Ways to Avoid Student Loan Fees
Many students rely on student loans to help them pay for college. In addition to charging interest, student loans may also have other fees associated with them. Fees charged may include origination fees — a fee charged by the lender for processing the loan — or late payment fees.
When students sign up for loans or are in the midst of repayment, they may not even be aware of fees that accompany many private and federal student loans. But by learning about these fees, they can better prepare themselves financially and avoid headaches.
Keep reading to learn more on student loan fees and how you may be able to avoid them.
Key Points
• Both federal and private student loans may come with fees, including origination fees and late payment fees.
• Federal student loans come with origination fees: approximately 1.057% for Direct Subsidized and Unsubsidized Loans, and about 4.228% for Direct PLUS Loans.
• Private lenders may charge various fees, including late payment fees, returned check fees, and forbearance fees.
• Late payments on student loans can incur fees up to 6% of the missed payment amount.
• If you’re facing financial difficulties, proactively contact your loan servicer to discuss options like deferment or forbearance.
What Are Student Loan Fees?
Student loan fees are additional charges that may be applied when borrowing or repaying student loans. They may include:
Student loan fees may include:
• Origination fees
• Late payment fees
• Returned-check fees (aka insufficient-funds or non-sufficient-funds fees)
• Loan collection fees
• Forbearance and deferment fees
Can a Student Loan Fee Be Waived?
For the most part, student loan fees cannot be waived. In some instances, lenders may be willing to waive late payment fees for borrowers who have not previously made a late payment. Fees and policies may vary by loan type and lender, so contact your lender with specific questions. Continue reading for an explanation of different types of fees that may be associated with a student loan.
Origination Fees
Origination fees cover the cost of processing the loan. They are typically a small percentage of the loan amount.
How Are Student Loan Origination Fees Assessed?
Student loan origination fees are charged as a percentage of the loan amount. Federal student loans have an origination fee, and the information will be included in the Master Promissory Note. The origination fee is deducted from the amount borrowed, so when you receive the loan, it will actually be for less than the amount you borrowed.
Private student loans may or may not charge an origination fee; the policy will depend on the lender.
How Much Are Student Loan Origination Fee?
For federal student loans, the origination fee (also known as disbursement fee) is dependent on the loan type. Direct Subsidized and Unsubsidized Loans disbursed between October 1, 2020 and October 1, 2025 have a 1.057% origination fee. During the same timeframe, Direct PLUS Loans have a 4.228% origination fee.
The origination fee on private student loans will vary based on the lender, and not all private lenders charge an origination fee. Review the terms and conditions closely and contact your lender with any questions.
Recommended: Avoiding Loan Origination Fees
Late Payment Fees
Making a loan payment past the due date for a federal student loan can result in a late fee. After 30 days, the late fee may be up to 6% of the loan amount due. Review your Master Promissory Note or contact your loan servicer with questions.
The late fee for a private student loan depends on the lender and loan program. Some private student loan lenders do not charge late fees.
Returned-Check Fees
If a borrower pays using a check that bounces, the student loan servicer could charge a returned-check fee.
Loan Collection Fees
If a borrower defaults on a loan by not making payments for a certain amount of time (270 days for most federal student loans), the loan may be placed with a collection agency and be subject to loan collection fees. Any fees incurred will be in addition to the outstanding principal balance, interest, and fees.
Private student loan companies may charge even higher loan collection fees. Generally, private student loans also enter default sooner than federal student loans. The default period is described in the loan contract.
Forbearance and Deferment Fees
Borrowers who cannot make payments temporarily can request student loan forbearance or deferment. Typically, loan holders can avoid a fee, but they will need to contact their loan provider.
Forbearance and deferment are available for most federal student loans. Private lenders are not obligated to offer either program, but may offer some forms of deferment. If you are struggling to make payments on a private student loan, contact your lender to evaluate the options available to you.
Federal Student Loan Fees
When students want to apply for a loan, they can do it through the federal government or a private company, depending on their circumstances. The loan providers charge different types of fees.
Students will pay an origination fee for a federal student loan. As mentioned previously, for Direct Subsidized and Unsubsidized Loans, the fee is 1.057% of the loan amount. For Direct PLUS Loans (including Grad PLUS and Parent PLUS Loans), the fee is about 4.228% of the loan amount.
A late payment fee will typically be charged within 30 days after the payment is due. The late fee could be up to 6%. At that rate, if your monthly minimum payment is $250, your fee would be $15.
Private Student Loan Fees
Private lenders may not charge origination fees, though there may be an origination fee for a specialty loan, like a loan for medical school.
Some lenders charge late fees — generally a percentage of the late payment amount or a flat fee. They also typically charge for returned checks.
Additionally, most private student loan companies charge a fee for forbearance, a flat fee determined by the lender.
Collection fees will vary from lender to lender. If there is a collection fee on a private student loan, it will typically be included in your loan agreement.
How to Avoid Student Loan Fees
If students need to take out private or federal student loans, they may be able to avoid some of the fees (with the exception of origination fees for federal student loans). Ways to avoid student loan fees include:
Paying on Time
Paying on time is always recommended, not only to avoid late fees but to keep a credit report healthy. To avoid late fees, returned-check fees, and collection fees, borrowers can set up automated payments from a bank account. Otherwise, they can set up reminders on their phones and calendars that go off when their payments are about to come due.
Communicating with Your Lender
In terms of deferment fees, borrowers having trouble making payments on time can call their student loan servicer and ask for extensions or other options so that they don’t go into default.
Students shouldn’t be afraid to reach out to their loan servicer as soon as they can’t make a payment.
Choosing No-Fee Lenders
Some private lenders offer student loans with no origination, application, or late payment fees. Comparing lenders and reading the fine print can help you steer clear of unnecessary charges.
Paying for College
Paying for college may require a combination of resources. One of the first places for students to start their financial aid journey is by filling out the Free Application for Federal Student Aid (FAFSA®) every year. This application allows students to find out if they are eligible for federal financial aid, including federal student loans, grants, scholarships, and work-study. Additional ways to pay for college include private student loans and personal savings.
Private Student Loans
Private student loans are offered by private lenders such as banks, credit unions, and other financial institutions. To apply, potential borrowers will need to file applications with individual lenders. The interest rate and loan terms are generally determined based on the applicant’s personal information, such as their income and credit score. It’s generally worth shopping around to find the best rate and loan terms for your personal situation.
Private student loans can be helpful tools to pay for college. However, when comparing private student loans vs. federal student loans, it’s important to note that private student loans lack the borrower protections afforded to federal student loans — things like income-driven repayment plans or deferment options. For this reason, they are generally considered an option after all other financial resources have been depleted.
Personal Savings
Some students may have the money saved to go to college, or someone in their family might be able to finance their education. For instance, perhaps their parents or grandparents opened a 529 savings plan for them when they were younger and funded it with money to put toward college.
Grants
Grants are a type of funding that typically don’t need to be repaid. Grants are generally awarded based on financial need and can be found from sources such as the federal or local government, college, or even nonprofit organizations.
Each grant application may have different application and eligibility requirements so be sure to read the instructions closely.
Scholarships
Scholarships are another type of aid that recipients are not required to repay. Often, they are awarded based on merit, though they can be awarded based on other criteria, as well.
Students can look for scholarships in schools, nonprofit and community organizations, companies, and more.
Take a look at your school’s financial aid website to see what scholarships are available. There are also online databases that aggregate information on available scholarships, as well.
The Takeaway
Student loan fees, like an origination fee or late payment fees, can increase the total cost of the loan. The types of fees on student loans will vary based on the loan type. Federal student loans, for example, charge an origination fee which varies based on the type of federal loan, and there are late payment fees associated with payments that are 30 days late or more.
Private loans may or may not have an origination fee or late payment penalties. The policies will vary by lender.
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.
FAQ
How much is the origination fee for student loans?
The origination fee on a student loan will likely vary depending on the loan type and lender. For federal student loans, the origination fee from October 1, 2020 through October 1, 2025 is 1.057% for Direct Subsidized and Unsubsidized Loans and 4.228% for Direct PLUS Loans.
The origination fee on a private student loan will vary by lender.
Do unsubsidized student loans have an origination fee?
Yes, unsubsidized loans through the federal government’s Direct Loan Program do have an origination fee of 1.057% for loans disbursed between October 1, 2020 and October 1, 2025.
Can a student loan origination fee be waived?
Federal student loans have an origination fee and it’s unlikely to have this fee waived. Some private student loans may not charge an origination fee and lenders that do may be willing to negotiate with borrowers.
SoFi Private Student Loans
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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.
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.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
SOISL-Q225-041
Read more