score before you apply for a refinance. Consider taking a look at a calculator for student loan refinancing to help you learn about the costs.

Alternatives to Refinancing Student Loans

Refinancing your student loans isn’t your only option. Keep in mind that refinancing federal loans eliminates them from federal programs and protection like income-driven repayment (IDR) plans. You may also want to consider a few alternatives, including consolidation, forgiveness, deferment, or forbearance (for federal student loans), or talk to your lender about your options.

• IDR plans: The U.S. Department of Education has a website called Federal Student Aid where student loan holders can find four types of IDR plans. They are, with the repayment terms, as follows:

◦ IDR Pay As You Earn (PAYE) Plan: 20 years

◦ Saving on a Valuable Education (SAVE) Plan: 10 or 25 years

◦ Income-Based Repayment (IBR) Plan: 20 or 25 years

◦ Income-Contingent Repayment (ICR) Plan: 25 years

• Consolidation: Consolidation allows you to combine all of your federal student loans into one monthly payment with one servicer. Consolidation won’t lower your interest rate — the new rate is the weighted average of your existing interest rates. You cannot consolidate private student loans — you may only refinance them.

• Forgiveness: If you have federal student loans, you may want to consider looking into student loan forgiveness options, which means that you do not have to repay your loans in part or full if you meet specific requirements. For example, you may be able to tap into teacher loan forgiveness, Public Service Loan Forgiveness (PSLF), income-driven repayment plans, military service forgiveness, or other options.

• Deferment or forbearance: Deferment and forbearance allow you to temporarily postpone or reduce your payments. Borrowers with federal loans may qualify to defer repayment due to cancer treatment, economic hardship, graduate school, military service and post-active student duty, rehabilitation training, unemployment, and more. Private lenders may have their own programs for forbearance. Check in with your private lender directly.

• Talk to your lender or loan servicer: You can also talk through all your payment options with your loan servicer. If you’re having trouble making your payments, explain how and why (and be prepared to show proof).

The Takeaway

Borrowers with a low credit score (a bad credit score is defined as a FICO score below 670 or a VantageScore below 661), may find it challenging to get a student loan refinance with bad credit without a cosigner.

However, there are other avenues you can take for student loan refinancing with bad credit, including improving your credit score, improving your DTI, researching options with a credit union, non-profit debt consolidation, or getting a secured loan. You may also want to consider alternatives to refinancing private student loans with bad credit if you have federal student loans, through consolidation, forgiveness, deferment, or forbearance. You may also try talking to your lender or loan servicer for all your options, asking them about alternative options to refinance a student loan with bad credit.

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. Also, 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/Vladimir Vladimirov

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.

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 .

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.

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

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.

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Jan

2024

Guide to Student Loan Cash-Out Refinance

Guide to Paying Off Student Loans with a Cash-Out Refinance

By Melissa Brock | Fresh Out of School, Student Loans, student_loan | Comments Off

If you are feeling the weight of your student loans, you are not alone. Student debt is currently the second largest kind of debt in the US after mortgages, and it can feel as if it’s taking a very long time to pay it off. Some borrowers find that a cash-out refinance, which allows you to tap into the equity in your home and receive cash back at closing, can be a good move. In some cases, it may allow for payment terms that better suit your budget and needs.

However, a student loan cash-out refinance isn’t the right choice for everyone. It can be helpful to weigh the pros and cons to help you decide if it makes sense for your personal financial situation. Read on to learn the definition of refinancing student loans, what a cash-out refinance is, and what the upsides and downsides are.

Refinancing to Pay Off Student Loans

Before considering a cash-out refinance, let’s review what refinancing is. Typically, student loan refinancing means that a lender pays off your existing loans with a new student loan ideally at a lower interest rate, which can save you money over time.

If you have some type of federal student loans, you can only refinance with a private lender, which means losing certain federal student loan benefits and protections, such as income-driven repayment and forgiveness plans.
Also, it’s important to note that if you refinance for an extended term, you may well pay more interest over the life of the loan, even if your monthly payment is lower.

Calculate paying off your student loan before you decide whether this method makes sense for you.

Next, consider a different option. If you are a homeowner, you might look into a cash-out home refinance. This is a very different financial arrangement than a student loan refinance. When you complete a cash-out refinance, you are refinancing a home loan to tap the equity in your home and then use the funds to pay down or off your student loans.

💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

What Is a Student Loan Cash-Out Refinance?

Here’s a closer look at the last option mentioned above, which can be a good path for some borrowers. If you own a home and have student loan debt, you can roll your student loan into your mortgage using a student loan cash-out refinance.

Here’s how cash-out refinance works: You get a mortgage loan that allows you to tap into your home’s equity to pay off your student loan debt. You consolidate your mortgage loan and your student debt. You also get a lump sum of money upon closing, which comes out of your home’s equity, and can be put toward your student loan debt.

If your home is valued at $450,000 and you have a $300,000 mortgage and over $50,000 in student loan debt, you might take out a cash-out refinance loan for $350,000 and get $50,000 to pay off your student loans. You would then have eliminated that educational debt, but now owe more against the value of your home.

Some notes:

• To qualify, you typically must have a credit score (a number that indicates how likely you are to pay back a loan on time) of at least 620 to get a mortgage that isn’t from a government agency.

• You also generally need to have a debt-to-income ratio (DTI) of under 43%, which refers to your monthly debt payment compared to your monthly gross income.

• You’ll also need at least 20% of equity in your home in order to take advantage of a cash-out refinance.
Your lender pays off your first mortgage, which results in a new mortgage loan, which probably has different terms than your original loan (a different type of loan and/or a different interest rate).

How Cash-Out Refinance Works for Student Loans

Typically, you can borrow up to 80% of your home’s equity. Equity refers to the difference between the current value of your home and the amount of money you owe on your mortgage.

To get a student loan cash-out refinance, you can prequalify and choose the right mortgage refinancing option for you. Your lender will detail the interest rate and monthly payments that fit your goals.

Once your application has been approved, you’ll sign your paperwork. Your lender will pay off your student loan at closing by sending the cash to your student loan servicer to take care of your student loan debt.

Taking out money for a cash-out refinance means you just move debt from one location to another. Ultimately, you still have to pay off that debt — it just takes a different form.

Recommended: Cash-Out Refinance vs HELOC

Pros of Cash-Out Refinance for Student Loans

Why might you want to use a cash-out refinance to pay off student loans? Here are some of the reasons why it might be a good choice.

• You could get a better interest rate. Before you refinance, you want to make sure you’re getting a lower interest rate than your current student loan interest rate and your current mortgage interest rate.

Calculating the new interest amount will tell you whether you’ll save money. (You’ll also want to figure in any fees.) If you lengthen your loan term along with your cash-out refinance, you may lower your monthly payments but pay more interest over the long run.

• You may tap into tax deductions. The interest you pay on student loans and your mortgage are both typically tax-deductible. However, you’ll have to itemize deductions if you choose a cash-out refinance with your mortgage.

You can take either the standard deduction or itemize deductions on your taxes. If your allowable itemized deductions are greater than your standard deduction or you cannot use the standard deduction, you can itemize. However, it’s important to note that the new larger standard deduction means you may want to consider whether it makes sense to itemize.

In tax year 2023 (meaning taxes filed by April 2024), the standard deduction for married couples filing jointly is $27,700. For single taxpayers and married individuals filing separately, the standard deduction is $13,850. For heads of households, the standard deduction is $20,800.

• You no longer have to make two payments. Instead of making both a mortgage payment and a student loan payment, you would make one payment. This can simplify your financial life and help you stay on top of your payments.

💡 Quick Tip: If you have student loans with variable rates, you may want to consider refinancing to lock in a fixed rate before rates rise. But if you’re willing to take a risk to potentially save on interest — and will be able to pay off your student loans quickly — you might consider a variable rate.

Cons of Cash-Out Refinance for Student Loans

It’s important to consider the downsides of cash-out refinancing for student loans as well.

• You give up certain borrower protections. Refinancing a federal student loan via a cash-out refinance means you forfeit certain borrower protections that come with federal loans, such as income-based repayment plans, loan forgiveness, and other options through the Department of Education.

• You turn unsecured debt into secured debt. Student loans don’t require any collateral. However, your mortgage does, which means that you turn what was once unsecured debt into secured debt. If you stop making your mortgage payments, you could lose your home to foreclosure.

• You’ll pay closing fees. You’ll pay closing costs to refinance a mortgage, which can include title fees, appraisal fees, settlement fees, recording fees, land surveys, and transfer tax. The amount you’ll pay depends on your mortgage, the terms, and your state. They can be 3% to 5% of the loan’s value. You’ll want to consider whether these fees are worth what you’ll gain by refinancing.

When to Execute a Student Loan Cash-Out Refinance

It can be hard to decide when to refinance your student loans. This option may make sense for you if you:

• Know you’ll save money in the long run: It’s important to fully understand how a student loan cash-out refinance works. If you’ve calculated your new loan amount and know you’ll save money after streamlining your debt, you could be a good candidate for a student loan cash-out refinance.

A new repayment term over a longer period may seem like a great deal because you’re lowering your monthly payments, but you’ll pay more in interest over your loan term. You may also pay more in interest due to the higher loan amount which might give you higher potential fees and expenses.

• Have a plan to tackle your debt after refinancing: It’s important to be sure that you’ll be able to make your mortgage payments every month.

• Want just one payment: Having just one loan with a longer repayment term means you simplify your debt. This way, you don’t have to keep track of multiple payments every month.

Finally, you may want to go through with a student loan cash-out refinance if you know for sure that you won’t need or be eligible for federal student loan repayment programs, forgiveness options, or other benefits, and have a plan to tackle debt. It’s a good idea to envision your top priorities — whether you want to save money, prefer just one payment, or would like to lower your monthly payments — or prefer all three benefits!

There are other reasons you may consider getting a cash-out refinance to pay off student loans, but this list gives you a jump start.

Refinancing Your Student Loans With SoFi

Considering cash-out refinancing or student-loan refinancing. SoFi offers both.

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

FAQ

How long does underwriting take for cash-out refinance?

Refinancing a mortgage typically takes 30 to 45 days but can take up to 90 days, depending on how quickly you provide information to your lender, the complexity of the loan, and your lender or broker. Often, the faster you provide documentation, the quicker your lender can underwrite and process your loan.

How do you get your money from a cash-out refinance?

Upon closing, you get a lump sum from your lender when you get a cash-out refinance. The loan proceeds pay off your existing mortgage(s), including closing costs and any prepaid items. You can do what you want with the remaining funds.

Do you pay closing costs on a cash-out refinance?

Yes, you’ll pay closing costs to refinance a mortgage. The amount you’ll pay depends on a variety of factors but is typically 3% to 5% of the loan amount. It’s a good idea to consider how long it’ll take you to recoup your closing costs after refinancing.

Photo credit: iStock/FatCamera

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.

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

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Jan

2024

How Do You Find Non Academic Scholarships for College?

By Stacey Leasca | Going to College, Student Loans, student_loan | Comments Off

Imagine this: After spending 12 long years of education, it’s finally time to head to college. But hang on, because there’s a catch — tuition is much higher than you thought, and the school didn’t offer an academic scholarship.

One alternative for students can be to find a non-academic scholarship and keep pushing toward that dream. Here are tips on finding non-academic scholarships to help pay for a college education.

What Is a Non-Academic Scholarship?

Scholarships are one type of financial aid available to students that don’t need to be repaid and are typically awarded based on merit — that is, being especially knowledgeable or skilled in one area. Grants, which also do not need to be repaid, are typically awarded based on need and not based on academic or athletic merit. For example, Pell Grants are federal grants awarded to undergraduate students who exhibit exceptional financial need.

Scholarships can be awarded for many different reasons, including academic achievement. However, just because someone isn’t an A+ student doesn’t mean they can’t qualify for a scholarship. There are non-academic scholarships that are based on athletic or artistic achievement, community involvement, extracurricular activities, and more. Students may just need to put in a bit of legwork to find ones they qualify for and apply.

Recommended: Finding Free Money for College

Where to Find Non-Academic Scholarships

Often, the first step in getting a scholarship is to find it. Here are a few places to start your search.

School Counselor’s Office

High school students can check in with their high school counselor to see about any non-academic scholarship they may know about. The office may have a list of options available to students, and, because they may know the student, their skills, and their future aspirations, they may be able to hone in on the right scholarship for them.

School counselors may also have helpful information on navigating the financial aid process. One piece of the funding puzzle may be undergraduate loans if scholarships don’t cover all of the costs. Students may consider private student loans after exhausting federal aid, including federal student loans. This comprehensive private student loan guide dives into more detail.

College Admissions Website

If a high school student has already been accepted to school, they may check in with the college’s admission website. There, they could find a list of potential scholarships offered directly by the school. Students should also reach out directly to the admissions office or future academic counselors for assistance.

As the school year nears, you may consider checking in with your college’s financial aid office to see if they can guide you to unclaimed scholarships.

Scholarship Listing Websites

There are several scholarship search tools out there that roundup available scholarships to students, including destinations like FastWeb or CollegeBoard. Here, students can sift through hundreds of available scholarships and find help with the application process, as well.

Professional Associations and Clubs

Another place to find scholarships includes professional associations and clubs, such as churches, your parent’s employers, local businesses, minority groups, and more.

A quick Google search on professional organizations in your chosen field of study can lead to scholarships, too. Most are free to join and include fields such as marketing, engineering, graphic arts, law, and more.

Friends and Family

Sure, it may not seem as obvious, but merely asking around for scholarship opportunities can’t hurt. Students should reach out to their network and let everyone know they are on the hunt for financial assistance. Someone may know of a specific scholarship that could be the perfect fit for the student.

Connect With the Community

Explore connections with local religious groups, business, and other organizations. Having an existing connection can potentially improve an applicant’s chances of securing a scholarship. Plus, students may face less competition when they apply for more local scholarships.

💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Types of Non-Academic Scholarships

Need a little help thinking about what type of non-academic scholarship may fit? Here are a few types of scholarship ideas to get students started.

Talents

Have a unique talent? There’s probably a scholarship available for it. For example, you can find scholarships for duck calling, dancing, drawing, and much more.

Athletics

Each year, there are more than 180,000 athletic scholarships awarded to students. Scholarships are available for a wide variety of sports to both men and women, including volleyball, tennis, swimming & diving, skiing, lacrosse, golf, fencing, and more.

Heritage

Students may also find non-academic scholarships based on their heritage. Students from minority groups may find additional opportunities, including scholarships for African American or Hispanic students.

Some scholarships may be available through churches, while others can be found on websites like College Board. There, students of various backgrounds can search for a suitable match.

Interests

Students can apply to non-academic scholarships based on their various interests, too. For example, those interested in cars can apply for the National Corvette Club scholarship. Those students that love to cook can apply for the AAC Culinary Scholarships for High School Seniors .

Know a student who spends their Sundays completing The New York Times crossword puzzle in pen? Have them apply to the Crossword Hobbyist Crossword Scholarship . No matter the interest, odds are there is a scholarship out there for it.

Area of Study

Future and current college students may be able to find a scholarship that suits their future area of study. Students hoping to become their own CEOs can apply for The National Association for the
Self-Employed ’s Future Entrepreneur Scholarships, which helps promote “entrepreneurial thinking among aspiring business students.”

Again, if there’s an area of study, odds are there’s a scholarship available for it.

Area Code

Students looking for a non-academic scholarship can search for regional scholarships on many online databases. SoFi runs a state-by-state grant and scholarship database, so you can take a look at what is available in your area.

Other sources for regional or location-based scholarships may include local nonprofits and businesses.

Other, Outlandish Options

There are scholarships available for less obvious reasons, too. One of the more famous wacky scholarships is the Stuck at the Prom Scholarship Contest sponsored by Duck brand duct tape. Each year, the company awards a $5,000 scholarship to a teen who designs and wears a dress or tuxedo made out of their duct tape.

How to Get a Non-Academic Scholarship

There are thousands of non-academic scholarships available each year. In order to get a non-academic scholarship, you should first look for scholarships in line with your talents and career interests. From there, you can look to local businesses, friends and family, and your community to find other non-academic scholarships.

And finally, do a Google search for non-academic scholarships you think you may qualify for. There are scholarships available for almost every type of person and every interest, including scholarships for minorities, scholarships for people who dance, religious scholarships, first-generation scholarships, and more.

Tips for Finding & Applying for Non-Academic Scholarships

If you’re hoping to find and apply for non-academic scholarships to help pay for college, there are a few things you can do to increase your chances of getting one.

Start Early

Starting your search early is one of the best things you can do to land a scholarship. Since many scholarships come from the school you’re attending, it’s recommended to fill out the FAFSAⓇ as soon as possible. Some grants and scholarships offered by schools are on a first-come, first-served basis.

It’s also a good idea to start your search early so you can make sure you can meet all the deadlines for the scholarships you hope to apply for. Many will require essays, and the sooner you know which scholarships you want to apply for, the sooner you can get your essays completed and submitted.

Read the Fine Print

Make sure to read the fine print of all scholarship applications. This will ensure you won’t miss any deadlines or important information regarding the scholarship.

Showcase Your Personality

When applying for scholarships and writing essays, it’s important to showcase your personality through your written word. Most non-academic scholarships are fun, so feel free to express yourself and make it so your application stands out from the rest.

Proofread Your Application

Proofreading your application is a great way to catch any grammar errors or application mistakes prior to submission. If it comes down to you and one other candidate, you don’t want to miss out because of easy grammatical errors you could have caught by simply proofreading your application beforehand.

Don’t Give Up

And finally, keep searching and applying for scholarships until you receive the amount of money you’re hoping for. Scholarships can be competitive, so don’t get down on yourself if you’re struggling to get one. Instead, keep the momentum going by continually searching and applying for new opportunities as they arise.

The Takeaway

Non-academic scholarships can be awarded based on talent, skill, interest, and more. Some scholarships may even be regional or location based. To find non-academic scholarships, consult with your guidance counselor, your college’s financial aid office, local business and nonprofits, and online scholarship databases.

If scholarships and federal financial aid aren’t enough to cover college costs, private student loans can help fill in the gaps.

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.

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

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

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

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

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.

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Jan

2024

52 Companies that Offer Student Discounts in 2024

By Kaitlyn Farley | Budgeting & Goals, Going to College, Student Loans, student_loan | Comments Off

College comes with a lot of expenses. On top of tuition, fees, books, and housing, you might also want to occasionally go out and have fun. Maybe you want to go shopping, see a movie, or meet friends for lunch or dinner. That’s not always easy on a student budget. Fortunately, there are widely available deals and discounts designed just for college students. Here’s where you can find them.

52 Places with Student Discounts

Major Retailers

1. Amazon

Amazon Prime Student gives you six free months of Amazon Prime, and after that it’s $7.49 per month (about half regular price). Plus, you’ll receive perks like free food delivery, 10% off flights and hotels, and one month free of homework help. You can cancel at any time.

2. Sam’s Club

Sam’s Club offers special membership pricing to college students through UNiDAYS , a site that verifies student status and offers exclusive student deals (sign-up is free). Once you register with UNiDAYS, you can get $40 off a Sam’s Club Plus Membership or 30% off a Club Membership. You’ll also qualify to get a $45 eGift Card when you spend $45.

3. Target

Target Circle’s College Student Appreciation program offers exclusive perks and discounts to students, which could come in handy when you’re shopping for your dorm room. To access deals, like 15% off your purchase, you need to join Target Circle for free, verify your student status (by uploading a student ID, class schedule, or tuition receipt), then check back later for offers.

4. Costco

A Costco membership can also help make college more affordable. College students who join Costco as a new Gold Star Member through UNiDAYS can receive a $30 Digital Costco Shop Card.

💡 Quick Tip: Some lenders help you pay down your student loans sooner with reward points you earn along the way.

Technology

5. Apple

Keep this in mind when you’re preparing for college: Apple offers special pricing for current and recently accepted college students (along with their parents). For example, you can get a 13” macbook air with the M2 chip for $999 (normally $1099) or an iPad air for $549 (normally $599).

6. Microsoft

Students (as well as parents and teachers) can save up to 10% off eligible computers and accessories with Microsoft’s student discount . You also get Office 365 and access to Teams for free.

7. Dell

Dell offers exclusive discounts on laptops, monitors, and accessories to students with a valid academic email address (such as one ending in .edu). Savings vary depending on the product, but currently you can save $300.00 (20%) on an XPS 15 Laptop.

8. Lenovo

College students get an extra 5% off their tech purchases at Lenovo . Incoming students can also access the deal by providing a letter of acceptance. You simply need to verify your student status through ID.me during checkout.

9. Adobe

Adobe Creative Cloud for Students allows you to get an All Apps plan for $19.99 a month for the first year, and $29.99 per month after that (it’s normally $54.99 per month). To get the deal, you need to provide a school-issued email address during purchase so you can be instantly verified.

Clothes

10. Aeropostale

Students can benefit from an extra 15% off at Aeropostale . To take advantage of the deal, you’ll simply need to register and verify your student status with UNiDAYS.

11. J.Crew

J.Crew gives students (and teachers) 15% off purchases when they present a valid college ID at checkout. The discount can be used up to four times a month.

12. Hanes

Need some basics, like tees or undergarments? Hanes offers students 10% off online purchases. To score your discount, you need to verify your student status through ID.me and get a promo code.

13. The North Face

The North Face gives students a 10% discount code to use at full-price locations (not factory stores), as well as online. You can redeem one code every 30 days.

14. Tommy Hilfiger

Tommy Hilfiger offers students 15% off online or in-store. First, you have to create or log in to your ID.me account.

15. Levi’s

Levi’s offers students 15% off online purchases after you verify your student status on the site.

16. Club Monaco

Students who are Club Monaco fans can get 15% off online and in-store. Simply register for an account with your .edu email address and a 15% off discount will automatically apply to your cart. If you’re shopping in-store, just present a valid student ID at the register.

17. Docker’s

Docker’s offers students a generous 25% off all purchases made online. You simply need to verify your student status through the site.

18. Outdoor Voices

Students shopping at Outdoor Voices can score 20% off through Student Beans (a site similar to UniDAYS that helps verify student status and offers discounts to partner stores). Once you register with Student Beans (which is free), you’ll get a discount code that you can use at checkout.

19. Champion

Champion offers 10% off to actively enrolled students. You simply need to verify your student status through ID.me to get the discount code.

Restaurants

20. McDonald’s

Right now, you can get a free Cheeseburger, Mayo Chicken, or McFlurry® Original when you buy any Extra Value or Wrap Meal and show your valid student or Student Beans ID.

21. Chick-fil-A

Student discounts vary by location, but many Chick-fil-As offer students a free drink with any purchase.

22. Dunkin’

Dunkin’ offers a 10% off student discount at participating locations. To claim the deal, simply show your student ID to your cashier.

23. Arby’s

You can save 10% on your Arby’s meal when you show your student ID at participating locations.

24. Buffalo Wild Wings

Want to catch the game and eat some wings with friends? Students can score 10% off at many Buffalo Wild Wings locations.

25. Waffle House

Looking for a late-night meal? Students can enjoy a 10% discount at participating Waffle Houses.

26. IHOP

If you don’t have a Waffle House nearby, many IHOP locations also offer 10% off for students.

27. Qdoba

Qdoba has two discount options for students at most locations: either a free drink with your purchase or a burrito meal for just $5.

28. Taco Bell

Craving a Crunchwrap Supreme? You can get a 10% student discount at participating Taco Bells.

Recommended: A Guide to Making Friends in College

Travel & Transportation

29. Greyhound

Through Student Advantage , Greyhound offers 10% off any fare. The Student Advantage card costs $30 a year and offers students — and parents — a wide range of discounts.

30. Amtrak

Students between the ages of 17 and 24 can travel by Amtrak train for 15% off when booking at least one day in advance.

31. United Airlines

United Airlines offers a 5% flight discount to any travelers who are 18 to 23 years old. To get the deal, you need to book through the United app.

32. Hotels.com

Through UNiDAYS, you can snag steep discounts at hotels.com , such as 35% Off last-minute hotel bookings and up to 40% off the site’s Weekend Getaway Deals.

33. FlixBus

You can get 15% off Flixbus tickets with Student Beans. Simply use your FlixBus student discount code at checkout.

34. Hertz

Hertz offers students 21 and older who have had a driver’s license for at least one year, 15% off cars and 20% off vans.

35. Budget Truck Rentals

Budget Truck Rentals offers students 20% off local moves and 15% off one-way moves any day of the week. Use the discount code TRUKU.

36. Penske

Penske offers college students a 10% discount on all truck rentals and unlimited miles on one-way moving truck rentals. Simply use the discount code STUDENT at checkout. You’ll need to provide a college ID or proof of enrollment status at pickup to receive the discount.

37. Red Coach

RedCoach offers high school, college, and graduate students up to 10% off tickets. To get the discount, check the student option at checkout then show your student ID card to the driver along with your ticket.

Recommended: College Move-In Day Tips for Parents

Entertainment

38. AMC

Students get a lower ticket price at select AMC theaters every day. Just bring your photo student ID (and maybe some extra money for popcorn).

39. Cinemark

Student discounts at Cinemark vary by location and time of day, so check with the local box office to see what kind of deal you can snag.

40. Apple Streaming

Apple’s Student Music plan is $5.99 per month for up to 48 months (normally $10.99 per month). You also get Apple TV+ (usually $6.99) free.

41. Hulu

Hulu offers students its ad-supported plan for just $1.99 a month (a 75% discount). If you’re interested in a bundle, check out the deal below.

42. Spotify Bundle

As a student, you can get Spotify Premium and Hulu (with ads) for just $4.99 per month. Spotify Premium normally costs $9.99 per month and Hulu (with ads) is $7.99 a month, so you can snag a monthly savings of $12.99 for as long as you’re going to college.

43. The Washington Post

The Washington Post has a digital all-access student subscription plan for just $1 every four weeks.

44. Paramount+

As a student, you can get a Paramount+ Essential monthly plan for just $4.50 per month (25% off). You can cancel anytime.

45. YouTube Premium

YouTube Premium (which allows you to enjoy YouTube and YouTube Music ad⁠-⁠free) is available to students at a discounted rate of $7.99 a month, after a free one-month trial. You can cancel at any time.

46. The Economist

The Economist offers students an annual digital subscription for a steep 75% off. You can get the Economist Espresso for $19.75 a year, or the Economist Digital for $52.25.

💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

Home Goods

47. Ghost Bed

As a student or teacher, you can get 50% off your entire order at GhostBed . To take advantage of the deal, just click on the ID.me button and then “Student ID” to sign up and get verified.

48. Mattress Firm

After verifying your student status through ID.me, Mattress Firm will give you a single-use coupon code that can be used in-store or online. You get an extra 20% off select purchases or an extra 10% off Purple with the code.

49. Purple

You can also get a 10% discount directly from Purple . Once you verify your eligibility, you’ll be emailed a coupon for 10% off your order.

50. Helix

You can get a discount code for 15% off a mattress at Helix through UNiDAYS.

51. Puffy

Puffy offers a generous student and educator discount — $1,425 off any Puffy mattress.

52. Brooklyn Bedding

Brooklyn Bedding offers a 30% discount and free shipping to students. You simply need to verify your eligibility through ID.me.

The Takeaway

Student discounts can help you save on everything from food and clothing to electronics and entertainment. Even with these deals, however, you may still need help covering your college expenses.

If you completed the FAFSA and didn’t get enough financial aid to pay all of your school bills, keep in mind that you may be able to get a private student loan to help fill in any gaps. Unlike federal student loans, which have strict application deadlines, you can apply for private student loans at any time — including mid-semester.

Private student loans also allow you to borrow up to 100% of the school-certified cost of attendance. Just keep in mind that private student loans don’t offer the borrower protections — like income-driven repayment plans and deferment or forbearance — that come with federal student loans.

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 many times can you use a student discount?

It depends on the company. Some retailers and restaurants allow you to use your student discount once per visit or purchase; others limit you to a certain number of times per month or year.

How much is the average student discount?

Student deals typically give you 10% to 15% off, though you may find some discounts for 50% off or even higher. In some cases, a student discount may come with restrictions, such as only being able to use it on full-price merchandise. So it’s always a good idea to compare your student discount to any other available deals and sales.

Do student discounts only apply to college students?

Typically, student discounts only apply to college and graduate students. In some cases, high school students can get deals if they have an email that ends in .edu. The colleges and programs that retailers recognize can vary, but you can expect most major colleges and universities to be eligible.

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

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

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

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

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

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Jan

2024

A Complete Guide to Private Student Loans

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

The average cost of college in the U.S. is $36,436 per year, including books, supplies, and daily living expenses, according to the Education Data Initiative. While grants and scholarships can significantly lower your out-of-pocket expenses, they typically don’t cover the full cost of your college education.

Student loans, both federal and private, can help bridge this gap in financial aid to allow you to attend the college of your choice. Federal student loans are funded by the government. They tend to offer the best rates and terms but come with borrowing limits. If you still have gaps in funding, you can turn to private student loans.

Private student loans are funded by banks, credit unions, and online lenders. Private lenders set their own eligibility criteria, and interest rates generally depend on a borrower’s creditworthiness. While private student loans don’t offer all the same borrower protections as federal loans, they can still be a smart choice to help you pay for educational expenses, as long as you do your research.

This guide offers private student loan basics, including what they are, how they work, their pros and cons, and how to apply for one.

What are Private Student Loans?

Often when people talk about student loans, they’re referring to federal student loans, which are provided by the federal government. Private student loans, by contrast, are given out by individual banks and lenders. Students typically turn to private student loans when federal loans won’t cover all of their costs.

You can use the money from a private school loan to pay for expenses like tuition, fees, housing, books, and supplies. Interest rates for private student loans may be variable or fixed and are set by the lender. Repayment terms can be anywhere from five to 20 years.

Unlike federal student loans, borrowers must pass a credit check to qualify for private student loans. Since most college students don’t have enough credit history to take out a large loan, a cosigner is often required.

💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

How Do Private Student Loans Work?

How Private Student Loans Work

Loan amounts, interest rates, repayment terms, and eligibility requirements for undergraduate private student loans vary by individual lenders. If you’re in the market for a private student loan, it’s key to shop around and compare your options to find the best fit.

To get a private student loan, you need to file an application directly with your lender of choice. Based on the information you submit, the lender will determine whether or not you are approved and, if so, what rates and terms you qualify for.

If you’re approved, the loan proceeds will typically be disbursed directly to your university. Your school will apply that money to tuition, fees, room and board and any other necessary expenses. If there are funds left over, the money will be given for you to use toward other education-related expenses, such as textbooks and supplies.

Repayment policies vary by lender but typically you aren’t required to make payments while you’re attending school. Some lenders will allow you to defer payments until six months after you graduate. However, interest typically begins accruing as soon as the loan is dispersed. Similar to unsubsidized federal student loans, the interest that accrues while you’re in school is added to your loan balance.

The Pros and Cons of Private Student Loans

Pros of Private Student Loans	Cons of Private Student Loans
Apply any time of the year	May require a cosigner
Higher loan amounts	Less flexible repayment options
Choice of fixed or variable rates	No loan forgiveness programs
Quick application process	Can lead to over-borrowing
Statute of limitations on collection	Not always discharged in death or disability
Options for international students	No federal subsidy

If federal financial aid — including grants, work-study, and federal student loans — isn’t enough to cover the full cost of college, private student loans can fill in any gaps. Just keep in mind that private student loans don’t offer the same borrower protections that come with federal student loans. Before taking out a private student loan, it’s a good idea to fully understand their pros and cons.

The Benefits of Private Student Loans

Here’s a look at some of the advantages that come with private student loans.

Apply Any Time of the Year

Unlike federal student loans, which have application deadlines, you can apply for private student loans any time of the year. As a result, they can be helpful if you’re facing a mid-year funding shortfall or if your college expenses go up unexpectedly.

Higher Loan Amounts

Federal loans have annual maximums. For example, a first year undergraduate can borrow up to $5,500. The aggregate max you can borrow from the government for your entire undergraduate education is $31,000. Private student loan limits vary with each lender, but you can typically borrow up to the full cost of attendance minus any financial aid received.

Choice of Fixed or Variable Interest Rates

Federal loans only offer fixed-rate loans, while private lenders usually give you a choice between fixed or variable interest rates. Fixed rates remain the same over the life of the loans, whereas variable rates can change throughout the loan term, depending on benchmark rates.

Variable-rate loans usually have lower starting interest rates than fixed-rate loans. If you can afford to pay off your student loans quickly, you might pay less interest with a variable-rate loan from a private lender than a fixed-rate federal loan.

Quick Application Process

While federal student loans require borrowers to fill out the Free Application for Federal Student Aid, or FAFSA, private student loans do not. You can apply for most private student loans online in just a few minutes without providing nearly as much information. In some cases, you can get a lending decision within 72 hours. By comparison, it typically takes three to five days for the government to process the FAFSA if you submit electronically, and seven to 10 days if you mail in the form.

Statute of Limitations

While you never want to default on your student loans (since it can cause significant damage to your credit), it can be nice to know that private student loans come with a statute of limitations. This is a set period of time that lenders have to take you to court to recoup the debt after you default. The time frame varies by state, but it can range anywhere from three to 10 years. After that period ends, lenders have limited options to collect from you.

However, that’s not the case with federal student loans. You must eventually repay your loans, and the government can even garnish your wages and tax refunds until you do.

Options for International Students

International students typically don’t qualify for federal financial aid, including federal student loans. Some private lenders, however, will provide student loans to non-U.S. citizens who meet specific criteria, such as attending an eligible college on at least a half-time basis, having a valid student visa, and/or adding a U.S. citizen as a cosigner.

When we say no fees we mean it.
No origination fees and late fees
when you take out a student loan with SoFi.

The Disadvantages of Private Student Loans

Private student loans also have some downsides. Here are some to keep in mind.

Requires a Cosigner

Most high school and college students don’t make enough income or have a strong credit history to qualify for private student loans on their own. Though some lenders will take grades and income potential into consideration, most students need a cosigner to qualify for a private student loan. Your cosigner is legally responsible for your student debt, and any missed payments can negatively affect their credit. If you can’t repay your loans, your cosigner is responsible for the entire amount.

The good news is that some private student loans allow for a cosigner release.That means that after you make a certain number of on-time payments, you can apply to have the cosigner removed from the loan.

Less Flexible Repayment Options

Federal student loans offer several different types of repayment plans, including Income-Driven Repayment (IDR) Plans, which calculate your monthly payment as a percentage of your income. With the new Saving on a Valuable Education (SAVE) Plan, for example, your monthly payments are generally equal to 5% of your discretionary income (which is the extra income you have after paying for basic necessities).

With private student loans, on the other hand, usually the only way to reduce your monthly payment is to refinance the loan to a lower interest rate, a longer repayment term, or both.

No Loan Forgiveness Programs

Federal student loans come with a few different forgiveness programs, including Public Service Loan Forgiveness (PSLF), IDR forgiveness. and Teacher Loan Forgiveness. While these programs have strict eligibility requirements, they can help many low-income borrowers. Private lenders, however, generally don’t offer programs that forgive your debt after meeting certain requirements.

If you’re experiencing financial hardship, however. the lender may agree to temporarily lower your payments, waive a payment, or shift to interest-only payments.

Can Lead to Over-Borrowing

Private loans typically allow you to borrow up to 100% of your cost of attendance, minus other aid you’ve already received. Just because you can borrow that much, however, doesn’t necessarily mean you should. Borrowing the maximum incurs more interest over the duration of your loans and increases your payments, which can make repayment more difficult.

Not Always Discharged in Death or Disability

Federal loans are discharged if the borrower passes away, which means that the debt will be cleared and won’t count against the borrower’s estate. With private student loans, however, lenders can try to collect any outstanding loan amounts against a borrower’s estate in the event of death. They can’t, however, try to collect from a relative who did not cosign the debt.

Also keep in mind that your private loan could go into automatic default if your cosigner passes away, even if you’ve been making your payments on time.

No Federal Subsidy

Subsidized federal student loans, awarded based on financial need, come with an interest subsidy, meaning the government pays your interest while you’re in school and for six months after you graduate. This can add up to a significant savings.

Subsidies don’t exist with private student loans. Interest accrues from day one; in some cases, you might need to make interest payments while still in school. If you don’t pay the interest as you go, it’s added to your debt as capitalized interest when you finish school. (This is also the case with federal unsubsidized loans.)

Federal vs Private Student Loans

Here’s a look at the key differences between federal vs. private student loans.

Federal Student Loans vs. Private Student Loans

The Application Process

Federal student loans are awarded as a part of a student’s financial aid package. In order to apply for federal student loans, students must fill out the FAFSA each year. No credit check is needed to qualify.

To apply for private student loans, students need to fill out an application directly with their preferred lender. Application requirements may vary depending on the lender. A credit check is typically required.

Recommended: Financial Aid vs Student Loans

Interest Rates

The interest rates on federal student loans are fixed and are set annually by Congress. Once you’ve taken out a federal loan, your interest rate is locked for the life of the loan.

For the 2023-2024 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 5.50%, the rate on Direct Unsubsidized loans for graduate and professional students is 7.05%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 8.05%. The interest rates on federal student loans are fixed and are set annually by Congress.

Private lenders, on the other hand, are free to set interest rates. Rates may be fixed or variable and depend on several factors, including your (or your cosigner’s) credit score, loan amount, and chosen repayment term. Private student loan rates range anywhere from 2.99% to 14.96% APR for fixed-rate loans and 2.99% to 14.86% APR for variable-rate loans.

Repayment Plans

Borrowers with federal student loans can select from several different federal repayment plans , including income-driven repayment plans. You can defer payments while enrolled at least half-time and immediately after graduation

Repayment plans for private loans are set by the individual lender. Many private student loan lenders allow you to defer payments during school and for six months after graduation. They also have a variety of repayment terms, often ranging from five to 20 years.

Options for Deferment or Forbearance

Federal student loan borrowers can apply for deferment or forbearance if they encounter financial difficulties while they are repaying their loans. These options allow borrowers to pause their loan payments (interest, however, will typically continue to accrue).

Some private lenders may offer options for borrowers who are facing financial difficulties, including short periods of deferment or forbearance. Some also offer unemployment protection, which allows qualifying borrowers who have lost their job through no fault of their own to modify payments on their student loans.

Loan Forgiveness

Borrowers with federal student loans might be able to pursue loan forgiveness through federal programs such as PSLF or Teacher Loan Forgiveness, or after paying down their balances on an IDR plan for a certain period of time.

Since private student loans aren’t controlled by the government, they are not eligible for federal loan forgiveness programs. Though private lenders will often work with borrowers to avoid default, private student loans are rarely forgiven. Generally, it only happens if the borrower becomes permanently disabled or dies.

Should You Consider Private Student Loans?

There are many different types of student loans. It’s generally a good idea to maximize federal student loans before turning to private student loans. That way, you’ll have access to income-driven repayment plans, loan forgiveness programs, and extended deferment and forbearance periods.

If you still need money to cover tuition or other expenses, and you (or your cosigner) has strong credit, a private student loan can make sense.

Private student loans can also be useful if your expenses suddenly go up and you’ve already maxed out federal student loans, since they allow you to access additional funding relatively quickly. You might also consider a private student loan if you don’t qualify for federal loans. If you’re an international student, for example, a private loan may be your only college funding option.

Another scenario where private student loans can make sense is if you only plan to take out the loan short-term. If you’ll be able to repay the loan over a few years, private student loans could end up costing less overall.

Recommended: When to Apply for Student Loans

How to Get a Private Student Loan

Here’s a look at the steps involved in getting a private student loan.

1. Shop around. Your school may have a list of preferred lenders, but you’re not restricted to this list. You can also do your own research to find top lenders. As you evaluate lenders, consider factors like interest rates, how much you can borrow, the loan term, when you must start repayment, any fees, and if the lender offers any hardship programs.

2. See if you can prequalify. Some lenders allow borrowers to get a quote by filling out a prequalification application. This generally involves a soft credit inquiry (which won’t impact your credit score) and tells you what interest rates and terms you may qualify for. Completing this step can help you decide if you need a cosigner.

3. Gather your information. To officially apply for a private student loan, you typically need to provide your Social Security number, birthdate, and home address, as well as proof of employment and income. You may also need to provide other financial information, such as your assets, rent or mortgage, and tax returns. If you have a cosigner, you’ll have to provide their personal and financial details as well.

4. Submit your application. Once you’ve completed your application, the lender will typically contact your school to verify your information and eligibility. They will then process the student loan and notify you about your approval and disbursement of your money.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Does Everyone Get Approved for Private Student Loans?

No. Requirements for private student loans will vary depending on the lender, but generally to qualify you need to:

• Attend an accredited school (this typically includes four-year colleges and, sometimes, two-year community colleges and trade schools).

• Have a strong credit score (usually in the mid-600s or higher).

• Have a steady income that can cover your expenses.

If you don’t meet these qualifications you can apply with a cosigner who does.

Apply for a Private Student Loan with SoFi

Private student loans are offered by banks, credit unions, and online lenders to help college students cover their educational expenses. They are not part of the federal student loan program, and generally do not feature the flexible repayment terms or borrower protections offered by federal student loans. However, private student loans come with higher loan limits, and the borrowing costs are sometimes lower compared to their federal counterparts. If you’re thinking about a private student loan for college, it pays to shop around to find the best rates and terms.

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

Why would someone get a private student loan?

Students typically turn to private student loans when federal loans won’t cover all of their costs. Private student loans come with higher borrowing limits than their federal counterparts. The aggregate max you can borrow from the government for your entire undergraduate education is $31,000. With private loans, on the other hand, you can typically borrow up to the total cost of attendance, minus any financial aid received, every year. This gives you more flexibility to get the financing you need.

Will private student loans be forgiven?

Private student loans aren’t funded by the government, so they don’t offer the same forgiveness programs. In fact, private student loan forgiveness is rare.

If you experience financial hardship, however, many lenders will work with you to stay out of default. They may agree to temporarily lower your payments, waive a payment, or switch to interest-only payments. Or, you might qualify for deferment or forbearance, which temporarily postpones your payments (though interest continues to accrue).

Are private student loans paid to you or the school?

Typically, lenders will send your private student loan money to your school, which will apply the loan to your current charges. The school will then transfer any balance to you to use towards other costs, such as school supplies and other living expenses.

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

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

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

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

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