Oct
05
2023
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FAFSA Tips and Mistakes to Avoid

By | Debt Payoff, Student Loans, student_loan | No Comments
Editor’s Note: The new, simplified FAFSA form for the 2024-2025 academic year is available, although applicants are reporting a number of glitches. Try not to worry, take your time, and aim to submit your application as soon as possible.

If you’re applying to college or graduate school, figuring out how to pay for your education is likely top of mind. The first step for many prospective students is to fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA®.

This form is your gateway not only for federal loans, but also for federal grants, work-study jobs, and even scholarships and grants available through your state or school. Filling out the FAFSA is key, since it’s how your eligibility for student aid is determined.

You might be tempted to put off filling out the application or have no idea where to start, but submitting your application early could improve your chances of earning more aid. Continue reading for more FAFSA tips and tricks to help make sure everything goes smoothly.

Tips for Filling Out the FAFSA

The FAFSA is required in order to apply for federal student loans, grants like the Pell Grant, and scholarships. Colleges and universities may also use the information provided on the FAFSA to determine college-specific awards. This is an important first step for students figuring out how they’ll pay for college.

Unfortunately, the FAFSA has become known for being a long, tedious, and complex form to fill out. Good news: The U.S. Department of Education is rolling out a new streamlined and simplified FAFSA for the 2024-25 school year in December, 2023 (a delay from the usual October 1).

Whether you’re filling out the standard 2023-24 FAFSA or the simplified 2024-25 FAFSA, here are some tips to keep in mind.


💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

Actually Fill The FAFSA Out

Some people may not complete a FAFSA under the assumption that their income, or that of their family, is too high for them to qualify for any student aid. In reality, the government has no official income threshold to qualify for federal student aid, and there are many forms of aid on the table.

So you can’t really predict whether you might benefit. You also need to fill out the FAFSA to be eligible for any type of federal student loan. Federal loans typically come with more robust benefits when compared to private student loans, including deferment during periods of economic hardship and income-driven repayment plans. You don’t want to lose out on potential financial help for lack of even trying.

If you don’t end up earning as much aid as you need, you can also search for scholarships from private organizations.

Submit As Early As Possible

Typically, the FAFSA becomes available on October 1 for the following academic year. The 2024-2025 academic year, however, is an exception. Due to upcoming changes to the FAFSA (and some adjustments to how student aid will be calculated), the form will be available in December 2023.

Generally, it’s a good idea to submit the FAFSA as soon after it’s released as possible, since some aid is awarded on a first-come, first-served basis. Submitting the form early could help improve your chances of receiving financial help for college.

Most importantly, don’t miss the submission deadline. Technically, the FAFSA deadline is the end of June of the following year. But each state and educational institution has its own deadline for submitting the FAFSA.

You can check state deadlines on StudentAid.gov . For individual college due dates, you can go to the website for each college you’re interested in applying to, or reach out to their financial aid offices. Make sure you submit the FAFSA by the earliest deadline of the bunch.

Prepare Ahead of Time

To simplify the process of filling out the FAFSA, it’s helpful to gather everything you need in advance. Here are some of the things you may need for both yourself and your parents (if you’re a dependent):

•   Social Security Numbers, or Alien Registration Numbers for non-citizens If you don’t know these, you can request them from the Social Security Administration or U.S. Citizenship and Immigration Services.

•   Driver’s license numbers

•   Tax returns For the 2024–25 academic year, you’ll be asked for your 2022 tax information, which can typically be transferred directly from the IRS. If you or your parents have had a change of income since that tax return, you may need to let the financial aid departments of the schools you’re applying to know directly.

•   Records of assets you or your parents own This can include bank statements showing savings and checking account balances or records of investments such as stocks, bonds, or real estate, excluding the family home.

•   Records of income that isn’t taxed This might include child support or interest.

•   Federal school codes for the institutions you’re applying to You can find these on the Department of Education website. Include every school you’re even remotely considering, even if you haven’t yet submitted your application or been accepted. There are no repercussions if you end up listing schools you don’t apply to or get into. However, if you add a school later, there may be less financial aid available.

Recommended: How Many Colleges Should I Apply To?

When we say no fees we mean it.
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Apply Online

You can request a paper form, but if possible, submitting your FAFSA online is the quickest and easiest way to submit your application. Make sure you are on the official Student Aid website, which should end in “.gov.” If you’re asked to provide credit card information, you’re in the wrong place (after all, “free” is in the form’s name).

Before you get started, you’ll need to create an FSA ID on the Department of Education website . This is the username and password you’ll use to electronically sign your FAFSA, as well as to prefill information in future years, since you’ll need to fill out the FAFSA each year you want to apply for student aid.

If you are a dependent student, your parents will need to create an independent FSA ID. Because this ID serves as an official signature, you should create your own and not share it with anyone.

Take Advantage of Time Savers

Besides using an FSA ID, another way to speed up the application process is to use the IRS Data Retrieval Tool. This allows you to automatically populate answers to some questions on the FAFSA with information from you or your parents’ federal income tax returns. This not only saves time, but is also a good way to make sure you submit accurate numbers. According to the Department of Education, the 2024-2025 FAFSA will have an even easier and faster way to transfer your tax information directly from the IRS.

Get Help if You Need it

If you’re confused about something, don’t worry — and don’t ignore it. First, check the frequently asked questions on the FAFSA website. If that doesn’t help, you can contact the Federal Student Aid Information Center by chat, email, or phone.

Common Mistakes to Avoid

Every year, certain errors crop up again and again in FAFSA applications. To help prevent delays in your financial aid, it’s worth ensuring you aren’t making these common mistakes:

Leaving Fields Blank

Leaving fields blank can result in errors when filing your application. Instead, write “0” or “N/A” where relevant.

Filling Out the Application at the Same Time as Your Parents

The FAFSA will require financial information from both you and your parents. As mentioned, both you and your parents will have your own FSA ID information to log in and make changes to the FAFSA application. If you log in at the same time, you risk one or both of your changes not being saved properly.

Providing Incorrect Information

The FAFSA requires a lot of personal and financial information. Making careless errors or submitting incorrect information can cause issues with your application. For example, make sure you submit the correct Social Security number. If you don’t use this number often, you may not know it by heart. But being one digit off here can throw things off.

Issues can also occur if you are providing the wrong figures for investments. Carefully follow the instructions to report student and parent investments in the right place and understand what to include or exclude.

Take your time and read the questions carefully. Breezing through the application in a rush can potentially lead to wrong answers or missed fields.

Recommended: What Are the FAFSA Requirements and Do You Meet Them?

Failing to Reapply

The FAFSA isn’t a one-time deal. Most schools require you to re-apply every year, so make sure you stay on top of deadlines.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

The Takeaway

Filling out the FAFSA is the first step to getting the financial aid many students need to make college or graduate school a reality. A few tips to help you toward FAFSA success include: reading the application closely, making sure you have the most up-to-date financial information at hand when you are ready to submit, and submitting the application as early as possible. And don’t forget, you’ll need to submit an application annually.

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 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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Oct
05
2023
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PAYE vs Repaye vs SAVE: What’s the Difference?

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

Struggling to make your federal student loan payments? An income-based repayment plan may ease the burden. Previously, two of the primary income-based plans were Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), but the latter has been replaced by a new plan — the SAVE Plan. In all cases, the plans adjust your monthly loan payments based on your income and family size. In this article we’ll look at how SAVE compares to the old REPAYE, as well as to the PAYE Program.

PAYE vs REPAYE: An Overview

The existing PAYE and former REPAYE federal student loan payment plans were similar, but differed in a few key areas. Both of these plans had income-based repayment terms generally set at 10% of a borrower’s discretionary income.

Some borrowers may not qualify for PAYE because the initial enrollment step requires partial financial hardship as determined by one’s annual discretionary income and family size. You cannot enroll into PAYE if your federal student loan monthly payment would be lower under the Standard Repayment Plan. You also cannot enroll into PAYE after a certain date.

No new PAYE enrollments will occur after July 1, 2024, although current PAYE enrollees can remain on the plan after that date. The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1 and payments to resume in October 2023 under any federal student loan repayment plan.

Some federal student loan borrowers who did not qualify for PAYE may have been eligible for REPAYE. Note that REPAYE no longer exists and has been fully replaced by the SAVE Plan as of July 2023.

Here are the key differences between the existing PAYE and former REPAYE plans:

•   PAYE requires partial financial hardship to sign up for first-time enrollment

•   REPAYE did not require low-income, moderate-income, or partial financial hardship to enroll

•   No new PAYE enrollments will occur after July 1, 2024

•   Borrowers already enrolled in PAYE can continue repaying under that plan after July 1, 2024

•   REPAYE no longer exists as a federal student loan repayment plan

SAVE vs REPAYE

Saving on a Valuable Education (SAVE) Plan is the federal income-driven repayment (IDR) plan that replaced REPAYE in July 2023. If you were enrolled on the REPAYE Plan at that time, you’ve been automatically enrolled into the SAVE Plan.

The SAVE Plan is essentially a major upgrade to the former REPAYE Plan, as shown in the table below:

SAVE

 REPAYE
$0 monthly payment if your income is within 225% of the federal poverty guideline (or less than $32,805 for a single borrower and $67,500 for a family of four in 2023). Fewer borrowers qualified for a $0 monthly payment because the threshold was set at 150% of the federal poverty guideline.
Your loan balance won’t grow over time if your monthly payment amount is less than the interest accruing. It was possible for borrowers to see their loan balances grow over time if their monthly payment was insufficient to pay the accrued interest.
Inclusion of your spouse’s income is not required if you file your taxes separately. Inclusion of your spouse’s income was required
Beginning July 2024, payment amounts are based on 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average for borrowers who have both. Payment amounts were based on 10% of discretionary income
Beginning July 2024, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments. Loan forgiveness would only occur after 20 years of monthly qualifying payments for undergraduate loans and 25 years for graduate loans

SAVE vs PAYE

Both SAVE and PAYE are federal income-driven repayment plans not available to private student loan borrowers. New enrollments in PAYE will end in July 2024.

The below table highlights the key differences between SAVE and PAYE:

SAVE

 PAYE
Annual adjusted gross income does not determine your eligibility for this IDR plan. Enrolling into this plan typically requires low or moderate income, also known as a partial financial hardship.
You don’t have to pay if your income is below 225% of the federal poverty guideline. You don’t have to pay if your income is below 150% of the federal poverty guideline.
Beginning July 2024, payment amounts are based on 5% of one’s discretionary income for undergraduate loans, 10% for graduate loans, and a weighted avera.ge for borrowers who have both. Payment amounts are generally 10% of one’s discretionary income, but never more than the 10-year Standard Repayment Plan amount.
Also beginning July 2024, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments. Your remaining loan balance is forgiven after 20 years of monthly qualifying payments.
There’s no deadline to enroll and make payments on this plan. No new enrollments will occur after July 1, 2024, but current enrollees can remain on this IDR plan after that date.

Depending on your original principal balance amount, student loan forgiveness on the SAVE Plan can occur after 10 to 25 years of monthly qualifying payments beginning in July 2024.

If you’re a federal student loan borrower working toward Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining loan balance after 10 years of qualifying payments.

Recommended: Student Loan Forgiveness Programs


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

What Is the Interest Subsidy?

The SAVE Plan has a permanent interest subsidy, whereas the PAYE Plan offers a temporary interest subsidy to eligible borrowers.

If you’re on the SAVE Plan, 100% of your unpaid accrued interest is not charged if your monthly payment is less than the interest accruing. The effect of this permanent interest subsidy is that your loan balance won’t grow over time if your SAVE Plan monthly payment is less than the interest accruing.

Under the PAYE Plan, the U.S. Department of Education may provide an interest subsidy if your monthly payment is less than the interest accruing. This PAYE Plan interest subsidy is discontinued after the first three years of repayment and only applies to Direct Subsidized Loans and the subsidized portion of Direct Consolidation Loans.

Some borrowers on the PAYE Plan may see their loan balances grow over time. This can happen if you’re not covered by an interest subsidy when making a monthly payment that’s insufficient to pay the accrued interest. (Effective July 1, 2023, your unpaid accrued interest is not capitalized if you switch from PAYE to another repayment plan, fail to recertify your income, or no longer have a partial financial hardship.)

Recommended: Direct vs. Indirect Student Loans: What’s the Difference?

Answers to Common Questions

How do I apply for a federal IDR plan?

You only need to submit one application for any federal income-driven repayment plan and will need to supply financial information. It will take about 10 minutes. The Federal Student Aid Office also will recommend a repayment plan based on your input. Remember that private student loans are not eligible for federal IDR plans.

I want to apply for PAYE. How is partial financial hardship defined?

A general rule of thumb: If your debt exceeds your income, you likely demonstrate hardship under PAYE.

More specifically, your loan servicer will compare your monthly payment under the standard plan and PAYE. If you’d pay more under the standard plan, you have a partial financial hardship. Remember there’s no option to apply for PAYE after July 1, 2024.

What if I’m in PAYE and no longer demonstrate hardship?

Your loan payments will stop being based on your income. Instead, your monthly payment will be based on the amount you would pay under the 10-year Standard Repayment Plan. Your maximum required payment in PAYE will never be higher than the 10-year standard payment amount.

What if I forget to recertify my income and family size?

If you’re on the SAVE Plan, failing to recertify your income and family size may switch you to an alternative repayment plan with a larger monthly payment.

If you’re on the PAYE Plan, failing to recertify by the annual deadline may give you a larger monthly payment resembling what you would pay under the Standard Repayment Plan.

Auto-recertification will be available in July 2024 if you agree to securely share your tax information with the U.S. Department of Education.

Does a Parent PLUS Loan qualify for PAYE or SAVE?

No. Federal Parent PLUS Loans are not eligible for either the PAYE or SAVE plans.

Recommended: Types of Federal Student Loans

Income-Driven Repayment Alternatives

One of the alternatives to federal income-driven repayment is student loan refinancing. You can refinance your student loans — private and federal — with a private lender and potentially qualify for a lower interest rate. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

The federal Direct Consolidation Loan program combines federal student loans into a single federal loan, but the interest rate is the weighted average of the original loans’ rates rounded up to the nearest eighth of a percentage point, which means the borrower usually does not save any money. Lengthening the loan term can decrease the monthly payment, but that means you may spend more on total interest.

Federal IDR plans like SAVE or PAYE offer federal protections and benefits, such as access to the Public Service Loan Forgiveness program. Any loans you refinance with a private lender will not be eligible for PSLF, Teacher Loan Forgiveness, or federal IDR plans. A student loan refinancing calculator can help you determine whether student loan refinancing is right for you.



💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

The Takeaway

The SAVE Plan is generally the most affordable federal student loan repayment plan. It replaced the former REPAYE Plan and offers a permanent interest subsidy, among other perks that you can’t get with PAYE.

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.

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

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


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

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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Oct
04
2023
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Applying for a Student Loan Cosigner Release

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

If you borrow a student loan with a cosigner, you may want to officially remove them from the loan by applying for a cosigner release. The specific requirements for this can vary by lender but may include things like a minimum number of on-time monthly payments and a review of your credit history.

Borrowers will likely be required to file a formal application with their lender in order to release their cosigner from a student loan. Continue reading for a high-level rundown of what the process of cosigner release can look like and what other options might exist if a cosigner release is not available.

What Is a Cosigner?

The financial aid process typically begins with families filling out the Free Application for Federal Student Aid (FAFSA®) to see how much aid they’ll receive . Direct Subsidized and Unsubsidized federal loans don’t need a cosigner, but they don’t always cover the whole cost of your education. If you’re unable to get a student loan yourself, a cosigner — often a parent, relative, or close family friend — may be able to help secure funding.

Cosigners are just as responsible as the primary borrower to repay the loan. If the primary borrower doesn’t make a payment on time, the cosigner is legally required to make the payment. Late or missed payments can affect the credit score of both the primary borrower and the cosigner. If a debt goes into default and the lender hires a collection agency, that agency can pursue the cosigner to collect the debt.

Cosigners may choose to help their child or family member take out a loan when they are in college, but once the student graduates and gets a job, they may decide it’s time for them to take full responsibility for the loan.


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

What Is a Cosigner Release, and How Do You Qualify?

A cosigner release is the process of removing a cosigner from a loan. Depending on the loan’s terms, the cosigner may be removed from the loan with a cosigner release after the student has graduated and met certain requirements as outlined by the lender. Here’s a list of the typical requirements that a primary borrower must have in order to remove a cosigner from their loan:

1. Minimum full monthly payments:

Typically, the primary borrower will have to show that they’ve made one to two years’ worth of full monthly payments, depending on the lender. Full payments include principal and interest rate payments, and they must be made on time.

2. Satisfactory credit:

The lender will generally check the primary borrower’s credit to make sure they can qualify for the loan on their own and meet minimum credit requirements. For example, they’ll be looking to make sure that the borrower doesn’t have any loans in default and that they have a good consumer credit report.

3. Employment:

Lenders may ask for proof of employment and determine whether a primary borrower is meeting minimum income requirements. Borrowers may be asked to prove income with recent paystubs, W-2s, or the borrower’s most recent tax return.

Depending on your lender, there may be other criteria you have to meet.

How to Apply for Cosigner Release

Before a lender will release a cosigner, primary borrowers must submit an application. Here is a step-by-step guide to applying for a cosigner release.

1. Check with Your Lender

First things first, if you’re unsure if the loan you have qualifies for a cosigner release, check in directly with your lender. Generally, lenders will have certain requirements that borrowers are required to meet before they can apply for a cosigner release. These may include things like making a minimum number of on-time monthly payments, establishing a strong credit history, and securing employment. Again, each lender is able to set their own criteria.

2. File an application

Once you’re confident you can meet the requirements, you will likely have to file a formal application with your lender to have the cosigner removed from your loan. Depending on the lender, you may be able to submit the application online or by mailing in a printed form. Read the application requirements thoroughly because some lenders may require supporting documentation, like a W-2 or recent pay stubs.

Once you have submitted an application with the information your lender requires, the lender might then issue a cosigner release.

Why Get a Cosigner Release?

A cosigner may want to be released from a student loan for a number of reasons, not the least of which is the flexibility they may gain from having that portion of their credit freed up.

First, their debt-to-income ratio will likely improve, which may make it easier to apply for new credit or get a new loan at a favorable interest rate. If a cosigner is looking to buy a car or get a mortgage, for example — or even cosign another loan — they may be able to do so with more favorable rates.

Cosigners with other children bound for college may want to be released from one child’s loan so they can turn their attention to funding their next child’s education.

Another reason to consider releasing a cosigner is that some private loans go into automatic default if the cosigner dies. Removing the cosigner protects the primary borrower from needing to worry that they may have to pay any remaining balance in full immediately if their cosigner dies.

Once the cosigner is released from the loan, they will no longer have to worry that their credit will be damaged if loan payments aren’t made on time, or that they may be responsible for payments should the primary borrower drop the ball.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

What Are the Limitations of Cosigner Releases?

Not all loans offer a cosigner release. And even for those that do, it can be difficult to obtain. For that reason, when you are on the hunt for an initial loan, you should read the fine print to see if the loan offers a cosigner release option. That way, you’ll know the possibility is there.

What Are the Alternatives to a Cosigner Release?

If your application for a release is rejected, there are other ways you may be able to relieve your cosigner.

One alternative that might be worth considering is refinancing your student loan(s).

When you refinance student loans, your new lender pays off your old loan (or loans) in full, replacing it with a new one. If the primary borrower can qualify for a new loan on their own, they won’t need to include the cosigner on the new loan.

If you do decide to go the refinance route, it’s worth spending a little bit of time shopping around for a lender that can help you manage your student loan debt better. For example, you could look for a lender that offers you lower interest rates, since this could cut your interest costs over the life of the loan and may save you money.

You will still need to apply for this type of loan as you would any other, demonstrating that you are capable of paying the debt off yourself. You’ll likely need to prove that you have a history of making on-time student loan payments, too. Lenders might look at your consumer credit report, debt-to-income ratio, and income, among other factors that will vary from lender to lender.

If you do qualify for a refinanced loan on your own, then only your name will be on the new loan. Then, your cosigner will no longer be responsible should you miss payments or default. Though the responsibility for repaying the loan will fall entirely on you now, being released from the old cosigned loan can be a big weight lifted off your cosigner’s shoulders.

The Takeaway

Applying for a cosigner release may require that the primary borrower meet certain lender requirements like having a full-time job and making a minimum number of on-time monthly payments. If approved, the cosigner on the loan will be officially removed and the primary borrower will be the sole borrower.

In the event that you aren’t approved for a cosigner release, you may be able to remove your cosigner by refinancing your loan. This entails applying for a new loan, potentially with a new lender. Refinancing won’t be the right choice for every borrower, and if you have federal student loans, you will forfeit any federal borrower protections, like income-based repayment plans, if you refinance them with a private lender. (Federal loans also don’t require a cosigner.) If you think refinancing might be a fit for your personal financial situation, consider SoFi. Refinancing at SoFi can be done entirely online and there are absolutely no hidden fees.

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

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.


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.

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 .

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

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

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

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Oct
03
2023
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Can Student Loans Be Discharged?

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

Student loans can be discharged in certain circumstances. When federal student loans are discharged, your requirement to pay back some or the entire remaining amount of your debt due is eliminated. However, this usually only happens in unique life situations, such as school closure, permanent disability, or death. However, because of a new student loans bankruptcy process, it may be possible to discharge student loans in bankruptcy.

Ahead, we explain who may qualify for student loan discharge, and other options for managing student loan debt.

When You Can Discharge Student Loans

Interested in discharging your student loans? Wondering when can student loans be discharged during bankruptcy? Here are details about some of the circumstances under which you may qualify for student loan discharge.

Total and Permanent Disability Discharge

To qualify for a federal student loan discharge due to disability, you must have a “total and permanent” disability that can be verified by the U.S. Department of Veterans Affairs, the Social Security Administration, or a qualified doctor. You also must complete a discharge application available at studentaid.gov, which includes documentation showing you meet the government’s requirements for being considered disabled.

Veterans may be eligible for student loan discharge if they can provide paperwork from the VA demonstrating they either have a disability that is 100% disabling due to their service, or are totally disabled due to an individual unemployability rating.

For those borrowers who are eligible for Social Security Disability Insurance or Supplemental Security Income, you may also qualify for loan discharge by providing documentation of your Social Security award.

Not all private student lenders give you the option to discharge your loans if you’re permanently disabled. While you might be able to file an application to discharge your federal student loans because of disability, with private loans, you may have to consider legal action. You should speak to an attorney to determine if that’s the right course of action.


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

Student Loan Discharge Due to Death

Federal student loan discharge may also be granted if the borrower dies. Parents who have taken out Parent PLUS loans on behalf of a student may also have these loans forgiven if the student dies.

Proof of death, such as an original death certificate or certified copy, must be submitted in order for the loans to be canceled.

Declaring Bankruptcy and Discharging Student Loans

Can student loans be discharged during bankruptcy? And does bankruptcy clear student loans? The answer is yes to both questions, but the process can be lengthy and somewhat complicated.

Until late 2022, it was challenging and rare for federal student loans to be discharged through bankruptcy. But a new process unveiled by the Justice Department in November 2022, makes it easier. Those filing for bankruptcy must fill out what’s called an attestation form to verify that they fit the definition of “undue hardship.” Their request is then evaluated by the bankruptcy judge under new standards, and their debt may be fully or partially forgiven.

Borrowers must pass a three-part test to prove they qualify for “undue hardship” and should have their federal loans discharged:

1.    Is the borrower able to maintain a minimal standard of living while paying their student loans?

2.    Have they made a good faith effort to repay the loans?

3.    Will they continue to struggle to make payments during the remaining term of their loan?

It’s important to understand that filing for bankruptcy can have serious consequences. For instance, bankruptcy will impact your credit for years. It’s best to consult with a qualified professional, such as an attorney specializing in bankruptcy law, before making any decisions.

Closed School Discharge of Loans

If your school closes, you may be eligible for a 100% discharge of certain loan types, including Direct Loans, FFEL, and Federal Perkins loans. However, for this to apply, you must meet one of the following criteria:

•   You must have been enrolled at the time the school closed

•   You must have been on an approved leave when the school closed

•   Your school closed within 120 days after you withdrew if your loans were first disbursed before July 1, 2020 (180 days if your loans were first disbursed on or after July 1, 2020)

Only federal student loans can be discharged due to school closure and other circumstances. For private loans, you must contact your lender directly to see if you will qualify with them.

Loan Discharge Because You Were Misled By Your College

If you have federal loans, and you feel your school “misled” you — for instance, by promising you’d get certain jobs or certain salaries — you may qualify to apply for Borrower Defense Discharge through the Department of Education. The Biden administration has approved $14.7 billion in relief for 1.1 million borrowers who claim their colleges made such claims, or whose schools closed abruptly, as of July 2023. Note that this program has been challenged in court, and in August 2023, a federal court issued an injunction against the program. That’s delayed payments, but borrowers can still submit an application.

The application process is lengthy and submitting an application does not guarantee that your loans will be canceled.

False Certification Discharge

In very rare circumstances, you may be eligible for a discharge if loans were issued but they should not have been given out to you in the first place. For instance, this may apply if:

•   Your school falsely certified that you had a high school diploma or GED

•   You had a disqualifying status, such as a physical or mental condition, criminal record or other circumstance, at the time of the school certified your eligibility

•   Someone else or your school signed your name on the loan application or promissory note

In all of the above circumstances, your loans might be discharged.

Unpaid Refund Discharge

If you leave school after getting a loan, your school may also be required to return part of your loan money. You may be eligible for a partial discharge if you withdraw from school, and the college did not return the portion it was required to under the law.

In this case, only the amount of the unpaid refund would be discharged.

Alternatives to Discharging Student Loans

Since qualifying for a student loan discharge is only permitted under certain circumstances, it’s important to look at other options for federal loans. Here are some of the other choices you may have to help you pay off your student loan debt:

Forbearance: Forbearance temporarily allows you to stop making your federal student loan payments or reduce the amount you have to pay. You may qualify if you are unable to make monthly loan payments because of financial difficulties, medical expenses, or changes in employment. Usually interest will still accrue while your loan is in forbearance.

Deferment: You may be able to defer your loans in certain circumstances, such as going back to school. Depending on your loan type, your loans may still accrue interest while in deferment. However, if you qualify for deferment on federal subsidized loans, you generally will not be charged interest during deferment.

Income-based repayment: With income-driven repayment, you may be able to reduce your monthly student loan payments if you can’t afford your monthly payments on a Standard Loan Repayment plan. With an IDR plan, you’ll make monthly payments of 10% to 20% of your monthly discretionary income, and then after 20 or 25 years of on-time payments your remaining balance will be forgiven.

Cancellation: If you have a federal Perkins Loan, you may qualify for up to 100% cancellation if you served full-time in a public or nonprofit elementary or secondary school system as a teacher serving low income students or students with disability or teach in a certain field. In addition to teachers, the following jobs may qualify you for partial or whole Perkins Loan cancellation: early childhood education provider, employee at a child or family services agency, faculty member at a tribal college or university, firefighter, law enforcement officer, librarian with master’s degree at Title I school, military service, nurse or medical technician, professional provider of early intervention (disability) services, public defender, speech pathologist with master’s degree at Title I school, volunteer service (Americorps Vista or Peace Corps).

Forgiveness: For borrowers working certain qualifying public service jobs, student loan forgiveness may be an option. With this option, your remaining student loan balance will be forgiven after you make 120 qualifying monthly payments while working full-time for a qualifying employer, which can include government organizations and certain not-for-profit organizations.

When to Refinance Your Student Loan Debt

Unlike student loan forbearance or deferment, which are temporary, short-term solutions, student loan refinancing can be a long-term debt solution. If you don’t qualify for the options mentioned above, refinancing can help simplify your repayment process since all of your loans can be taken care of with one monthly payment. If you refinance with a private lender, you can also change the term length on your student loans.

Should you refinance your student loans? You’ll need to weigh the pros and cons. One very important consideration is that if you refinance your federal student loans with a private lender, you will forfeit your eligibility for federal loan benefits, including student loan forgiveness or deferment.

Recommended: Student Loan Refinancing Guide

The Takeaway

As you can see, it is possible to discharge student loans, but only in unique life circumstances, such as disability or false certification. If you do qualify, you may not have to pay some or all of your student loans, though you may have to pay taxes on the discharged balance.

If you don’t qualify for student loan discharge or one of the alternatives programs, refinancing your student loans with a private lender like SoFi can help get you a potentially lower interest rate, or a lower monthly payment if you extend your loan term. (You may pay more interest over the life of the loan if you refinance with an extended term.) Using a student loan refinance calculator can show you how much you might save. Plus, with SoFi, there are no fees, and you find out if you prequalify in two minutes.

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

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


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

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

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

This article is not intended to be legal advice. Please consult an attorney for advice.

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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Oct
02
2023
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What Is the Average Length of Time to Pay Off Student Loans?

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

Whether you’ve just graduated from college or you’ve been making payments for years, your student loan debt can seem endless. When you take out a federal student loan, the Standard Repayment Plan is 10 years. According to the Education Data Initiative, the average student borrower takes 20 years to pay off their loans. However, this timeline can vary based on factors such as the type of repayment plan and interest.

And, not all loans are treated equally. Your major, amount borrowed, loan type, and chosen career path can all influence how much you could end up paying back. Continue reading to discover steps you can take to help reduce your student loan debt.

How Long Are Student Loan Terms?

How long it takes to pay off student loans can vary based on a few different factors. There is a specific selection of student loan terms available for federal student loan borrowers. The Standard Repayment Plan spans 10 years but borrowers can change their repayment plan at any time, without incurring any fees.

The terms on private student loans are set by the individual lender. Terms are set at the time the loan is borrowed. To adjust the terms of a private student loan, the borrower will generally need to refinance the loan. Check in directly with the private student loan lender.

Federal Student Loan Terms

While most federal student loans use the standard, 10-year repayment plan, other loans have different options. (And both Direct Consolidation Loans and FFEL Consolidation Loans offer 10- to 30-year repayment terms.)

Here are the repayment plans that the U.S. The Department of Education has set up for federal loans.

•   Standard Repayment Plan: up to 10 years

•   Graduated Repayment Plan: up to 10 years

•   Extended Repayment Plan: up to 25 years

•   Income-Driven Repayment Plans, including:

◦   Pay As You Earn (PAYE) Plan: up to 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

Income-driven repayment plans — PAYE, SAVE, IBR, and ICR — forgive any outstanding balances if they aren’t completed by the end of the term. (Though you may have to pay taxes on the forgiven balance.)


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Private Student Loan Terms

For those who’ve taken out private student loans to pay for school, the payment plan may differ from those with federal loans. Some private lenders have terms that are 10 years like their federal counterparts. Other lenders cap terms at 20 or 25 years.

The repayment timeline for private loans varies — for some private loans, you might have to start paying it back while you’re still in school. And they might have fixed or variable interest rates. Because of this, it’s hard to specifically gauge how long it takes the average person to pay off their private student loans.

Paying Off Your Student Loans Sooner

There are plenty of smart ways to pay off student loans. Most important is that you make your payments on-time each month. But, strategies like making overpayments can help you accelerate your pay-off timeline. Regardless of the type of loan you have, there are steps you can take to help get rid of your student debt sooner than you originally thought.

Paying More Than the Minimum

Paying the minimum might be what you can afford right now. But if you come into some extra cash — whether through a bonus at work, a gift from a relative, or your tax refund — you can use this money toward your student loan balance.

Cutting away at your debt when possible may help shorten the length of your repayment.

Want to pay your student loans off fast?
Understand how student loan
refinancing can help.

Refinancing your Loans

While consolidating your federal student loans with a Direct Consolidation Loan is an option for some, those with private student loans may want to consider refinancing instead.

Refinancing your student loans means a private lender pays off your student loans for you and then you pay back your lender with a new loan, new interest rate, and new terms. Ideally, your interest rate would be lower, which could save you money on interest over the life of the loan.

Refinancing allows you to combine all your loans, private and federal, into one for more streamlined payments. But if the interest rate offered isn’t lower than what you’re currently paying, or there are more fees, you might want to keep your options open.

And keep in mind that when you refinance, you’ll lose your federal loan benefits like income-based repayment plans or forbearance. If you’d like to continue taking advantage of those benefits, refinancing might not be for you right now. Ultimately, refinancing should be helpful, not cause more stress or create more debt.


💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

Choosing Another Payment Plan

As mentioned, federal student loan borrowers can change their repayment plan at any time. Calculating your student loan payment is easy with tools like SoFi’s student loan calculator. These calculators can help estimate how much you’ll be paying each month on your student loans. Once you get an estimate, you can more easily decide if you want to choose a new payment plan or stick with your current payment plan or switch to another.

Income-driven repayment plans are one option that allows borrowers to lower their monthly payments, though generally, this results in an extended loan term with increased interest costs. Continue reading for more details on the income-driven repayment plans available for federal student loans.

Income-Driven Repayment Plans

Income-driven repayment plans use your discretionary income and family size to determine how much you pay on a monthly basis. This can be helpful for those in entry-level, lower-paying positions, as they could pay less monthly early on.

As your financial situation improves, your monthly payment minimum increases in turn (and vice versa). Remember that income-based repayment plans often have longer terms, which could mean you end up paying more interest over the life of your loans. Three types of income-driven repayments include PAYE, SAVE, and ICR plans.

Pay As You Earn (PAYE) Plan

On the PAYE Plan, loan repayment takes place over 20 years. Payments are 10% of your discretionary income, but never more than what you would pay on the standard 10-year repayment plan.

SAVE (SAVE) Plan

Borrowers on the SAVE Plan will pay 10% of their discretionary income toward student loan payments. Repayment terms are 20 years for students paying off loans exclusively from undergraduate studies. Borrowers with graduate degrees will repay over a period of 25 years. Any outstanding balance remaining after the aforementioned time periods will be forgiven.

Recommended: Details about the new repayment plan, SAVE

Income-Contingent Repayment (ICR) Plan

The loan repayment terms for the ICR Plans is 25 years. Loan payments can be either 20% of your discretionary income or the value of what you’d pay on a fixed payment repayment plan over 12 years — whichever is lesser in value.

Exploring Your Employee Benefits

Your job might be able to help you with your student loan debt. Under the CARES Act, employers may pay up to $5,250 as tax-free student loan payments for employees through Dec. 31, 2025. Here are some employers who might help you pay your loans.

Refinance Your Student Loans With SoFi

You can refinance student loans to ideally secure a lower interest rate which could reduce the amount of money you’ll owe over the life of the loan. It’s also possible to adjust your repayment term — though keep in mind that extending your term may result in lower payments but may increase your interest costs over the life of the loan.

Refinancing at SoFi is easy — it takes a few minutes to fill out a simple, online application. Qualifying borrowers can secure competitive interest rates and there are no fees. Plus, as a SoFi member you’ll gain access to other benefits like career coaching.

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.

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.

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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