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While on the campaign trail, not-yet President Joe Biden tweeted , “Additionally, we should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.”

At a virtual summit on student loan debt, Senate Majority Leader Chuck Schumer Senate called for President Joe Biden to forgive $50,000 in student debt through executive action for all borrowers.

The U.S. Department of Education has said $50,000 student loan cancellation would take care of 36 million individuals’ loans and put a dent in the student loan debt that currently sits at about $1.5 trillion. Student loans represent the second largest portion of household debt after mortgages — more than credit card debt. About 43 million Americans have student loans.

At this point, the White House and Congress have not enacted legislation for $50,000 student loan forgiveness. In this piece, we’ll touch on $50,000 student loan forgiveness, preexisting forgiveness programs, and other ways to pay for school.

Is the $50,000 Student Loan Forgiveness Program Real?

Currently, no widespread federal student loan forgiveness order exists to wipe out student loans. Schumer and Elizabeth Warren, senior United States senator from Massachusetts, believe that one-time student loan forgiveness could relieve students of their debt burden as well as potentially:

•   Reduce wealth gaps, including racial wealth gaps

•   Help those without a degree who have lower lifetime earnings but owe on student loans

•   Economically stimulate the middle class

•   Increase home purchases and stimulate small businesses

•   Help more people save for retirement and start a family

•   Boost the economy

In April of 2021, President Biden asked the U.S. Department of Education to see if his executive authority gives him the ability to order student loan forgiveness without the approval of Congress.

Who Qualifies for $50,000 Student Loan Forgiveness?

Right now, nobody qualifies for $50,000 student loan forgiveness because a blanket forgiveness order hasn’t come from the Biden administration or Congress. That’s not without pressure from progressive Democrats, who have repeatedly asked the president to issue an executive order for $50,000 student loan forgiveness.

Instead, the administration has been focusing on already-established student loan forgiveness programs , including approving $1.5 billion in borrower defense claims and providing $7.1 billion in relief for borrowers eligible for total and permanent disability discharges. This includes $5.8 billion in automatic student loan discharges to 323,000 borrowers and the reinstatement of $1.3 billion in loan discharges for another 41,000 borrowers.

Is the $50,000 Student Loan Forgiveness for Private Lenders?

If a $50,000 student forgiveness legislation came to fruition, the measure would likely only apply to federal student loans. Those with private student loans would still have to continue making their payments unless individual private student loan companies make changes to authorize student loan forgiveness.

An income threshold may also go into effect. In that case, the amount of forgiveness you could hypothetically receive would depend on how much money you make. If you make more than what federal guidelines suggest, you may face restrictions on the $50,000 threshold.

Can the Government Forgive $50,000 in Student Loan Debt?

Warren says that the president has the power to take care of $50,000 of student loan debt with the flick of a pen. However, Biden does not plan to support Warren’s and Schumer’s calls for action, nor does Speaker Nancy Pelosi believe Biden can unilaterally make that call on his own.

In a town hall meeting a few weeks after he took office, a citizen asked about the possibility of $50,000 student loan forgiveness. Biden said in no uncertain terms that he did not support the idea.

Preexisting Forgiveness Programs for $50,000 Student Loan Debt

So, if $50,000 in loan forgiveness isn’t an option, what are the possibilities? Several loan discharge options might be available to you. Loan discharge means you no longer have to repay your loan as long as you meet certain requirements. Let’s walk through Total and Permanent Disability (TPD) Discharge, Closed School Discharge, and Public Service Loan Forgiveness (PSLF). Keep in mind that these forgiveness programs only apply to federal student loans.

Total and Permanent Disability Discharge

A Total and Permanent Disability (TPD) Discharge absolves you of having to repay a few types of federal loans or grants:

•   William D. Ford Federal Direct Loan (Direct Loan) Program loan

•   Federal Family Education Loan (FFEL) Program loan

•   Federal Perkins Loan

•   TEACH Grant service obligation

You must complete and submit a TPD discharge application and documentation from one of these three sources: the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA), or a doctor.

Closed School Discharge

Closed School Discharge means that you may be eligible for discharge of your federal student loan if your college or career school closes during or soon after you leave it.

You may qualify for a percent discharge of the following types of loans:

•   William D. Ford Federal Direct Loan (Direct Loan) Program loans

•   Federal Family Education Loan (FFEL) Program loans

•   Federal Perkins Loans

You may qualify if you were enrolled when your school closed or you were on an approved leave of absence during the period when your school closed. You may also qualify if your school closed within 120 days after you withdrew (as long as your loans were first disbursed before July 1, 2020) or your school closed within 180 days after you withdrew (as long as your loans were first disbursed on or after July 1, 2020).

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan. You must work full-time for a qualifying employer (a U.S. federal, state, local or tribal government, or nonprofit organization) in order to qualify for PSLF.

Other Ways to Pay for School

Let’s explore the various options available to you, rather than waiting for the government to help out with relief that might not come. It may be helpful to know the differences between grants vs. scholarships vs. loans.

Private Student Loans

Just like federal student loans, you can use private student loans to pay for college or career school costs, but they come from a bank, credit union or online lender — not the federal government.

Generally speaking, federal grants and loans should be prioritized before you take on private loans because you’ll usually pay higher interest rates for private student loans. The amount you can borrow depends on the cost of your degree as well as personal financial factors (such as your credit score and income). Private lenders also aren’t required to offer the same borrower protections and benefits as federal lenders — things like income-driven repayment plans or the forgiveness options discussed previously.

Recommended: Private vs. Federal Student Loans

Credit Cards

You can use a credit card to pay for books or other school supplies but your college or university bursar’s office may or may not let you pay for college tuition with a credit card. Speak with the bursar’s office to find out whether it’s possible to pay using a credit card as well as the fees you’ll incur to pay using this method.

Paying for college costs with credit cards carries some added risks. For example, fees from the bursar’s office may outstrip any rewards you earn. It’s also highly likely that you’ll pay more in interest on a credit card than you would with a student loan.

Using a credit card will also disqualify you from the perks of federal student loans — repayment plans, deferment, and the forgiveness programs listed above.

Borrow from Loved Ones

Will a trusted family member or close friend allow you to borrow from them? If so, you could rely on them to lend you money when you need money for school. However, this option can have both positive and negative consequences, the most negative being that you might tarnish your relationship with the individual who loans you the money.

Before you borrow from a loved one, set clear expectations, establish a realistic repayment plan, discuss what happens when you can’t make payments, draw up a formal contract and examine the tax implications for the other party when lending money.

You may also want to suss out the other party’s ability to loan you the money as well. If you think it’ll put the other person in a financial bind, you may want to consider alternative options.

Pay Cash

Do you or your parents have money set aside for you to attend college? This is one of the best ways to pay for college because you don’t have to pay interest on borrowed money. You can tap into money that’s earmarked for college or pull from monthly earnings as well.

The Takeaway

So far, $50,000 student loan forgiveness is not an option available to federal student loan borrowers. There are some options currently available, such as Public Service Loan Forgiveness, which requires borrowers to make 120 qualifying payments while working for an eligible employer — such as one in the nonprofit sector.

If you’re looking for options beyond federal student loans to pay for college, private student loans may be an option to consider. SoFi’s private student loans make paying for your undergraduate or graduate education easier. You can receive up to 100% of school costs, including tuition and food, books, supplies, room and board, and other education expenses for your undergraduate, graduate school, MBA, and/or law school education. Specific undergraduate loans and graduate loans are available from SoFi.

FAQ

Check out some FAQs for student loan forgiveness $50,000:

Can the President forgive $50,000 student loan debt?

It’s unlikely that President Joe Biden will unilaterally forgive $50,000 of student loan debt for every borrower. In fact, he stated in a town hall in February 2021 that he doesn’t think he “has the authority” to cancel $50,000 per borrower. House Speaker Nancy Pelosi has also flatly stated that he cannot do it, either.

What are ways to pay off $50,000 in student loan debt?

There are many ways to pay off $50,000 in student loan debt, including paying off student loans one month at a time through monthly payments. However, you can also look into loan forgiveness programs like the ones listed above or income-driven repayment plans. You can also put more money toward your student loans by making more than the required monthly payment each month.

You can target specific loan-payoff methods, including the debt avalanche or debt snowball methods. The debt snowball method means you pay off the lowest amount of money you owe. For example, if you have three student loans, worth $1,000, $2,000, and $3,000, you’d pay off the lowest amount first because you can more quickly pay it off.

The debt avalanche method means you pay off the loan with the highest interest rate first.

It’s also important to remember that student loan forgiveness is not completely free. It’ll affect your taxes. Here’s how:

Let’s say that a federal mandate does materialize and cancels $10,000 worth of student loans. The money from the $10,000 student loan forgiveness program would get added to your taxable income, under what’s called Cancellation of Debt (COD) income. You would also receive Form 1099-C.

When you do your taxes, you’d report $10,000 as COD income and you’d owe based on your individual tax bracket. If you’re in the 22% tax bracket, you’ll pay $2,200 in taxes ($10,000 x 22%).

Do private lenders offer $50,000 student loan forgiveness?

No, private student loan lenders do not offer $50,000 student loan forgiveness but you may be able to explore different payment options with your lender. Talk to your private loan lender if you’re having trouble making your monthly payments.

Student loan lenders want to work with you to give you the best possible options for paying off your loans, but don’t expect to receive $50,000 student loan forgiveness automatically from private lenders.

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

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.

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With the high cost of a college education, affording college with no money set aside might feel impossible. However, there are many forms of financial aid — whether from federal, state, school, or private organizations — that can help you pay for your college degree.

Learning how to pay for college with no money might require approaching your higher education costs from different angles. This includes cutting your college expenses, finding alternate financial aid sources, or both.

Average Cost of College

How much you can expect to pay for college varies, depending on the school you choose, your degree level, whether you’re a state resident, and other factors.

According to the CollegeBoard’s 2021 Trends in College Pricing and Student Aid report, the average tuition and fees for a full-time, in-state undergraduate student attending a public four-year school in 2021-22 is $10,780. Out-of-state students can expect to pay an average of $27,560 in tuition and fees for the same academic year. And students attending a nonprofit four-year private institution are charged an average $38,070 in tuition and fees.

Keep in mind that these figures are exclusively for tuition and fees. This cost doesn’t account for additional expenses that college students often face, like textbooks, school supplies, housing, and transportation.

Ways to Pay for College

The cost of being a college student can seem overwhelming when you don’t have savings or out-of-pocket funds available to directly pay for school.

If you want to go to college but have no money or are a parent who’s helping your child pay for college, here are a few ideas on how to go to college with no money saved.

Fill Out FAFSA® to See if You Qualify for Financial Aid

The best way to pay for college with no money — and really, the first step you should always take — is submitting a Free Application for Federal Student Aid, also known as the FAFSA.

The FAFSA is the first step in finding out if you qualify for a federal financial aid program. For example, you can see if you’re eligible for the Pell Grant, Federal Work-Study, and Direct Loans. The information on your FAFSA is also commonly used to determine your eligibility for state, school, and other privately sponsored aid.

Grants

In addition to federal grants, search for grants from your state and school for additional funding. Grant funds generally don’t need to be repaid as long as you meet the grant program’s requirements.

Some organizations — nonprofit and for-profit — also host their own need- or merit-based grant programs for college students.

Scholarships

Scholarships are considered gift aid, meaning they typically don’t need to be repaid. There are a plethora of scholarship opportunities that are awarded due to financial need or merit.

You can search for scholarships online from various companies, organizations, community groups, and more. Ask your school’s financial aid office for help finding these advantageous sources of aid.

Negotiate With the College for More Aid

If your financial circumstances have changed since you submitted your FAFSA, request a professional judgment to have your school reevaluate your financial aid package.
Not all schools accept this request, but if yours does, this process gives you a chance to provide additional documentation that’s used to recalculate your financial need.

Start With Community College and Transfer

If you want to go to college but have no money, one option is to attend a community college for the first two years of your college education. According to the same CollegeBoard report, the average 2020-21 cost for tuition and fees at a local two-year college is $3,800 for a full-time undergraduate student.

After completing your general education courses at a junior college, you can then transfer to a four-year school.

Choose a Less Expensive University

The type of school you choose can also help you afford college if you don’t have money saved. As mentioned earlier, the cost of college varies widely between a public versus private institution.

Additionally, choosing a public school in your home state generally costs less than attending an out-of-state school. When reviewing cost, be sure to factor in the scholarships and grants you may qualify for.

Live at Home

Room and board is one of the largest expenses facing students. Instead of having to account for costs toward a dorm room or off-campus housing, living at home and commuting to school can help you keep expenses lower.

Talk with your parents about whether living at home while you earn your degree is an option.

Study Abroad

Some students may explore pursuing their degree abroad, as one solution to cut expenses. Thanks to government subsidies in some countries, attending university abroad can be less expensive than staying in the U.S. In some cases, American students may even qualify for free tuition.

Work-Study

The Federal Work-Study program allows you to earn financial aid with part-time work through an employer partner.

Federal Student Loans

If you need to borrow money for college, a federal student loan is the first choice for students. The Department of Education offers subsidized and unsubsidized federal loans to students. These loans need to be repaid.

Undergraduate students might be eligible for subsidized federal loans in which the government pays for accrued interest while you’re enrolled in school, during your grace period and while in deferment. These are awarded based on financial need.

Private Student Loans

After exhausting all of your federal student aid opportunities, students may apply for a private student loan if they need additional cash to pay for college.

Private student loan rates and terms differ from federal loans. Generally, private student loans don’t offer borrowers income-driven repayment plans, or flexible deferment or forbearance terms when you’re having trouble repaying your loan.

Also, loan details often differ between lenders. To find a competitive private student loan, compare rates from a handful of lenders before choosing one.

Working Part-Time

To supplement the financial aid you’ve received, consider working part-time while you’re enrolled in school. Funds from a part-time job can help you pay for day-to-day costs as a student, like groceries, transportation, or general living expenses while you’re studying for your degree.

Borrowing From Family Members

If you have a money gap between the financial aid you’ve received and your college expenses, an option is to ask a close family member if they’re willing to offer you a loan.

Depending on your family’s financial resources and your relationship with your parents or relatives, you might have access to this alternative low-interest financing option. When borrowing money from family, be clear about how much you need, how the funds will be used, and expectations regarding repayment after you leave school.

Is College Right for You?

Attending a degree-granting, four-year college isn’t the only choice you have for furthering your education and career prospects. Enrolling in a trade school or seeking vocational training can help you advance your skills for more job-focused opportunities.

Trade School

A trade school offers programs that teach students the hands-on skills for a technical or labor-based profession.

Vocational Training

Vocational schools provide students with the education to earn a certification or formal training quickly for service-oriented professions.

SoFi Private Student Loans

If you’ve decided that a traditional college education is for you, you might still need additional funds, despite exploring alternatives to afford college with no money. A SoFi private student loan can help by offering easy financing through a fast online process.

It provides competitive rates and flexible terms to suit your repayment needs. Plus, checking your rates can be done in just three minutes.

FAQ

Is there any way to go to college entirely for free?

Yes, but financial aid is highly variable and is determined based on your unique situation. Students might be eligible to enroll in college at no cost, depending on their financial need. Similarly, some students might be able to attend college for free based on merit, like with a full academic or athletic scholarship.

Is relying completely on student loans for college a good idea?

No, relying completely on student loans for college isn’t a good idea. To keep your student loan debt out of college as low as possible, it’s generally wise to seek out a mix of financial aid options. Prioritize aid that you don’t have to repay, like grants and scholarships, and use student loans as a last option when funding your college education.

Why is the cost of college so high in the US?

The high cost of college in the U.S. can be attributed to various factors. An increased demand for higher education, and unrestrained administrative and facility costs have been cited as reasons for the ongoing rise of college costs.

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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.

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

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Direct Stafford Loans (or simply Stafford Loans or Direct Loans) are the most common federal student loans available for students seeking financial aid for college. While there are Stafford Loan limits, most students who fill out the Free Application for Student Aid (FAFSA®) can receive some amount of financial aid, whether those Stafford Loans are subsidized or unsubsidized.

Students interested in getting federal aid—including grants, federal student loans, and federal work-study—must submit the FAFSA annually. Here are some other important facts, deadlines, and tips to get you ready to apply for federal financial aid.

What Is a Direct Stafford Loan?

A Stafford Loan is a common name for the federal student loans available to eligible students directly from the US Department of Education. These subsidized or unsubsidized federal loans are often referred to as Stafford Loans or Direct Stafford Loans, which are offered under the William D. Ford Federal Direct Loan (Direct Loan) Program.

In 1988, Congress changed the name of the Federal Guaranteed Student Loan program to the Robert T. Stafford Student Loan program in honor of higher education champion, Senator Robert Stafford. This is one reason why Stafford Loans are sometimes referred to by different names.

Direct Stafford Loans are taken out in the student’s (not a parent’s) name. Before one accepts any loans as part of a financial aid package, it’s important to understand the fundamental differences between the two types of Stafford Loans you can apply for: subsidized or unsubsidized.

Subsidized vs Unsubsidized Loans

There are two different types of Direct Stafford Loans: subsidized and unsubsidized. With a subsidized Stafford Loan, the government will pay the interest that adds up while the borrower is in school at least half-time, during the loan’s grace period (the first six months after graduating or dropping below half-time enrollment), and during a deferment—an official postponement of payments. In contrast, borrowers with unsubsidized student loans are responsible for all of the interest that accrues on the loan at all times.

To be eligible for a subsidized loan, borrowers must meet the income requirements for need-based aid. The school determines the amount a student is able to borrow. As of 2012, subsidized Stafford Loans were no longer available for graduate or professional students.

Related: Explaining Federal Direct Unsubsidized Loans

Unsubsidized Stafford Loans start to accrue interest as soon as the loan is disbursed. These loans are available to undergraduate, graduate, and professional students, and there is no requirement to demonstrate financial need.

Students are not required to start paying back unsubsidized Direct Stafford loans while they are in school, but they are responsible for the interest at all times—including before graduation and during the loan’s grace period.

Students can estimate their federal student aid eligibility before filling out the FAFSA. If students have the flexibility to only accept some of the financial aid package, it may be worth accepting subsidized loans before unsubsidized (if eligible) in order to take advantage of the potential interest savings.

Stafford Loan Limits and Rates

It is up to a student’s school to determine which loan type and loan amounts they receive every year. There are Direct Stafford Loan limits, which are determined by a student’s year in school and whether they are considered a dependent or independent student.

What Is the Direct Stafford Loan Interest Rate?

Interest rates for federal student loans are fixed for the life of the loan and are set annually.

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.

What Are Direct Stafford Loan Limits For Undergraduates?

First-year undergraduate dependent students are eligible for Direct loans of up to $5,500, but only $3,500 of that amount can be subsidized. (Note: this excludes students whose parents are ineligible for Direct PLUS Loans.)

This amount can increase with each year you’re in school at least half-time, with even higher limits for eligible graduate students.

For undergraduate dependent students, the current annual loan limits are as follows :

•  First Year: $5,500 maximum, no more than $3,500 subsidized

•  Second Year: $6,500 maximum, no more than $4,500 subsidized

•  Third Year and Beyond: $7,500 maximum, no more than $5,500 subsidized

•  Total Direct Stafford Loan Limits: $31,000 max, $23,000 subsidized

The loan limit amounts vary based on a student’s year in school. Additionally, loan limits differ for dependent and independent students. Independent students are generally considered to be financially independent by meeting certain eligibility requirements. Graduate or professional students can take out a maximum of $20,500 annually, but only in unsubsidized loans.

Dependent students whose parents are not eligible for a Direct Parent PLUS Loan, might be able to take out additional Direct Unsubsidized Loans.

Additionally, students can’t receive Direct Subsidized Loans for more than 150% of the published length of their degree program. For instance, if you are in a four-year bachelor’s degree program, the maximum amount of time you can receive Direct Subsidized Loans is six years.

Applying for a Direct Stafford Loan

In order to qualify for Direct Loans, students must be a US citizen, permanent resident, or eligible non-citizen; enrolled at least part-time in an accredited college; and not in default on any other education loan.

Students can apply for all federal financial aid online via the FAFSA website. According to the Department of Education, almost every FAFSA applicant is eligible for some kind of student aid package that may include federal student loans. Unlike most private student loans, however, most federal student loans do not require a credit check or a cosigner.

Typically, a student’s school will apply their student loan funds to pay for tuition, fees, room and board, and other school charges. (They also factor in any scholarships, federal grants and work-study.) If any additional funds remain, the money will be returned to you, which is why it’s important to carefully consider the amount of loan funding you need.

While a loan refund may be nice in the moment, that money will still need to be repaid (with interest)—though some students might find the funds useful for other school-related items like books and technology. (All Direct Stafford Loan funds must be used for education expenses.)

When Do You Have to Pay Back Your Direct Stafford Loan?

The simple answer is: after the grace period. The grace period for Direct Stafford Loan repayment begins the day the borrower officially leaves school, and lasts for six months. Also, if you change your student status to less than half-time enrollment, that starts the clock on the grace period, too.

Take note: educational institutions define “half-time enrollment” in different ways. The status is usually, but not always, based on the number of hours and credits in which a student is enrolled. When in doubt, check with the school’s student aid office to confirm their official definition.

The total timeframe of the Direct Stafford Loan repayment grace period: six months, and not a day more (with a handful of exceptions ). Another thing to keep in mind about that grace period: students may want to start making payments on the loan during the grace period.

Even though grace periods are meant to give borrowers time to adjust to their post-school life, the interest on an unsubsidized loan is still accruing during the grace period. At the end of the grace period, the accrued interest is capitalized, or added to the principal amount of the loan.

One quick tip while on the subject of grace periods: Find out who the student loan servicer is so you know who to contact with any questions. Borrowers don’t get to choose their own federal student loan servicer. They’re assigned by the Department of Education to handle billing and other services.

Repaying Direct Stafford Loans

The default payment plan is the Standard Repayment Plan, which sets the monthly payment to the amount that will pay off the loan in 120 payments, or 10 years. However, there are alternative federal repayment plans to consider that can help lower monthly payments. (Note that lowering the monthly payments is generally the result of extending the repayment term, which will usually make the loan more expensive in the long run).

Direct Consolidation Loans

There are also Direct Consolidation Loans that allow borrowers to consolidate their federal student loans into one new loan, at an interest rate that’s the weighted average of all the existing interest rates (rounded up to the nearest eighth of a percent). That typically doesn’t help save money on interest but does streamline repayment (one loan, one lender, one payment to make each month).

Student Loan Refinancing

Another option is to refinance student loans with a private lender, which may be appealing to borrowers who are in a financially stable place and have federal and/or private student loans.

Refinancing lets you pay off the loans you already have with a brand-new loan from a private lender. This can be done with both federal and private loans. The new loan from a private lender may allow borrowers to breathe easier with interest rates and repayment terms that work better for them.

But refinancing isn’t without its downsides. Federal student loans that are refinanced with a private lender, will lose all the federal benefits and protections—like income-driven repayment options and loan forgiveness for public service work. Borrowers who want to keep their federal student loans as federal student loans could consider consolidation instead.

The Takeaway

Direct Stafford Loans are federal student loans offered to students to help them pay for college. There are two major types of direct loans, subsidized and unsubsidized. Students with subsidized student loans are not responsible for any accrued interest while they are enrolled at least half-time and during the loan’s grace period. Unsubsidized student loans begin accruing interest as soon as they are disbursed, and borrowers are responsible for repaying all of the accrued interest at all times.

The size of a Stafford Loan depends on such factors as education costs and financial aid eligibility. If your costs are higher than your awarded federal student loans and other financial aid, one way to cover the gap is with a private student loan.

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.

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.