If a student has the goal of pursuing a career as a teacher, they may find that the Teacher Education Assistance for College and Higher Education (TEACH) Grant can help them meet their goals and reduce their educational expenses. The TEACH Grant is a form of federal financial aid that is focused on helping those pursuing a career in teaching pay for their college expenses.
As part of the TEACH Grant, recipients are required to complete a teaching service obligation in order to get the grant. If this obligation isn’t completed, the grant will be transitioned into a loan that will need to be repaid with interest.
Keep reading for more information on the TEACH Grant, including how it works, pros and cons of the TEACH Grant, and how to apply.
• The TEACH Grant provides up to $3,772 per year to eligible undergraduate and graduate students pursuing teaching degrees.
• Recipients must teach high-need subjects in low-income schools for four years within eight years of completing their academic program.
• Students must meet academic requirements to qualify, including maintaining a 3.25 grade point average (GPA) or scoring above the 75th percentile on a college admissions test.
• If recipients do not complete their service obligation, all TEACH Grant funds are converted into Direct Unsubsidized Loans that they must repay with interest.
• The TEACH Grant can reduce education costs, but students who don’t want to commit to the service requirement may need to pursue alternative funding options.
What Is a TEACH Grant?
The TEACH Grant is a federal financial aid program designed to help students pursuing teaching careers pay for college expenses. In order to receive a TEACH Grant, applicants have to agree to teach a subject that is considered “highly needed” in a low-income area with a shortage of specific subject teachers. They can do this in an elementary or secondary school.
Grant awards are up to $3,772 a year when the recipient is in school. Once they start working, they will be paid their normal salary without the addition of any grant funds.
Prospective teachers in multiple subject areas are eligible for TEACH Grants, including:
• Bilingual education and English language acquisition
• Foreign languages
• Mathematics
• Reading specialist
• Science
• Special education
• Any other field that has been identified as high-need by select governing agencies
After graduating, recipients have to teach at a low-income school or educational agency for a minimum of four years. This four-year teaching requirement must be completed within eight years of the recipient’s graduation.
The TEACH Grant comes with certain eligibility requirements, including:
• The student must be eligible for federal student aid programs.
• The student has to be an undergraduate or graduate student.
• The recipient’s school has to participate in a TEACH-Grant-eligible program of study.
• The student has to be enrolled in one of these eligible programs.
• The recipient must score above the 75th percentile on one or more portions of a college admissions test or maintain a cumulative GPA of 3.25 or higher.
How the TEACH Grant Works
Students who qualify for the TEACH Grant program may receive up to $3,772 a year in funding if they are in the process of completing — or one day plan to complete — the coursework required to start a teaching career.
In order to qualify for a TEACH Grant, the student has to sign a TEACH Grant agreement to work full-time as a teacher for four years at an elementary or secondary school or educational service agency that serves low-income students. As we’ve mentioned, they also need to teach in a high-need field and have to complete their teaching obligations within eight years after they graduate from or stop being enrolled at the institution of higher education where they received a TEACH Grant.
Do You Have to Pay It Back?
If the recipient fulfills all the service obligations of the grant, they won’t have to repay their TEACH Grant. However, if they don’t fulfill the TEACH Grant requirements, then all TEACH Grants they received will be converted to Direct Unsubsidized Loans that they must repay in full. They will be charged interest starting from the day of their TEACH Grant disbursement.
Can It Be Used for Living Expenses?
The TEACH Grant is intended to fund educational expenses (up to $3,772 annually) for students who are in the process of or will one day complete the coursework required to begin a teaching career. As a form of federal student aid, it should be usable for living expenses.
Pros and Cons of a TEACH Grant
Like any program, the TEACH Grant has some unique advantages and disadvantages associated with it.
Pros
Cons
Up to $3,772 in funding each year to pursue the coursework required to become a teacher
Must work full-time as a teacher for four years at an elementary or secondary school or educational service agency that serves low-income students
If service obligation is fulfilled, the grant doesn’t need to be repaid
If the service obligation is not completed within eight years, the grant will need to be repaid in the form of a Direct Unsubsidized Loan
Applying for a TEACH Grant
The TEACH Grant application is a part of the Free Application for Federal Student Aid (FAFSA®). Students can apply for the TEACH Grant when they submit their FAFSA. Some grants may have limited funding, so it’s generally recommended that students submit the FAFSA earlier rather than later. When the student receives their financial aid offer, they’ll find out if they received a TEACH Grant.
Students must continue to apply for the TEACH Grant each year by submitting the FAFSA annually. They will also be required to complete TEACH Grant counseling and sign a new Agreement to Serve every year.
Not all schools participate in the TEACH Grant program, so it’s helpful to contact the school’s financial aid office to find out whether they participate and learn what specific areas of study are eligible.
Alternative Forms of Funding
If a student doesn’t qualify for the TEACH Grant, finds it is not a good fit for their needs, or knows that they don’t want to complete the service obligations, these are some other options they may have for pursuing funding to help pay for college.
Scholarships
When a student receives a scholarship, they don’t have to repay those funds. It’s worth applying for multiple smaller scholarships, not just big ones. Those smaller scholarships can really add up.
Like scholarships, generally, students don’t have to repay grants for college (unless the grant has obligations, as with the TEACH Grant). A student’s financial aid office can help point them in the direction of available grants, and filling out the FAFSA annually can help them qualify for other federal grants, such as the Pell Grant.
Federal student loans are funded by the U.S. Department of Education, and there are a handful of different types of federal loans available to both undergraduate and graduate students. To qualify for federal student loans, students have to fill out the FAFSA each year. Federal student loans generally have better interest rates and terms than private student loans and come with unique federal protections.
Private Student Loans
Students can use private student loans to help fill the gaps that scholarships, grants, and federal student loans leave behind. As mentioned, private student loans may not offer the same benefits as federal student loans, so they are generally considered an option only after other funding resources have been exhausted.
If students are looking to avoid taking on student loan debt or want to lighten their student loan load, they may work part-time to help cover higher education costs and living expenses. There are often on-campus jobs designed to help college students balance their school work and their need to earn an income.
The Takeaway
Paying for college is expensive, and a TEACH Grant can help soon-to-be teachers pay for the cost. That being said, the service obligations of this grant may not suit all students, and you may find you need to pursue alternative funding, including federal and private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
Is the TEACH Grant worth it?
Each individual needs to consider carefully whether the service obligation attached to the Teacher Education Assistance for College and Higher Education (TEACH) Grant makes the $3,772 in financial assistance worth it to them. If you don’t want to live or teach in an area that serves low-income students, you may find this program isn’t a good fit.
Do you have to pay back a TEACH Grant?
Recipients may have to pay back their Teacher Education Assistance for College and Higher Education (TEACH) Grants if they don’t meet the full requirements of their service obligation. If a recipient fails to meet these obligations, the grant funds they received through the program will be converted to Direct Unsubsidized Loans, which must be repaid in full with interest.
What does TEACH Grant stand for?
The acronym TEACH stands for Teacher Education Assistance for College and Higher Education. The grant is a form of federal financial aid for those pursuing a career in teaching.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
Photo credit: iStock/Marcus Chung
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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A Doctor of Pharmacy degree is a 4-year, licensed professional degree that teaches students how to fill prescription medications and educate patients about using prescriptions safely. Pharmacy school can be expensive, adding up to nearly $200,000.
With that price tag, it’s not a surprise that pharmacy students may have to rely on a few different sources of financing to pay for school, sometimes using a combination of savings, grants, scholarships, and federal and private student loans. This article will review pharmacy school costs, the amount pharmacists can make, and nine tips for paying for pharmacy school.
• Pharmacy school can be worth it, with pharmacists earning a median salary of $137,480 and enjoying strong career stability.
• Pharmacy school can cost up to $200,000, depending on the program.
• Students can usually rely on a combination of funding sources to pay for school.
• Scholarships and grants are ideal since they don’t need to be repaid.
• Loans, work, and repayment or forgiveness programs can help cover remaining costs.
How Much Does Pharmacy School Typically Cost?
The cost of pharmacy school can vary depending on where you enroll, the location of the institution, and the extent to which public dollars support the university you plan to attend. As mentioned, the complete cost of pharmacy school can add up to nearly $200,000, and this can swing higher for students who opt for an out-of-state institution. The American Association of Colleges of Pharmacy (AACP) lists the tuition and fees for pharmacy school for the 2025-2026 academic year, which can help you compare costs across the pharmacy schools you may be considering.
For example, the first school on the list, Auburn University, costs $11,340 per year for in-state pharmacy students and $34,020 per year for out-of-state students. Mandatory fees cost $14,566 for 33 credit hours for students in their first year. However, in the fourth year, mandatory fees cost $13,316 for 46 credit hours.
It’s worthwhile to compare the costs of various institutions before you make a decision. However, remember that financial aid can potentially bring the costs down further, so don’t rely completely on the published tuition prices. A conversation with the financial aid office at each school may give you a more in-depth analysis of how much it will actually cost, taking your personal situation into account.
Is Pharmacy School Worth It?
For the right individual, pharmacy school can be worth it. The costs of pharmacy school may seem daunting, but the professional perks, ability to become a part of a health care team, job opportunities, and career stability mean that pharmacy school can be the right option for many individuals. The high salary of pharmacists may also make pharmacy school worth it.
How Much Can Pharmacists Make?
The 2024 median pay for pharmacists was $137,480 per year, or $66.10 per hour, according to the Bureau of Labor Statistics. The job outlook for 2024-2034 will increase 5% in total, which is faster than average.
9 Tips for Paying for Pharmacy School
Think of paying for pharmacy school as dividing up a pie, as there are many ways to do this. For example, various pieces of the pie might be made up of scholarships, grants, loans, and money out of your own pocket. No matter how you slice the pie, every dollar you contribute is an investment into your career and your future. We’ll discuss scholarships, including university, pharmacy, and private scholarships as well as grants in the next section.
1. Scholarships
Scholarships are funds that you don’t have to pay back. You can get scholarships as a pharmacy student from a number of different sources, including the university that you plan to attend as well as through designated pharmacy and private scholarships.
It’s also worth considering your other interests beyond pharmacy. Scholarships may be awarded based on heritage, location, or even hobbies or special skills. Take some time to review if you have talents in other areas that may qualify you for additional scholarships.
University Scholarships
Pharmacy colleges and schools traditionally offer direct financial assistance to pharmacy students through various sources, including alumni associations and local chapters of pharmaceutical organizations and fraternities. Consider setting up a meeting with the financial aid office at the university you plan to attend to learn more about specific scholarships available for the pharmacy program.
Pharmacy Scholarships
Local and state pharmaceutical associations, practicing pharmacists, drug manufacturers, and wholesalers may also offer pharmacy scholarships to promising pharmacists. For example, seven pharmacy students annually can receive a $5,000 Walmart Community Pharmacy Scholarship. Students must be accepted or enrolled in the professional curriculum at a U.S. college or school of pharmacy and show evidence of leadership skills and academic success. They must also have a preference to serve rural or medically underserved patients.
Private Scholarships
Private scholarships come from companies, service groups, local or regional organizations, foundations, and individuals. For example, Tylenol offers a scholarship for students pursuing careers in health care, including pharmacy.
2. Grants
Like scholarships, you do not have to repay the money you receive from grants. Grants, which are typically based on need, can also be awarded based on merit. Filling out the Free Application for Federal Student Aid (FAFSA®) automatically considers you for federal grants based on need. You may also become eligible for state grants. Your college or university can give you more information about the types of grants you’re eligible for through your pharmacy program.
3. Federal Student Loans
You may be wondering how to pay for pharmacy school without loans. It’s possible to do it through a combination of scholarships, grants, and savings, though many people take advantage of federal student loans through the U.S. Department of Education.
Federal student loans are a type of federal financial aid, and to apply, you must file the FAFSA. Learn more about the requirements for this application in SoFi’s comprehensive guide to the FAFSA. You can qualify for two types of federal student loans for pharmacy school: Direct PLUS Loans and Direct Unsubsidized Loans.
Federal student loans have fixed interest rates and benefits, such as income-driven repayment plans. Just like obtaining an auto loan or a mortgage, you must pay back these loans with interest.
Direct PLUS Loans
Pharmacy students can take advantage of Direct PLUS Loans, also called grad PLUS loans or direct grad PLUS loans, to help finance graduate and professional school. The grad PLUS loan comes from the U.S. Department of Education for graduate or professional students. In order to get one, your school must participate in the Direct Loan Program.
Please note, however, that grad PLUS loans will be discontinued for new borrowers after July 1, 2026. Borrowers who received a grad PLUS loan before June 30, 2026, can continue borrowing under current terms through the 2028-29 academic year.
The Direct PLUS Loan is not need-based, which means you can get it no matter your income level. You can borrow up to the full cost of attendance and use the money to pay for your tuition, room and board, and fees. Your school will subtract other financial aid you receive, such as scholarships, grants, and fellowships, from the full cost of attendance and award you the difference with a Direct PLUS Loan. The interest rate is 8.94% for Direct PLUS Loans first disbursed on or after July 1, 2025 and before July 1, 2026.
Direct Unsubsidized Loans
Similar to student loans for undergraduates, you can tap into Direct Unsubsidized Loans. Unsubsidized means that the government doesn’t pay the interest while you’re in school and during the grace period. You can borrow up to $20,500 per year with this type of loan, and the interest rate is 7.94% if disbursed on or after July 1, 2025 and before July 1, 2026 for graduate students.
4. Private Student Loans
Private graduate student loans do not come from the federal government. This type of loan can come from a bank, credit union, or another financial institution and can be used to help finance your education. The amount you can borrow depends on the costs of your degree but also depends on your personal financial factors, such as your credit score and income.
You may have gotten advice that suggested exhausting all of your federal grant and loan options before considering private loans because interest rates are usually higher compared to federal student loans. Additionally, private student loans don’t qualify for the same borrower protections as federal student loans, such as income-driven repayment plans or deferment options. However, private student loans can be an option to consider if you need additional funding to cover your pharmacy school expenses.
The Public Service Loan Forgiveness (PSLF) Program is a federal student loan forgiveness program. More specifically, you may qualify to have the remaining balance on your Direct Loans forgiven after you have made 120 qualifying monthly payments under a qualifying repayment plan. You must work full-time for an employer that belongs to a qualifying organization, such as a federal, state, local, or tribal government organization or other nonprofit organization.
You must have Direct Loans or consolidate your other types of federal student loans into a Direct Loan, repay these loans under an income-driven repayment plan, and make 120 qualifying payments toward these loans. The requirements for PSLF can be quite strict, so be sure to read them closely. For more information about PSLF programs and to learn more about your eligibility, contact your loan servicer, which is the entity that services your loan.
6. Pharmacy Internships
Pharmacy internships can be instrumental in your budding career. This approach can help you understand how pharmacies operate, learn the ins and outs of customer service, help you dive into inventory management, and learn the professional skills necessary to become a pharmacist. You may also learn more from pharmacist professionals about leading a team and gain tangible professional experience to bring back to the classroom.
You may also want to look into pharmacy fellowships, which provide financial support in an external or internal capacity (in or out of the university environment). Assistantships also provide financial support in an academic department through teaching, research, or administrative responsibilities.
7. Work Part Time
You may want to consider working a part-time job in conjunction with pharmacy school. For example, if you attend school from 8am-4pm, you may want to seek a part-time job after hours.
However, it’s important to consider your time constraints and whether you can succeed in your coursework. Consider your ability to manage your time before you take on a part-time job. For the right student, taking on a job can help pay for college tuition and provide an additional source of income. Networking opportunities and skill development can also come from a part-time job, even if it doesn’t directly relate to your pharmacy career.
8. Borrow From Family
Do you have a family member who really wants to give you money for your education? You may seriously consider borrowing from your parents, sister, brother, or whoever else wants to lend you money.
Just remember that it could strain family relationships if you fail to pay back the loan. It’s a good idea to have a plan in place to repay your relative(s), as well as create boundaries so both parties feel good about the arrangement.
9. HRSA Loans
The Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services (HHS), improves health care for geographically isolated and vulnerable individuals.
The HHS, through the HRSA, also offers several loans for health services students.
For example, Health Professions Student Loans are available to individuals who study pharmacy, as well as dentistry, optometry, podiatric medicine, or veterinary medicine. Pharmacy students who show financial need may also be able to tap into Loans for Disadvantaged Students. Health Professions Student Loans have fixed interest rates of 5%, which is lower than both Direct Unsubsidized Loans and grad PLUS loans.
These loans also allow a 12-month grace period, while most other loans only offer six months. In addition, Health Professions Student Loans are subsidized, which means you don’t pay interest on the loan while you’re in school, and you do not pay additional loan fees. However, they come with a few downsides: not all schools participate, and there are no set borrowing limits. You also can’t tap into income-driven repayment plans or PSLF.
The Takeaway
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
Can you use FAFSA for pharmacy school?
Absolutely! It’s generally a smart idea to file the Free Application for Federal Student Aid (FAFSA®) for pharmacy school, no matter your financial situation. The FAFSA can give you access to a range of financial aid options, including scholarships (your school will consider your eligibility based on the FAFSA results), grants, loans, and work-study programs. You want to be able to put together the best financial aid options for your needs, and the best way to do that involves filing the FAFSA.
Does Walgreens pay for pharmacy school?
Walgreens offers the Pharmacy Educational Assistance Program. This program requires working for the company for a period of time as a registered pharmacist upon receiving your license. Check the company’s website for more details.
How much can pharmacists make after graduating?
The median pay for pharmacists is $137,480 per year, or $66.10 per hour, according to 2024 data from the Bureau of Labor Statistics. The job outlook for pharmacists is projected to grow by 5% between 2024 and 2034, which is faster than average.
About the author
Melissa Brock
Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.
Photo credit: iStock/cagkansayin
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Not all repayment options may be available for all loans. 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 current as of 3/2/2026 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
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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.
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When you’re thinking about earning more money in the quickest way possible, you might consider targeting a certificate program. Certificate programs have a major added benefit in that once you have your credentials in hand, they can help you boost your financial situation, sometimes significantly.
Graduates of all levels can take advantage of certificate programs, whether you’re a high school graduate or you’ve completed graduate school. (You may have come across information about paying for graduate certificates in your graduate school program.)
Keep reading to learn the definition of certificate programs, whether you’re eligible for student loans with a certificate program, funding options for certificate programs, the pros and cons of taking out a student loan for certificate programs, and more.
• Certificate programs provide specialized career training without requiring general education courses, often leading to increased salary potential.
• The average cost of a certificate program is around $5,000, significantly lower than traditional degree programs.
• Eligible certificate programs may qualify for federal student aid, including grants and loans, but not all programs are covered.
• Funding options for certificate programs include private student loans, federal grants, federal student loans, personal loans, and employer tuition assistance.
• Pros of taking out loans for certificate programs include career advancement and lower costs compared to a traditional degree, while cons include accumulating debt with interest and the complexity of choosing the right financing option.
What Are Certificate Programs?
Certificate programs can help you specialize in a specific trade or update your professional skills. These programs teach practical skills and training related to a specific career field — you don’t take general courses toward a degree.
Why might you want to tap into a certificate program? In addition to increasing your salary potential, you may want to get updated career training or learn about technological advancements or updates in your field.
Students who have a high school diploma or general educational development (GED) can use undergraduate certificate programs to go straight into the workforce with an entry-level position within a specific field.
Students who have already earned bachelor’s or graduate degrees may be interested in enrolling in certificate programs related to their field and level. Certificates could also give those who have already earned a bachelor’s degree an option to advance their career while avoiding graduate school altogether. However, it’s important to distinguish between a certification and a certificate. A certification is usually a stepping-stone credential that you must have for certain career paths. This article primarily discusses certificate programs, but some careers may require a certificate, even after getting a bachelor’s or graduate degree.
The earning potential relative to the low cost of a certificate program can pay off. For example, consider that in the 2024-2025 academic year, students at private nonprofit four-year institutions paid $43,350 on average for tuition and fees.
Students can spend far less on a certificate program, anything from $50 per month to $6,000 or more, depending on the type of program they choose to complete. The variations in cost depend on the college, program, and credit requirements. For example, an online program at a community college will most likely cost less than an in-person state or private college certificate program.
Let’s take a look at a few types of certificate programs and potential earnings:
• Surgical technologists earn a median income of $62,480 per year as of 2024 and will see 5% job growth through 2034, according to the Bureau of Labor Statistics (BLS).
• Construction and building inspectors earn a median income of $72,120 per year as of 2024, according to the BLS, though it’s anticipated the industry will see a 1% decline through 2034.
• Plumbers, pipefitters, and steamfitters earn a median income of $62,970 per year as of 2024, according to the BLS. This job is expected to experience a 4% increase in growth through 2034.
• Court reporters earn a $67,310 median income per year as of 2024, according to the BLS. The industry will see little or no increase or decrease in job growth through 2034.
• Sheet metal workers earn a $60,850 median income per year as of 2024, according to the BLS. The industry is expected to see a 2% increase in job growth through the year 2034.
Are Certificate Programs Eligible for Student Loans?
Yes, you can get a federal or private student loan to help you pay for a qualifying certificate program. As long as you attend an eligible school, you may qualify for a federal or private student loan to pay for a certificate program.
However, certain certificate programs may not qualify for federal student aid, depending on the nature of the certificate program. For example, if you need to take a class to boost your credentials as a criminalist in the DNA section of your state’s crime lab, you may not be able to borrow student loans to cover that class. In some cases, your employer may cover the fees for your course.
We’ll dive into the exact funding options for certificate programs below.
Funding Options for Certificate Programs
Before embarking on a certificate program, you need to figure out how you’re going to pay for it. Talk to the financial aid office at the college, university, or career school you plan to attend. Options for paying for certificate programs include:
Private Student Loans
Can you get student loans for certificate programs, or more specifically, private student loans for certificate programs? Answer: Yes!
A private student loan refers to money you borrow for educational expenses and pay back over time, with interest. You can get a private student loan to cover the cost of a certificate program. Private student loans can come from a bank, credit union, or another financial institution.
Interest rates are usually slightly higher for private student loans compared to federal student loans. Federal loans also come with borrower protections and forgiveness options. In general, it’s best to exhaust your federal student loan options prior to tapping into private student loans, if you’re eligible. The amount you can borrow through federal or private loans depends on the cost of your degree and personal financial factors such as your credit score and income.
You may qualify for federal grants to cover the costs of a certificate program. Federal grants are typically free money, assuming you meet the obligations.
In order to qualify for a federal grant, you must file the Free Application for Federal Student Aid (FAFSA®). Your school is responsible for verifying whether your certificate program qualifies for federal student aid under the U.S. Department of Education.
You may qualify for a Pell Grant, the largest program under the Department of Education. Pell Grants are awarded to students with financial need and no prior degree. You may also be able to tap into Federal Supplemental Educational Opportunity Grants.
Just like federal grants, you must file the FAFSA in order to qualify for federal student loans. The difference between federal grants and federal student loans is that you must repay the money you borrow for loans. You must also meet some basic eligibility criteria to qualify for federal student loans.
Undergraduate certificate students who show evidence of financial need may qualify for a Direct Subsidized Loan. Undergraduate, graduate, and professional students can qualify for a Direct Unsubsidized Loan, but eligibility is non-need-based. It’s important to discuss both of these options with financial aid offices to determine whether you can get any one of these loans to cover the costs of your certificate program.
You must go through entrance counseling to make sure you understand your loan repayment obligations to get a federal graduate student loan or undergraduate loan, as well as sign a Master Promissory Note. The Master Promissory Note states that you agree to the terms of the loan.
It may also be possible to borrow money from a bank, credit union, or online lender in the form of a personal loan. You’ll pay back a personal loan in fixed monthly payments or installments, usually over the course of up to seven years.
Just like a student loan, a personal loan is an unsecured debt. This means that it isn’t backed by collateral. If you stop making payments, none of your assets will be seized by the lender.
Interest rates may be higher for personal loans compared to private student loans and federal student loans, however. Do your homework before selecting one option over the other.
Employer Funds
If you’re currently employed and a certification relates to your current job description, your employer may pay for a portion or all of the cost of your certificate program. Companies such as Starbucks, Walmart, and Target all have tuition assistance programs. Many companies will offer tuition assistance for college courses, and some may even cover professional certifications.
Explore your options with your human resources office or ask your supervisor for more information.
Pros and Cons of Taking Out Loans for Certificate Programs
What are the pros and cons of taking out loans for certificate programs? Let’s walk through a few.
Pros of Taking Out Loans for Certificate Programs
• Offers career change opportunities: You may want to branch out or change your career completely, and getting a loan for a certificate program may allow you to do so.
• Costs less than a traditional degree: A certification usually costs less than pursuing a four-year or even a two-year degree. You may quickly pay off a loan, particularly because it may take you only a few months to attain a certificate.
Cons of Taking Out Loans for Certificate Programs
• You’ll owe money with interest: The obvious downside to taking out a loan is that you’ll owe money at the end of your program — with interest. Because a certificate program can generally be completed in a relatively short time frame, though, you may be able to repay your loan (and minimize the interest rate impact) in a short period of time.
• Choosing the right option can be complicated: You may feel as if you’re in a maze with so many different options at your disposal. It’s a good idea to reach out to a financial aid professional at the school you’ve chosen to go over all your financing options. They can also guide you through the scholarships and grant opportunities that you can obtain.
The Takeaway
It’s almost impossible to ignore the allure of a quick certification that can result in a lifetime of job satisfaction. Options for paying for certification include cash savings, grants, scholarships, federal student loans, and private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
Can federal student loans be used for certificate programs?
Yes, in certain cases, you can get federal student loans to cover the cost of certificate programs. However, your school and program must qualify under the Department of Education rules. Talk to the financial aid office at your college or career center for more information about your eligibility for federal student loans.
Can grants and scholarships be used for certificate programs?
Yes, you can obtain grants and scholarships to cover the cost of certificate programs. Talk to the financial aid office at your college or career center for more information. Your school may offer specific scholarships, but don’t forget to check into professional organizations or local chapters for the certificate program in which you plan to enroll.
Do some companies pay for employee certifications?
Yes, many employers pay for employee certifications to help boost employee retention and put employees at the top of their field. These may differ from certificate programs, however, so make sure you understand how your career-based certification may differ from a certificate. Ask your human resources office for information about continuing education or certification training.
About the author
Melissa Brock
Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.
Photo credit: iStock/PeopleImages
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Not all repayment options may be available for all loans. 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 current as of 3/2/2026 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
There are so many upsides to investing in your education — the personal enrichment and possibility of a bright and fruitful future being the most obvious. But, there are also some potential downsides that are hard to ignore, one of the main ones being the debt you may accrue.
If you’re a student loan borrower, you’ve probably noticed that your loans have a language all their own. Getting a grasp on terms such as interest rate vs. annual percentage rate (APR), subsidized vs. unsubsidized loans, and fixed vs. variable interest rates can help you make more informed, confident decisions.
Instead of enrolling in “Student Loan Language 101,” you can use our quick reference guide to find some answers without information overload. Borrowing money can have long-term financial consequences, so it’s important to fully understand the fees and interest rates that will affect the amount of money you owe.
• Understanding the specific vocabulary used in student borrowing is important for making informed financial decisions and managing educational debt effectively.
• Key concepts, such as interest rates, subsidized vs. unsubsidized borrowing, and repayment terms can impact the total amount owed.
• Understanding how interest accrues — and when it can be capitalized — can help borrowers estimate a student loan’s total cost.
• Federal borrowing options often offer lower interest rates and borrower protections, such as income-driven repayment plans and deferment, which are not typically available with private lenders.
• Knowing the differences between grants, scholarships, and various types of borrowing can help students prioritize sources of educational funding that do not require repayment.
Common Student Loan Terminology
Here are a few of the most important terms to understand before you take out a private or federal student loan.
Academic Year
An academic year is one complete school year at the same school. If you transfer, it is considered two half-years at different schools.
Accrued Interest
Accrued interest is the amount of interest that has accumulated on a loan since your last payment. You can keep private or federal student loan accrued interest in check by making your payments on time each month. However, after a period of missed or reduced payments, accrued interest may be “capitalized,” which essentially means you have to pay interest on the interest.
Adjusted Gross Income
Adjusted gross income (AGI) is an individual’s gross income, less any payroll deductions or adjustments. Income includes wages, salary, any interest or dividends you may earn, and any other sources of income. You can find your AGI on your federal income tax returns.
Aggregate Loan Limit
The aggregate loan limit is the maximum amount of federal student loan debt a borrower can have when graduating from school. The aggregate loan limits vary depending on whether you are a dependent or an independent student.
Amortization refers to the amount of loan principal and interest you pay off incrementally over your loan term. Each payment is a fixed amount that contributes to both interest and principal. Early in the life of the loan, the majority of each payment goes toward interest. But over time, as you pay down your loan balance, the ratio shifts, and most of the payment goes toward the principal.
Annual Percentage Rate
APR is the annual rate that is charged for borrowing, expressed as an annual percentage. APR is a standardized calculation that allows you to make a fairer comparison of different loans. Consider the difference between interest vs. APR — APR reflects the cost of any fees charged on the loan, in addition to the basic interest rate. Generally speaking, the lower your APR, the less you’ll spend on interest over the life of the loan.
Annual Loan Limit
The yearly borrowing limit set for federal student loans.
Automated Clearing House
An electronic funds transfer is sent through the Automated Clearing House (ACH) system. The ACH is an electronic funds transfer system that helps your loan payment transfer directly from your bank account to your lender or loan servicer each month.
The benefits of ACH are two-fold — not only can automatic payments keep you from forgetting to pay your bill, but many lenders also offer interest rate discounts for enrolling in an ACH program.
Award Letter
An award letter is sent from your school and details the types and amounts of financial aid you are eligible to receive. This will include information on grants, scholarships, federal student loans, and work-study. You will receive an award letter for each year you are in school and apply for financial aid.
Award Year
The academic year that financial aid is applied to.
Borrower
The borrower is the person who took out a loan. In doing so, they agreed to repay the loan.
Campus-Based Aid
Some financial aid programs are administered by specific financial institutions, such as the federal work-study program. Generally, schools receive a certain amount of campus-based aid annually from the federal government. The schools are then able to award these funds to students who demonstrate financial need.
This refers to the cancellation of a borrower’s requirement to repay all or a portion of their federal or private student loans. Loan forgiveness and discharge are two other types of loan cancellation.
Capitalization
Capitalization is when unpaid interest is added to the principal value of the private or federal student loan. This generally occurs after a period of nonpayment, such as forbearance. Moving forward, the interest will be calculated based on this new amount.
Capitalized Interest
Accrued interest is added to your loan’s principal balance, typically after a period of nonpayment, such as forbearance. When the interest is tacked onto your principal balance, your interest is now calculated on that new amount.
Most federal and private student loans begin accruing interest as soon as you borrow them. While you are often not responsible for repaying your student loans while you are in school or during a grace period or forbearance, interest will still accrue during these periods. At the end of said period, the interest is then capitalized, or added to the principal of the loan.
When interest is capitalized, it increases your loan’s principal. Since interest is charged as a percent of principal, the more often interest is capitalized, the more total interest you’ll pay. This is a good reason to use forbearance only in emergency situations and end the forbearance period as quickly as possible.
Cosigner
A cosigner is a third party, such as a parent, who contractually agrees to accept equal responsibility in repaying your loan(s). A federal or private student loan cosigner, also known as an endorser, can be valuable if your credit score or financial history is not sufficient to allow you to borrow on your own.
With a cosigner, you are still responsible for paying back the loan, but the cosigner must step in if you are unable to make payments. A co-borrower applies for the loan with you and is equally responsible for paying back the loan according to the loan terms on a month-to-month basis.
Consolidation (Through the Direct Loan Consolidation Program)
Private or federal student loan consolidation is the act of combining two or more loans into one loan with a single interest rate and term. The resulting interest rate is a weighted average of the original loan rates — rounded up to the nearest one-eighth of a percentage point.
Only certain federal loans are eligible for the Direct Consolidation Program. Consolidating can make your life simpler with one monthly bill, but it may not actually save you any money. You may be able to reduce your monthly payments by increasing the loan term, but this means you’ll pay more interest over the life of the loan.
Consolidation (Through a Private Lender)
Consolidation is the act of combining two or more loans into one single loan with a single interest rate and term. When you consolidate loans with a private lender, you do so through the act of refinancing, so you’re given a new (hopefully lower) interest rate or lower payments with a longer term.
By refinancing, you may be able to lower your monthly payments or shorten your payment term. Keep in mind that you may pay more interest over the life of the loan if you refinance with an extended term. And federal student loans come with a host of benefits and protections that are forfeited should you refinance.
Cost of attendance is the estimated total cost for attending a college based on the cost of tuition, room and board, books, supplies, transportation, loan fees, and miscellaneous expenses. Schools are required to publish the cost of attendance.
Credit Report
Credit reports detail an individual’s bill payment history, loans, and other financial information. These reports are used by lenders to evaluate your creditworthiness.
Default
Default is the failure to repay a loan according to the terms agreed to in the promissory note. Defaulting on your private or federal student loans can have serious consequences, such as additional fees, wage garnishment, and a significant negative impact on your credit. It’s always better to talk to your lender about potential hardship repayment options, such as deferment or forbearance, before defaulting on a loan.
Deferment
Deferment is the temporary postponement of loan repayment, during which time you may not be responsible for paying interest that accrues (on certain types of loans). Federal student loan deferment can be useful if you think you’ll be in a better place to pay your loans at a later date. However, deferment is usually only available for certain federal loans. To potentially cut down on interest, it may be wise to weigh your deferment options.
Delinquency
When you miss a student loan payment, the loan becomes delinquent. The loan will be considered delinquent until a payment is made on the loan. If the loan remains in delinquency for a specified period of time (which varies for federal vs. private student loans), it may enter default.
Direct Loan
The Direct Loan Program is administered via the U.S. Department of Education. There are four main types of direct loans, including, Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Direct PLUS Loan
Direct PLUS Loans are types of federal loans that are made to graduate or professional student borrowers or to the parents of undergraduate students. Direct PLUS Loans made to parents may be referred to as Parent PLUS Loans.
Note that, starting July 1, 2026, no new Direct PLUS loans will be offered to graduate and professional students. Any borrowers who received a Direct PLUS loan before that date can continue borrowing under the current terms through the 2028-29 academic school year.
Disbursement
When funds for a loan are paid out by the lender.
Discharge
Student loan discharge for private and federal loans occurs when you are no longer required to make payments on your loans. Typically, discharge occurs when there are extenuating circumstances, such as the borrower has experienced a total and permanent disability or the school at which you received your loans has closed.
Discretionary Income
Discretionary income is the money remaining after you pay for necessary expenses. An individual’s discretionary income is used to help determine their loan payments on an income-driven repayment plan.
Enrollment Status
Determined by the school you attend, your enrollment status is a reflection of where you stand with the school. It includes full-time, half-time, withdrawn, and graduated.
Expected Family Contribution
The expected family contribution was an estimation of the amount of money a student and their family were expected to pay out of pocket toward tuition and other college expenses. It is now known as the Student Aid Index (SAI).
Federal Work-Study
A type of financial aid, students who demonstrate financial need may qualify for the Federal Work-Study program, where they work part-time to earn funds to help pay for college expenses.
Financial Aid
Financial aid is funds to help pay for college. Financial aid includes grants, scholarships, work-study, and federal student loans.
Financial Aid Package
An overview of the types of financial aid you are eligible to receive for college, financial aid packages provide information on all types of federal financial aid and college-specific aid, such as scholarships, grants, work-study, and federal student loans.
Fixed interest rates remain the same for the life of the loan. The interest rate does not fluctuate.
Forbearance
Forbearance is the temporary postponement of loan repayment, during which time interest typically continues to accrue on all types of federal student loans. If your student loan is in forbearance, you can either pay off the interest as it accrues or allow it to accrue, and it will be capitalized at the end of your forbearance.
Use forbearance wisely, because interest that accrues during the forbearance period is typically capitalized, making your loan more expensive. If you can afford to make even small payments during forbearance, it can help keep interest costs down.
You will usually have to apply for student loan forbearance with your loan holder and will sometimes be required to provide documentation proving you meet the criteria for forbearance. For a loan to be eligible for forbearance, there must be some unexpected temporary financial difficulty.
Forgiveness
Loan forgiveness is another situation in which you are no longer responsible for repaying all or a portion of your federal student loans. Public Service Loan Forgiveness and Teacher Loan Forgiveness are two types of loan forgiveness programs in which your loans are forgiven after meeting specific requirements, such as working in a qualifying job and making qualifying loan payments.
Free Application for Federal Student Aid (FAFSA)
This is the application students use to apply for all types of federal student aid, including federal loans, work-study, grants, and scholarships. The FAFSA must be completed for each year a student wishes to apply for financial aid.
The grace period is a period of time after you graduate, leave school, or drop below half-time during which you’re not required to make payments on certain loans. Some loans continue to accumulate interest during the grace period, and that interest is typically capitalized, making your loan more expensive.
Grad PLUS Loans
Another term to refer to a Direct PLUS loan, specifically one borrowed by a graduate or professional student.
Graduate or Professional Student
A student who is pursuing educational opportunities beyond a bachelor’s degree. Graduate and professional programs include master’s and doctoral programs.
Graduated Repayment Plan
A type of repayment plan available for federal student loan borrowers. On this repayment plan, loan payments begin low and increase every two years. This plan may make sense for borrowers who expect their income to increase over time.
Students who are enrolled at least half-time in school are eligible to defer their federal student loans. This type of deferment is generally automatic for federal student loans. Note that unless you have a subsidized student loan, interest will continue to accrue during in-school deferment.
Interest
Interest is the cost of borrowing money. It is money paid to the lender and is calculated as a percentage of the unpaid principal.
Interest Deduction
A tax deduction that allows you to deduct the student loan interest you paid on a qualified student loan for the tax year. Interest paid on both private and federal student loans qualifies for the student loan interest deduction.
Lender
The financial institution that lends funds to an individual borrower.
Loan Period
A loan period is the academic year for which a private or federal student loan is requested.
Loan Servicer
A loan servicer is a company your lender may partner with to administer your loan and collect payments. For questions about your private or federal student loan payments or administrative details such as account information, you should contact your student loan servicer.
Origination Fee
Some lenders charge an origination fee for processing a loan application, or in lieu of upfront interest. To minimize incremental costs on your loan, look for lenders that offer no or low fees.
Part-Time Enrollment
Students who are enrolled in school less than full-time are generally considered part-time students. The number of credit hours required for part-time enrollment is determined by your school.
Pell Grant
The Pell Grant is awarded by the federal government to undergraduate students who demonstrate exceptional financial need.
Perkins Loan
Perkins Loans were a type of federal loan available to undergraduate and graduate students who demonstrated exceptional financial need. The Perkins Loan program ended in 2017.
PLUS Loans
Another way to describe Direct PLUS Loans, PLUS Loans are federal loans available for graduate and professional students or the parents of undergraduate students.
Prepayment
Prepayment is paying off the loan early or making more than the minimum payment. All education loans, including private and federal loans, allow for penalty-free prepayment, which means you can pay more than the monthly minimum or make extra payments without incurring a fee. The faster you pay off your loan, the less you’ll spend on interest.
Prime Rate
The Prime rate is the interest rate that commercial banks charge their most creditworthy customers. The basis of the prime rate is the federal funds overnight rate. The federal funds overnight rate is the interest rate that banks use when lending to each other. The prime rate can be used as a benchmark for interest rates on other types of lending.
Principal
The Principal is the original loan amount you borrowed. For example, if you take out one $100,000 loan for grad school, that loan’s principal is $100,000.
Private Student Loan
A private student loan is lent by a private financial institution, such as a bank, credit union, or online lender. These loans can be used to pay for college and educational expenses, but are not a part of the Federal Direct Loan Program. These loans don’t offer the same borrower protections available to federal student loans — like income-driven repayment plans or deferment options.
Promissory Note
A promissory note is a contract that says you’ll repay a loan under certain agreed-upon terms. This document legally controls your borrowing arrangement, so read it carefully. If you don’t fully understand the agreement, contact your lender before you sign.
Repayment
Repayment is repaying a loan plus interest.
Repayment Period
The agreed-upon term in which loan repayment will take place.
The Secured Overnight Financing Rate (SOFR) is an interest rate benchmark that is commonly used by banks and other lenders to set interest rates for loans. The SOFR is the cost of borrowing money overnight collateralized by Treasury securities.
Stafford Loans
Stafford loans were a type of federal student loan made under the Federal Family Education Loan Program. Beginning in 2010, all federal student loans are now loaned directly through the William D. Ford Federal Direct Loan Program.
Standard Repayment Plan
The Standard Repayment Plan is one of the repayment plans available for federal student loan borrowers. This repayment plan consists of fixed payments made over a 10-year period.
Student Loan Refinancing
Student loan refinancing is using a new loan from a private lender to pay off existing federal or private student loans. This allows you to secure a new (ideally lower) interest rate or adjust your loan terms. You may pay more interest over the life of the loan if you refinance with an extended term.
Subsidized Loan
A Direct Subsidized Loan is a type of federal loan available to undergraduate students where the government covers the interest that accrues while the student is enrolled at least half-time, during the grace period, and other qualifying periods of deferment.
Term
The Term is the expected amount of time the loan will be in repayment. Generally speaking, a longer term will mean lower monthly payments but higher interest over the life of the loan, while a shorter term will mean the opposite. Loan terms vary by lender, and if you have a federal loan, you are usually able to select your federal student loan repayment plan.
Tuition
The cost of classes and instruction.
Undergraduate Student
A college student who is enrolled in a course of study, typically lasting four years, with the goal of receiving a bachelor’s degree.
Unsubsidized Loan
A Direct Unsubsidized Loan is a type of federal loan available to undergraduate or graduate students. The major difference between subsidized vs. unsubsidized loans is that the interest on unsubsidized loans is not paid for by the federal government.
Variable Interest Rate
Unlike a fixed interest rate, a variable interest rate fluctuates over the life of a loan. Changes in interest rates are tied to a prevailing interest rate.
The Takeaway
Understanding key terms is essential for navigating student borrowing. Prioritizing sources of financial aid that don’t need to be repaid, such as scholarships and grants, can be helpful. But these don’t always meet a student’s financial needs.
Federal student loans have low interest rates and, for the most part, don’t require a credit check. Plus, they have borrower protections in place, such as income-driven repayment plans and deferment options, which make them the first choice for most students looking to borrow money to pay for college.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
What are common student loan terms?
Common federal and private student loan terms include the principal (the original borrowed amount), interest rate (the cost of borrowing), and repayment term (the length of time to repay the loan). Other terms involve grace periods (time before payments start after graduation), deferment, forbearance (temporary relief from payments), and fixed or variable interest rates.
What are the most important loan terms to understand?
It’s important to understand terms associated with borrowing because you’ll be required to repay the loan. Understand the interest rate and any fees associated with the loan.
What does APR mean in relation to student loans?
APR is a reflection of the interest rate on the loan, in addition to any other fees associated with borrowing. APR helps make it easier to compare loans from different lenders.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Not all repayment options may be available for all loans. 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 current as of 3/2/2026 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
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 .
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When financial aid, such as scholarships and grants, comes up short, federal student loans can help bridge the gap.
Colleges may include Unsubsidized Direct Loans in financial aid packages for undergraduate and graduate students.
Subsidized Direct Loans are only available to undergrads with financial need. The U.S. Department of Education (ED) pays the interest on these loans during certain periods.
When a college sends an aid offer, you must indicate which financial aid you want to accept. Here, we’ll look at Unsubsidized Direct Student Loans and how they can help you pay for college.
• Unsubsidized Direct Loans are available to both undergraduate and graduate students and are not based on financial need, unlike subsidized loans.
• Interest on unsubsidized loans begins accruing immediately upon disbursement, and unpaid interest is capitalized (added to the loan balance) when repayment begins.
• Borrowing limits depend on your year in school and whether you’re a dependent or independent student (ranging from $5,500 for first-year dependents to $20,500 annually for graduate students).
• Eligibility requires completing the Free Application for Federal Student Aid (FAFSA®), being enrolled at least half-time in a degree or certificate program, and meeting general federal aid requirements (citizenship, satisfactory progress, etc.).
• Alternatives include subsidized loans, scholarships, grants, and private student loans (which may help cover funding gaps but don’t offer federal protections such as forgiveness or income-driven repayment).
What Is an Unsubsidized Student Loan?
The Department of Education provides Federal Direct Unsubsidized Student Loans under the William D. Ford Federal Direct Loan Program. Other types of Direct Loans available in this program include Direct Subsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Unsubsidized loans provide undergraduate and graduate students with a fixed-rate financing option to help fund their college education.
Unlike Direct Subsidized Loans, unsubsidized student loans are not based on financial need. This means that any student may receive unsubsidized loan funding, as long as they meet the Department of Education’s general eligibility requirements.
How Do Unsubsidized Student Loans Work?
If you’re eligible for Direct Unsubsidized Student Loans, the amount you’re offered for the academic year is determined by your school, based on its cost of attendance minus other financial aid you’ve received (such as scholarships, grants, work-study, and subsidized loans).
You will need to complete entrance counseling to ensure you understand the terms and your obligation to repay the loan. Then you’ll sign a master promissory note stating that you agree to the loan terms.
The government will send the loan funds directly to your school. Your institution will then apply the money toward any unpaid charges on your school account, including tuition, fees, room, and board.
Any remaining money will then be sent to you. For example, if you were approved for $3,800 in unsubsidized loans but only $3,000 was applied to your education costs, the school will send the remaining $800 to you.
The Education Department’s Federal Student Aid office recommends accepting grants and scholarships first, then work-study, then loans. And it advises accepting a subsidized loan before an unsubsidized loan, and an unsubsidized loan before a PLUS loan.
A Matter of Interest
As soon as any student loan is disbursed, it starts accruing interest. For federal student loans and most private student loans, you can defer payments until after your grace period, which is six months after you graduate, leave school, or drop below half-time enrollment.
Here’s the kicker: With a subsidized student loan, the government pays the interest while you’re in school, during your grace period, and for any period of hardship deferment.
With an unsubsidized federal student loan or private student loan, unpaid interest accrues and will, in certain instances, be added to your loan’s principal balance when you start repayment.
Pros and Cons of Unsubsidized Student Loans
Although unsubsidized student loans offer many benefits, there are also some downsides to know.
Unsubsidized Loan Pros
Unsubsidized Loan Cons
Eligibility is not based on financial need
Interest accrues upon disbursement
Available to undergraduate and graduate students
You’re responsible for all interest charges
Can help cover educational expenses up to an annual limit
Graduate students pay a higher rate
No credit check or cosigner required
Interest capitalizes if payments are deferred
Can choose to defer repayment
Multiple payment plans are available
Applying for Unsubsidized Student Loans
Applying for federal financial aid starts with the FAFSA. Students seeking aid complete the form each year.
Where to Apply
You can complete the FAFSA at studentaid.gov, or you can print out a paper form and mail it.
Based on the information you provide in your FAFSA, each school that you list will determine your financial aid offer, including whether you’re eligible for an unsubsidized loan.
Typical Application Requirements
You must have an enrollment status of at least half-time to be eligible for a Direct Loan. You must also be enrolled in a degree- or certificate-granting program at a school that participates in the Direct Loan Program.
The Department of Education has general eligibility requirements for federal aid. Applicants must:
• Be a U.S. citizen or eligible noncitizen
• Have a Social Security number
• Prove that they qualify for a college education
• Maintain satisfactory academic progress
• Sign a certification statement
In the certification statement, you’ll need to confirm that you aren’t currently in default on a federal student loan, don’t owe money on a federal grant, and will only use aid funds for educational costs.
How Long Will You Have to Wait?
After submitting your FAFSA form online, the Department of Education processes your application in one to three days. If you submitted your FAFSA by mail, processing can take up to 10 days.
Once you’ve told your school which financial aid you want to accept, loan disbursement timelines vary. Generally, first-time borrowers have up to a 30-day waiting period before they receive their funds. Other borrowers may receive funding up to 10 days before the start of the semester.
How Much Can You Borrow?
There are annual limits to how much in combined subsidized and unsubsidized loans you can borrow. These limits are defined based on the year you are in school and whether you’re a dependent or independent student.
Here’s an overview of combined subsidized and unsubsidized loan limits per year for undergraduate students:
Undergraduate Year
Dependent
Independent
First-year student
$5,500
$9,500
Second-year student
$6,500
$10,500
Third year and beyond
$7,500
$12,500
Graduate students are automatically considered independent and have an annual limit of $20,500 for unsubsidized loans (they cannot receive subsidized loans).
Borrowers aren’t responsible for interest that accrues during in-school deferment and grace period
Borrowers are responsible for interest that accrues at all times
Borrowers must demonstrate financial need
Financial need isn’t a requirement
Annual loan limits are typically lower
Annual loan limits are generally higher
Alternatives to Unsubsidized Student Loans
Unsubsidized student loans are just one type of financial support students can consider for their education. Here are some alternatives.
Subsidized Loans
Direct Subsidized Loans are fixed-rate loans available to undergraduate students. As discussed, borrowers are only responsible for the interest charges that accrue while the loan is actively in repayment.
Scholarships and Grants
In addition to accessing potential scholarships, grants, and loans through the FAFSA, students can seek financial aid from other entities.
Scholarships and grants for college may be found through your state or city. Businesses, nonprofits, community groups, and professional associations often sponsor scholarships or grants, too. The opportunities may be based on need or merit.
Private Student Loans
Private lenders including banks, credit unions, and other financial institutions offer private student loans. Some schools and states also have their own student loan programs.
Private student loan lenders require borrowers, or cosigners, to meet certain credit thresholds, but many lenders offer pre-qualification without a hard credit inquiry. Undergraduate loan rates may be fixed or variable.
Private student loans can be a convenient financing option for students who are either ineligible for federal aid or have maxed out their federal student loan options. One need-to-know: Private student loans are not eligible for federal programs such as Public Service Loan Forgiveness and income-driven repayment.
SoFi Private Student Loan Rates
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
What are unsubsidized loan eligibility requirements?
To be eligible for a Direct Unsubsidized Loan, undergraduate and graduate students must be enrolled at least half-time at a qualifying school. They must also meet the basic eligibility requirements for federal aid, including being a U.S. citizen or eligible noncitizen, having a Social Security number, and completing the FAFSA.
How long does it take to receive a Direct Unsubsidized Loan?
Loan disbursement for first-time borrowers can take up to 30 days after the first day of enrollment. For others, disbursement takes place within 10 days before classes start.
What is the maximum amount of unsubsidized loans you can borrow?
Dependent students can borrow a maximum of $5,500 and $6,500 per year during their first and second academic years, respectively. Students in their third year of school and beyond can borrow an annual maximum of $7,500. The aggregate loan limit for dependent students is $31,000 in combined subsidized and unsubsidized loans.
Graduate or professional students may receive up to $20,500 per year in unsubsidized loans. Their aggregate loan limit is $138,500 (which includes all federal student loans received for undergraduate study).
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