Sep
09
2025
IPO Book Building Process Explained

IPO Book-Building Process Explained

By | Growing Wealth, invest, Investing | Comments Off on IPO Book-Building Process Explained

Initial public offering (IPO) book building is a process to help determine the share price for an IPO.

With book building, the investment bank that underwrites an IPO reaches out to institutional investors to gauge their interest in buying shares of a company looking to go public. The underwriter asks those interested to submit bids detailing the number of shares they seek to own and at what price they would be willing to pay.

Read on to discover how book building works and how it can affect the price of an IPO.

Key Points

•   Book building is the preferred method by which a company prices IPO shares.

•   There are five key steps in the IPO book building process: find a banker, collect bids, determine a price, disclose details, and allotment.

•   Partial book building is restricted to institutional investors, while accelerated book building is used for large equity offerings to raise capital in a short period.

•   The risk of an IPO being underpriced or overpriced when shares go public can lead to volatility, making IPO investing a high-risk endeavor.

•   The goal of book building is to ensure proper market-based price discovery to help the issuing company set a fair share price.

What Is Book Building?

Book building is the preferred method by which a company prices IPO shares. It is considered the most efficient way to set prices and is recommended by all the major stock exchanges.

Among the first steps of the IPO process is for the private company to hire an investment bank to lead the underwriting effort. IPO book building happens when the IPO underwriter gathers interest from institutional investors, such as fund managers and other large investors, to “build the book” of that feedback and determine the value of the private company’s shares.

As part of the IPO process, the investment bank must promote the company and the offering to stir up interest before they can determine share price.

This is typically called an IPO roadshow. If the underwriter finds that there is sufficient interest based on responses from the investor community, then the bank will determine an offering price.

Book building is common practice in most developed countries. It has become more popular than the fixed-pricing method, which involves setting an IPO price before measuring investor interest. Book building, on the other hand, generates and records investor interest to land on an IPO price.

Book building can help find a fair share price for a private company based on market interest. When a bank gauges market interest, a floor price is sometimes used, and bids arrive at or above that floor price. The stock price is determined after the bid closing date. With the book building method, demand can be seen in real-time as the book is being built.


💡 Quick Tip: IPO stocks can get a lot of media hype. But savvy investors know that where there’s buzz there can also be higher-than-warranted valuations. IPO shares might spike or plunge (or both), so investing in IPOs may not be suitable for investors with short time horizons.

Book-Building Process

Firms going public want to sell their stock at the highest possible price without deterring the investment community. There are five key steps the issuing company must perform in the process of IPO book building in order to discover a market-based share price.

1.    Find a Banker: The issuing company hires an investment bank to underwrite the transaction. The underwriter advises the company, guiding it through the lengthy book-building process. The investment bank, as a firm commitment underwriter (the most common underwriting arrangement in an IPO), also commits to buying all the shares from the issuer, carrying all the risk. The bank will then resell the shares to investors.

2.    Collect Bids: The investment bank invites investors to submit bids on the number of shares they are interested in and at what price. This solicitation and the preliminary bids give the bankers and the company’s management an indication of the market’s interest for the shares. Roadshows are often used to grow investor appetite.

3.    Determine a Price: The book is built by aggregating demand as the bids arrive. The bank uses a weighted average to determine a final cutoff price based on indications of interest. This step helps with pricing an IPO.

4.    Disclosure: The underwriter must disclose details of the bids to the public.

5.    Allotment: Accepted bidders are allotted shares.

Even if the IPO book-building process goes smoothly and a price is set, it does not ensure that actual transactions will take place at that price once the IPO is open to buyers. Book building simply helps to gauge demand and determine a fair market-based price. But substantial risks remain for interested investors, who could see steep losses if the share price drops after the IPO.


💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

What Is Partial Book Building?

Partial book building is another form of the IPO book-building process that happens only at the institutional level, rather than the retail level.

With partial book building, a select group of investors is approached regarding their interest in the IPO. Using their bids, a weighted average price is calculated and a cutoff price is determined. That cutoff price is then used as the public offering price to retail investors as a fixed price. The cost of the partial book-building IPO process is often lower due to its relative efficiency.

What Is Accelerated Book Building?

Accelerated book building is used for large equity offerings to raise capital in a short period of time. The investment bank is tasked with book building, determining a cutoff price, and allocating shares within 48 hours or less. No roadshow is involved.

The accelerated book-building process is typically used when a company needs immediate financing and raising capital from debt is off the table. It is typically done when a firm seeks to acquire another company.

Accelerated book building is often conducted overnight, with the issuing company asking investment banks to serve as underwriters before the next day’s placement.

What Effect Does Book Building Have On IPO Prices?

A good IPO book-building process helps ensure proper market-based price discovery. Still, there is the risk that an IPO can be underpriced or overpriced when shares finally go public. This can lead to volatility, which IPO investors also need to be aware of. This is one reason why IPOs are considered high-risk endeavors.

Underpricing happens when the offering price is below the share price on the first day of trading. In other words, the IPO is selling for less than its true market value. With an underpriced IPO, a company is said to have left money on the table because they could have set the offering price higher.

An overpriced IPO — meaning the offering price is above the stock’s true market value and higher than investors are willing to pay for it — can have negative implications for the future price of a stock due to poor investor response.

Investors may buy IPO stock on Day One of trading in the secondary market, while qualified investors can purchase IPO shares before they begin trading in the open market.

While there is no surefire way to guarantee a good IPO price, the book-building IPO method generally offers quality pre-market price discovery customized to the issuer. It also reduces the risk for the underwriter. It can have high costs, however, and there is the risk that the IPO will end up being underpriced or overpriced. The overall goal is to see a good and steady stock performance during and after the IPO.

The Takeaway

The book-building IPO process involves five critical steps to ensure a stock goes public promptly with as few hiccups as possible.

There are different types of IPO book building, and the way an investment bank performs the process can impact IPO prices. The goal is to set a fair market-based price for shares of the company looking to go public.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it's wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.


Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What are the steps in book building?

There are five main steps in the book-building IPO process:

1.    The issuing company hires an investment bank to underwrite the offering. The bank determines a share price value range and writes a prospectus to send to potential institutional investors.

2.    The underwriting bank invites institutional investors to submit bids on how many shares they want to buy and at what price.

3.    The book is built by sorting and summing up demand for the shares to calculate a final IPO price. It’s known as the cutoff price.

4.    The investment bank is required to disclose the details of submitted bids to the public.

5.    Shares are allocated to bidders who meet or exceed the final cutoff price.

What is 100% book building?

100% book building is when all of the company’s shares are sold through the book-building process. The final issue price of the shares is determined entirely by investor bids and demands.

Who carries out book building in an IPO?

The underwriters in an IPO, which are typically large investment banks, carry out the book building process. They build the book by asking institutional investors to submit bids for the number of shares of the company they’d be willing to buy and the price they would pay for the shares. They then list and evaluate investor demand based on the bids and use that information to set a price for the shares.

Photo credit: iStock/PeopleImages

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation Procedures.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

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

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Sep
08
2025
laptop and charts

Investing in Growth Funds

By | Growing Wealth, invest, Investing | Comments Off on Investing in Growth Funds

A growth fund is a type of mutual fund or exchange-traded fund (ETF) that’s typically invested in growth stocks, i.e., companies that aim to deliver substantial positive cashflow and better-than-average returns. Growth funds are focused on capital appreciation over time.

Growth funds primarily include shares of growth stocks, but can also include bonds or other investments designed specifically with higher returns in mind. Individual growth funds typically focus on small- , mid- , or large-cap stocks (although some might offer a mix).

Unlike some value funds, growth funds rarely pay dividends. Instead, investors make money on the appreciation of the underlying stocks. Since growth mutual funds are considered somewhat riskier investments — with a higher risk of loss along with a potential for bigger gains — holding these funds for the longer term may help mitigate the short-term impact of price volatility.

Key Points

•  In investing, a growth strategy is a more aggressive approach that’s focused on generating returns.

•  Growth funds are primarily invested in growth stocks: shares of companies that aim to deliver returns.

•  Growth funds may include stocks as well as bonds or other securities.

•  A growth strategy can be risky, as it includes the potential for losses.

•  Growth funds, like the growth stocks in their portfolios, generally don’t pay dividends, but reinvest earnings to fuel further growth.

What Is Growth Investing?

Growth investing is a strategy that focuses on increasing company revenue or investor returns. For this reason, growth investors may invest in younger or smaller companies, when they invest online or through a traditional brokerage, which are said to be in a growth phase, and whose earnings are expected to increase at an above-average rate compared to their industry sector or the overall market.

Growth Companies, Growth Strategies

Growth stocks aren’t always new companies, though. Larger, more established companies can also fall into this category, assuming they are poised for expansion. Big companies could be in a growth phase due any number of factors:

•   Technological advances

•   Shift in strategy

•   Movement into new markets

•   Acquisitions

How much growth can you expect to get from growth stock mutual funds? As with any mutual fund, the performance of these funds depends on their underlying assets and, in the case of actively managed funds, their portfolio managers’ strategies.

There are also growth index funds, which are passively managed. A growth index fund is a growth stock mutual fund that tracks the performance of a particular stock index that’s focused on growth (e.g., the CRSP Large Growth Index or CRSP Small Cap Growth Index).

Growth Fund Performance

To give you an example of how growth funds compare to the domestic equity market as a whole, the U.S. stock market had an average return of 11.6% in the last decade, compounded annually, as of Aug. 1, 2025, according to Yahoo Finance.

For context, here is the performance of five growth mutual funds and ETFs over the last 10 years, data from Morningstar, as of June 30, 2025.

Fund Name Total Net Assets 10-year avg. annual return
Champlain Mid Cap Fund
(CIPMX)		 $3.8 billion 11.11%
Champlain Small Company Fund (CIPSX) $1.7 billion 9.96%
Fidelity Series Large Cap Growth (FHOFX) $2.1 billion 15.94%*
Loomis Sayles Growth Fund (LSGRX) $17.7 billion 17.86%
Morgan Stanley Institutional Fund, Inc. Growth Portfolio (MGHRX) $4.6 billion 5.74%*

Source: Morningstar, as of June 30, 2025
*5-year returns used; inception August 2018 for FHOFX, June 2018 for MGHRX.

Remember that growth investing can be volatile since companies typically take some risks in order to expand. Also, some growth companies can get a lot of media or investor attention, which can contribute to price swings as investors buy and sell shares with the hope of seeing a profit.

Examples of Growth Stocks

Market capitalization — which indicates the number of outstanding shares a company has multiplied by its price per share — is not a specific hallmark or characteristic of growth stocks. Growth stocks can be large-cap corporations, mid-cap, or smaller companies. That said, most growth funds generally tilt toward larger companies.

Large-cap companies can scale their manufacturing to produce more products at cheaper prices, which increases their potential. Plus, big companies tend to reinvest the money they make into research and development, acquisitions, or expansion.

Information technology companies are often the largest holdings in U.S. growth mutual funds, but these funds may also hold healthcare and consumer discretionary stocks as well.

Smaller companies also have a lot of growth potential, as noted above — and some small-cap companies may be in the initial startup phase, which can sometimes generate outsize growth. And many mid-cap companies have been around longer and may have the ability to adapt to new market needs.

Recommended: Value Stocks vs Growth Stocks: Key Differences to Know

Benefits of Investing in Growth Mutual Funds

There are a few good reasons to consider growth stock mutual funds, and portfolio diversification is a consideration here.

It would be expensive for most individual investors when trading stocks to achieve the level of diversification offered by a pooled investment like a growth mutual fund. Investing in a single fund gives investors exposure to a wide range of stocks in different sectors.

Growth funds may also have long-term potential. For instance, growth stocks are more likely to see returns during an economic boom cycle, when many companies are growing and thriving. But shares can also be volatile, which is one of the risks of the sector.

While investors may not be able to count on dividend income from a growth mutual fund, they may still be able to sell the fund for more than what they paid for it, although there are no guarantees.

Downside of Growth Mutual Funds

Like any other investment, there are potential drawbacks to keep in mind with growth stocks and their growth fund counterparts.

While growth stocks can potentially increase in value more quickly than other stocks, this also makes them a potentially risky and more volatile investment. A typical growth stock mutual fund might return 18.0% one year and –6.0% the next. That kind of volatility isn’t for everyone.

In order for a growth stock to keep growing, the company must continue to earn money. This is challenging for any company to maintain over a long period of time. If there’s a recession, if a company has an unforeseen loss, or can’t continue to grow, the value of the stock may go down.

To help manage this risk, investors may choose to hold growth stocks and growth mutual funds for the five to 10 years, so that they can ride out market fluctuations and potentially be more likely to make a profit.

It’s also important to keep in mind that some growth stocks could become overvalued by the market, which might impact a growth fund’s performance. In this scenario, an investor might buy shares in a growth fund, hoping for solid returns. But if one or more of the underlying companies in those funds ends up being overvalued, the stock’s performance might fall below investor expectations.

Evaluating a Company’s Potential for Growth

Assessing a company’s potential for growth, either in the near or long term, is not an exact science. But it’s important to consider how likely a company is to grow when determining whether it’s a good fit for a growth portfolio. This typically involves looking at several key metrics, including:

•  Return on Equity (ROE). Return on equity is used to measure company performance. It’s calculated by dividing net income by shareholder equity over a set time period.

•  Earnings Per Share (EPS). Earnings per share represents a company’s total profit divided by its total number of outstanding shares. EPS is used to measure a company’s profitability.

•  Price to Earnings to Growth (PEG). The price to earnings to growth ratio represents the price to earnings (P/E) ratio of a stock divided by the growth rate of its earnings over a set time period. Growth funds tend to have a higher P/E ratio (price to earnings ratio), which is the cost of a company’s stock relative to its earnings-per-share (EPS) than other funds. This can make them more expensive, but their potential for growth might make the extra cost worth it.

When using these and other metrics to measure a company’s growth potential, it’s important to understand how to interpret them. For example, a company that has a higher earnings per share is generally viewed as being more profitable. Likewise, a high price to earnings ratio is considered to be an indicator of continued growth.

But investors should also consider how sustainable the outlook for profitability and growth truly is, given the context of a company’s revenue, debt, and cash flows.

Buying Growth Mutual Funds

When choosing which growth stocks or growth funds to invest in, there are several factors investors may choose to consider. These include:

•  Historical performance

•  Stocks and other securities held in the fund

•  Fund fees (e.g., the expense ratio)

•  Potential earnings

Growth funds can often — but not always — be identified by the word growth in their name. Some investors might choose to put their money in blended funds, which combine growth stocks with less risky holdings. These funds allow investors to benefit from some of the upsides of growth funds without quite as much risk.

Certain growth funds are exchange-traded funds, or ETFs. Like any ETF, these funds can be traded during the day like stocks.

It’s important for investors to understand the risks before investing in any stock or fund, and to build a diversified portfolio of assets in order to help mitigate risk. With a diversified portfolio, investors hold both riskier assets and less volatile assets, in an effort to reap potential benefits of growth without losing too much along the way.

It’s also vital to remember that past performance is not a guarantee of how well a stock or growth fund will perform in the future.

Recommended: Stock Market Basics

Investing for Growth or Value?

Growth investing and value investing are couched as different styles of investing, yet they share a similar profit-driven focus — just a different means of getting there. With growth investing, the overarching goal is to invest in companies that have solid potential for growth. With value investing, the goal instead is to find companies that have been undervalued by the market — and hopefully see them increase in value.

A value investor may seek out companies that they believe are bargains based on current market price. They then invest in these companies, either by purchasing individual shares or through value mutual funds, and hold onto those investments over time. The end goal is to eventually sell their shares for a profit down the line.

In addition to eventual capital appreciation, value stocks can also pay dividends to investors. Value stocks are typically more likely to be established companies rather than newer ones. The most important thing to know with value investing vs. growth investing is how to avoid a value trap. This is a company that appears to be undervalued, but actually has a correct valuation. In that case, an investor might buy in, expecting the stock’s price to rise over time, only to be disappointed by a price that stays the same or worse, declines.

Determining When to Invest in Growth Mutual Funds

Dollar cost averaging is a way to invest small amounts of money consistently over time, rather than attempting to time the market, which helps investors to limit their risk exposure. However, if there is a stock market correction, it can be a good time to pick up some extra assets while they’re at particularly low prices.

Growth stocks tend to do well during bull markets, so while they may not see significant gains during a recession, they can still be an option to consider for long-term investments to pick up before the next economic boom.

The Takeaway

Growth stocks have a primary goal of capital appreciation. These stocks are expected to grow more quickly than other stocks in the market, and because of this, growth mutual funds are considered riskier investments than other mutual funds with a high risk of loss along with a higher potential for gain.

Growth funds holdings tend to have a higher P/E ratio (price to earnings ratio), which can make them more expensive investments, but their rapid growth may make the extra cost worth it.

These types of funds are more likely to see returns during an economic boom, vs during a recession. During a recession or economic downturn, companies may not have the cash or earnings to be able to invest in growth, and the value of the stocks the fund could go down.

Investors who know the basics of growth mutual funds may be interested in adding some of these assets, or other types of mutual funds and ETFs, to their investment portfolio.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

Do growth funds pay dividends?

No, typically growth funds do not pay dividends because the underlying stocks held in the fund, which are growth stocks, reinvest profits into the company to fuel growth.

How risky is a growth fund?

Growth funds, like growth stocks, are generally considered higher risk owing to the volatility of some of the stocks they hold. Some investors may appreciate the potential for bigger gains, while others may not tolerate the risk exposure.

Which is better, investing for growth or income?

Choosing between an income strategy or a growth strategy will likely depend on your investment time horizon, as well as your goals. Investors in retirement may prefer investing with income in mind; younger investors with more years to ride out any volatility may want to invest in growth funds.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

SOIN-Q325-087

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Sep
06
2025
parent hugging college student

Can Parents Pay Off Their Children’s Student Loans?

By | Debt Payoff, Student Loans, student_loan | No Comments

College is expensive, and for many families, it’s a group effort to pay tuition, fees, and other expenses. Both parents and children may choose to take out student loans, and in some cases, parents might also help pay off their child’s student loan debt after graduation. But before you take out your checkbook, there are some things to be considered.

Ahead, we look at ways parents can help their children pay off their loans as well as pros and cons of helping with such a big financial expense.

Key Points

•   Financial contributions toward student loans are considered gifts, subject to annual IRS exclusions.

•   Financial contributions towards student loans are considered gifts, subject to annual IRS exclusions.

•   Parents should evaluate their financial stability and retirement plans before deciding to pay off their child’s student loans.

•   Various methods are available for parents to help, including direct payments or refinancing under their name.

•   Financial assistance from parents can significantly alleviate the burden of student loans for their children, enabling better financial freedom post-graduation.

Things to Consider Before Paying Off Your Children’s Student Loans

While there are no rules restricting parents from paying back their children’s student loans, there are a few things to think about before you do.

1. Gift Taxes

If you choose to pay off your child’s student loan in one lump sum, you may need to file a gift tax return and pay any applicable gift tax. The person who makes the payment as a gift pays the tax, not the recipient, according to IRS guidelines. In 2025, a parent may gift their child up to $19,000 before the gift tax comes into play (or two parents could gift one child up to $38,000). Even once that threshold is reached, however, a tax is not immediately triggered; rather, the excess gift is added to the lifetime gift tax exclusion, which in 2025 is set at $13.99 million. In other words, paying off your children’s student loans is unlikely to lead to tax liability on its own.

Recommended: How to Fill Out Gift Tax Form 709

2. Retirement

Parents should consider how helping their child (or children) pay off student loans might affect their retirement plans. Because parents are closer to retirement age than their adult children, it is often difficult for parents to build back up their nest egg if they deplete some or all of it helping pay back their children’s student loans.

3. Home Equity

Some parents decide to avoid using their retirement funds and instead tap into their home equity line of credit. But before you sign on the dotted line, you might want to consider the repercussions. You will want to make sure you have the necessary time to pay back that line of credit. Many borrowers opt for a 10- or 15- year home equity loan, but that may be risky if you are only 10 years from retirement.



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

How Parents Can Help Their Children Pay Off Their Student Loans

There are many factors to consider if you want to help pay off your child’s college loans, especially if you’re nearing retirement. Here are several ways you may want to help your child repay their loan.

1. Making Small Payments During College

Although most student loans don’t need to be repaid until after your child graduates, making small monthly payments — even as little as $25 a month — while your child is still in college may lower their debt by a few thousand dollars.

2. Making an Occasional Loan Payment as a Gift

When holidays and birthdays come around, instead of buying your child tickets to a concert or the shoes they’ve been coveting, consider making an extra payment on their student loan.

You can ask grandparents and aunts and uncles to do the same, if they are so inclined or have no idea what to give your child for their birthday or the holidays.

Any extra payments beyond the minimum monthly payment should be applied to the student loan principal, not to their next monthly payment. By applying the payment to the loan’s principal balance, borrowers may be able to save on interest payments in the long run. Most loan providers will allow you to make extra principal-only payments.

3. Paying Off Private Loans First

If your child has a mix of private and federal loans, you could offer to pay off the private loans while they continue to make monthly payments on their federal loans. Since private loans typically have higher interest rates, paying those loans off first might go a long way to helping your child pay back their loans quicker.

Not sure what your child’s monthly student loan payments will be? You can use our student loan calculator to estimate how much they could be paying each month. You can then decide if you want to give them money each month to go toward their payments, which in turn can help them pay off their student loans faster.

Furthermore, your child’s federal loans come with certain federal benefits such as income-driven repayment, deferment, forbearance, and access to certain loan forgiveness programs. Private loans don’t enjoy those same federal benefits, which may be another argument for paying off private loans first.

Recommended: Student Loan Consolidation Rates

4. Helping with Other Expenses

If paying off your child’s student loans is too expensive, consider helping them with some of their other monthly expenses that aren’t as steep. Perhaps pay an unexpected medical bill for them, offer to buy a week’s worth of groceries, or maybe surprise them with dinner and a movie once a month.

5. Considering a Parent PLUS Loan

If your child is still in school and you want to help them with tuition, you may want to consider a Parent PLUS Loan, which is a federal student loan that is available to the parents of a dependent undergraduate student. The interest rate is 8.94% for a Parent PLUS Loan disbursed between July 1, 2025, and before July 1, 2026.

While credit scores aren’t considered when determining eligibility for federal student loans, parents cannot typically qualify for these loans with “adverse credit history.”


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

6. Applying for a Private Parent Loan

If you don’t qualify for a federal loan for parents, you may want to consider taking out a private loan to help fund your child’s education. Keep in mind that you will be the only borrower. This is very different from having your child named as the borrower, and you named as the cosigner.

Parents who take out loans need to be careful they aren’t taking on more debt than they can pay back in their lifetime.

7. Refinancing the Student Loans

If you have a Federal Parent PLUS Loan, you might be able to save money and simplify your payments by refinancing your Parent PLUS Loan.

You could also help your child refinance their student loans by cosigning, which may secure a lower interest rate and save them money over the life of the loan if you qualify. (This is usually true provided you do not extend the loan term.) Borrowers should keep in mind that refinancing their federal loans will disqualify them from all federal benefits, including income-based repayment and potential forgiveness.

The Takeaway

While parents can help ease their child’s financial burden — whether by making payments, cosigning private loans, or refinancing — it’s essential to consider both tax implications and long-term impacts. Paying off a child’s student loans may trigger gift tax filings if amounts exceed annual limits, and tapping into retirement savings or home equity can jeopardize your financial security.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


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

FAQ

Can I pay off my child’s student loans?

Yes, you can pay off your child’s student loans, whether federal or private. Payments can be made directly to the loan servicer, either as a lump sum or regular contributions. However, the loan legally remains your child’s responsibility unless you refinance or take out a parent-specific loan.

Do I have to pay taxes if my parents pay off my student loans?

No, you will not have to pay taxes if your parents pay off your student loans, but your parents may, since it’s considered a gift. If the amount exceeds the annual gift tax exclusion ($19,000 per parent in 2025), your parents may need to file a gift tax return, though most won’t owe additional taxes.

Is there a downside to paying off student loans early?

It’s generally considered wise to pay off your student loans early if you can, as it can save thousands in interest over the years. However, paying off student loans early may reduce cash flow for other financial goals. You could miss out on higher investment returns, lose access to potential loan forgiveness programs, or limit your emergency savings by committing too much money to debt repayment.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance 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.

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

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Sep
06
2025
Understanding a Student Loan Statement: What It Is & How to Read It

Understanding a Student Loan Statement: What It Is & How to Read It

By | Going to College, Student Loans, student_loan | Comments Off on Understanding a Student Loan Statement: What It Is & How to Read It

Your student loan statement gives you all the important information about your student loan. If you took out one or more student loans to help pay for college, knowing how to read your student loan statements can help you manage your student debt and repayment.

Key Points

•   Your student loan statement provides a detailed breakdown of your loan balance, payment due, and due date, helping you stay on top of your financial obligations.

•   The statement includes information on the interest rate, the amount of interest accrued, and the principal balance.

•   It’s important to check for any late fees or penalties that may have been added to your account, as these can increase the total amount you owe.

•   The statement may also show your payment history, including past due dates and amounts paid, which can help you track your progress and identify any missed payments.

•   If you have multiple loans, your statement will typically consolidate the information for all of them, making it easier to manage and understand your total student loan debt.

What Are Student Loan Statements?

Student loan statements are detailed summaries of your student loan. They provide information such as the last payment received, the current amount due, and where to send payments.

You’ll typically receive your student loan statement from your loan servicer three weeks before payment is due each month. If you have multiple student loans with more than one servicer, you’ll receive a student loan statement from each servicer every month.

Why Is It Important to Know How Much You Owe?

Keeping track of any student debt is essential. You’re responsible for your student loan debt and making monthly payments on time until it’s paid off. Even missing one payment could cause you to fall behind.

A missed or late payment on your student loan debt could also hurt your credit. Your payment history makes up 35% of your FICO® credit score, so having late payments in your recent credit history could make it more difficult to be approved for credit cards or other loans.

Missed student loan payments may also incur late fees. Private lenders have their own rules when it comes to late fees and consequences, but they may start adding late fees after a grace period. Private student loans usually go into default as soon as you miss three monthly payments, but some go into default after one missed payment.

If you default on a federal student loan — typically after 270 days of missed payments — the government can recover the debt by garnishing your wages, withholding your tax refund, or seizing other federal payments.

Take control of your student loans.
Ditch student loan debt for good.

Where Do I Find My Student Loan Statement?

Your student loan statement will typically come by mail from your student loan servicer, unless you’ve opted to receive statements online. Borrowers are generally expected to make required loan payments when due.

If you haven’t received any student loan statements or if you’re not sure, there are ways to find your student loan balance, such as requesting and reading your credit report.

Private Student Loans

If you have private student loans, you can contact your lender directly and ask them how to get your student loan statements. You can also try contacting your school’s financial aid office for information about your private student loan and the company that originated your loan.

Another option is to get a free credit report from each of the three credit bureaus, Equifax®, Experian®, and TransUnion®. This may give you basic information on any active student loan accounts you have opened in your name.

Recommended: How Much Do I Owe in Student Loans?

Federal Student Loans

If you have federal student loans, there are a few ways to find your student loan statement. One way is to go to StudentAid.gov and log in with your Federal Student Aid (FSA) ID. You can find your student loan balances, loan servicers, and interest rates on the site.

As with private student loans, you can also contact your school’s financial aid office for more information on your federal student loans.

Recommended: FAFSA Guide

Student Loan Statements

Not all student loan statements look the same, but they generally provide the same key details about your student loan. Knowing how to read your student loan statement is an important step in helping you manage your student loan debt.

Payment Summary

The payment summary shows the current amount due if payment is made by the due date. If you have other amounts due in addition to the current payment, like fees or a past due amount, those will also be shown in the payment summary.

Monthly Payment

The monthly payment will tell you what you are expected to pay, which includes the principal and interest, by the due date. The student loan principal is the amount you borrowed, and the interest is what you’re paying to borrow the money.

Your required payment will be the same each month for the life of your loan unless you’ve chosen a variable rate for a private student loan or you’re enrolled in a federal income-driven repayment (IDR) plan.

Recommended: Smart Strategies to Lower Your Student Loan Payments

Amortization Schedule

Your student loan repayment follows a student loan amortization schedule. Amortization is the process of paying back an installment loan through regular payments. When a student loan is amortized, it means that your monthly payment is divided into principal and interest payments.

Current Balance

Your current balance is what you owe on the date of the student loan statement. This is the total amount, including principal, interest, and any fees.

Original Balance

Your original balance is the amount that you borrowed before you made any payments toward your student loan.

Interest Rate

The interest rate on your student loan is how much you pay to borrow the funds. Federal loans issued since July 2006 have fixed interest rates, meaning they don’t change over the life of the loan.

The fixed rate for federal student loans depends on the type of loan. Federal student loans for graduate or professional school typically charge higher rates than federal loans for undergraduate study.

Private lenders determine rates for borrowers based on their creditworthiness. They offer undergraduate loans and graduate student loan options.

Recommended: What’s the Average Student Loan Interest Rate?

Managing Your Student Loans

After you know your lender or loan servicer, you can easily manage your student loans. Student loan management may be different depending on whether you have a federal student loan or a student loan from a private lender.

Federal student loans allow you to select a repayment plan. Repayment plans are typically divided into traditional plans and IDR plans. This allows you a choice: quickly paying off student loan debt to minimize interest charges or lower monthly payments for greater affordability.

You can also consolidate your federal student loans or refinance federal and private student loans, resulting in one monthly payment. You may pay more interest over the life of the loan if you refinance with an extended term.

Keep in mind, though, that if you refinance federal student loans, you’ll lose federal benefits such as income-driven repayment and federal forgiveness programs.

Recommended: Should You Refinance Your Student Loans?

Should You Refinance or Consolidate to Simplify Repayment?

Combining multiple student loans into a single loan with one monthly bill can simplify your student loan repayment. However, the choice to consolidate student loans vs. refinance depends on your personal situation and your end game.

Federal student loan consolidation combines multiple federal loans into a single loan through the U.S. Department of Education. Federal consolidation generally won’t lower your total interest costs but can lower your monthly payments by extending the repayment period. (A longer repayment period means more total interest paid over the life of the loan.)

Private lenders offer student loan refinancing — including both federal and private student loans — which means paying off your current loans with one new private student loan, ideally with a lower interest rate.



💡 Quick Tip: When rates are low, refinancing student loans could make a lot of sense. How much could you save? Find out using our student loan refi calculator.

The Takeaway

Understanding how to read your student loan statement is an important step in managing your finances effectively. By familiarizing yourself with the key details such as your loan balance, interest rate, and payment history, you can ensure that you stay on track with your repayment plan and avoid any unexpected fees or penalties.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


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

FAQ

What is a student loan statement?

A student loan statement gives you a detailed breakdown of your loan, including the last payment received, the current amount due, and where to send your payments.

How do I get to my student loan statement?

Federal student loan borrowers can get their student loan statements from their loan servicer. If you don’t know who your loan servicer is, visit your Federal Student Aid account dashboard. Private student loan borrowers can contact their lender directly to ask for student loan statements. If you’re unsure who your lender is, you can get a free credit report from each of the three credit reporting agencies or contact your school’s financial aid office.

How do I read student loan statements?

Not all student loan statements look the same, but they generally provide the same information. Your student loan statement should give you a payment summary and tell you your monthly payment amount, due date, current and original balance, and interest rate.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance 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.

Photo credit: iStock/Ridofranz
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06
2025
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Can You Remove Student Loans from Your Credit Report?

By | Credit, personal_loan, Student Loans, student_loan | No Comments

Paying student loans on time can have a positive effect on your credit score and help build a good credit history. On the flip side, when you have a late or missed student loan payment, that can be reflected on your credit report as well.

If you’re wondering how to remove student loans from a credit report, the answer is that it’s only an option if there’s inaccurate information on the report. Student loans are eventually removed from a credit report, however, after they’re paid off or seven years after they’ve been in default.

Here’s what to know about student loans on a credit report, what happens when you default on a loan, and how to remove student loans from a credit report if there’s inaccurate information.

Key Points

•   Accurate student loan information is crucial for credit reports; incorrect details can be disputed to ensure accuracy.

•   Defaulted student loans appear on credit reports for seven years from the original delinquency date.

•   Student loans paid in full can remain on credit reports for up to 10 years, potentially boosting credit scores.

•   Removing student loans from a credit report is only possible if the reported information is inaccurate.

•   Regularly reviewing credit reports allows individuals to verify that student loans are reported correctly.

What Is a Credit Report?

Before considering the impact of student loans on your credit report, it’s helpful to review what a credit report is. A credit report is a statement that includes details about your current and prior credit activity, such as your history of loan payments or the status of your credit card accounts.

These statements are compiled by credit reporting companies who collect financial data about you from a range of sources, such as lenders or credit card companies. Lenders use credit reports to make decisions about whether to offer you a loan or what interest rate they will give you. Other companies use credit reports to make decisions about you as well – for example, when you rent an apartment, secure an insurance policy, or sign up for internet service.


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

Take control of your student loans.
Ditch student loan debt for good.

Defaulting on Student Loans

It’s also worth reviewing what happens when a student loan goes into default. One in 10 people in the United States has defaulted on a student loan, and 6.24% of total student loan debt is in default at any given time, according to the Education Data Initiative.

The point when a loan is considered to be in default depends on the type of student loan you have. For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan (FFEL) Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months).

For a loan made under the Federal Perkins Loan Program, the holder of the loan may declare the loan to be in default if you don’t make any scheduled payment by its due date. The consequences of defaulting on student loans can be severe, including:

•   The entire unpaid balance of your student loans, including interest, could be due in full immediately.

•   The government can garnish your wages by up to 15%, meaning your employer is required to withhold a portion of your pay and send it directly to your loan holder.

•   Your tax return and federal benefits payments may be withheld and applied to cover the costs of your defaulted loan.

•   You could lose eligibility for any further federal student aid.

And you don’t have to default on your student loans to experience the consequences of nonpayment. Even if your payment is only a day late, your loan can be considered delinquent and you can be charged a penalty fee.

How Long Do Student Loans Remain on a Credit Report?

If you are delinquent on your student loans or go into default, that activity is reported to the credit bureaus. It will remain on your credit report for up to seven years from the original delinquency date.

The good news is that the more time that passes since your missed payment, the less impact it has on your credit score.

The exception to this is a Federal Perkins Loan, which is a low-interest federal student loan for undergraduate and graduate students who have exceptional financial need. This type of loan will remain on your credit report until you pay it off in full or consolidate it.

On the other hand, if you made timely payments on your loan and paid it off in full, it may appear on your credit report for up to 10 years as evidence of your positive payment history and can boost your credit score.

Recommended: How Do Student Loans Affect Your Credit Score?

How Do I Dispute a Student Loan on My Credit Report?

It’s a good habit to periodically check your credit report. You can request a free report from each of the three major credit reporting agencies — Equifax®, Experian®, and TransUnion® — by visiting AnnualCreditReport.com. The bureaus are required by law to give you a free report every 12 months.

There are three reasons your student loan might have been wrongly placed in default and reported to the credit bureaus by mistake, including:

1. If You Are Still in School

If you believe your loan was wrongly placed in default and you are attending school, contact your school’s registrar and ask for a record of your school attendance. Then call your loan servicer to ask about your record regarding school attendance.

If they have the incorrect information on file, provide your loan servicer with your records and request that your student loans be accurately reported to the credit bureaus.

2. If You Were Approved for Deferment or Forbearance

If you believe your loan was wrongly placed in default, and you were approved for (and were supposed to be in) a deferment or forbearance, there is a chance your loan servicer’s files aren’t up to date. You can contact the loan servicer and ask them to confirm the start and end dates of any deferments or forbearances that were applied to your account.

If the loan servicer doesn’t have the correct dates, provide documentation with the correct information and ask that your student loans be accurately reported to the credit bureaus. Under the Fair Credit Reporting Act, a borrower may appeal the accuracy and validity of the information reported to the credit bureau and reflected on their credit report.

Recommended: Student Loan Deferment vs Forbearance: What’s the Difference?

3. Inaccurate Reporting of Payments

If your loan has been reported as delinquent or in default to the credit bureaus, but you believe your payments are current, you can request a statement from your loan servicer that shows all the payments made on your student loan account, which you can compare against your bank records.

If some of your payments are missing from the statement provided by your loan servicer, you can provide proof of payment and request that your account be accurately reported to the credit reporting agencies.

In all three cases, if you believe there is any type of error related to your student loan on your credit report, it’s best practice to also send a written copy of your dispute to the credit bureaus so they are aware that you have reported an error.

Recommended: How to Build Credit Over Time

Why Your Student Loans Should Stay on Your Credit Report

You generally can’t have negative but accurate information removed from your credit report. However, you can dispute the student loans on your credit report if they are being reported incorrectly.

On the bright side, if you’re paying your student loans on time each month, that looks good on your credit report. It shows lenders that you are responsible and likely to pay loans back diligently.


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

When You’re Having Problems Paying Your Student Loans

If you’re having difficulty making regular payments on your federal or private student loans, there are things you can do before the consequences of defaulting kick in.

As mentioned above, you can apply for student loan deferment or forbearance. It’s also a good idea to contact your loan servicer to discuss adjusting your repayment plans. Other options include:

Income-Driven Repayment

If you’re having trouble paying your federal student loans on time, you may be able to make your loans more affordable through a federal income-driven repayment plan. These plans cap your payments at a small percentage of your discretionary income and extend the repayment term to 20-25 years. Once the repayment period is up, any remaining balance is forgiven (though you may be subject to income taxes on the canceled amount).

Due to Trump’s One Big Beautiful Bill, many income-driven repayment plans are closing. Currently, you may still enroll in the Income-Based Repayment (IBR). And a new plan — the Repayment Assistance Plan (RAP) — will become the main option for new borrowers in mid 2026. RAP payments will be based on a percentage of your adjusted gross income (AGI).

Student Loan Refinancing

Refinancing your student loans may also be an option — if you extend your term length, you may qualify for a lower monthly payment. Note that while these options provide short-term relief, they generally will result in paying more over the life of the loan.

When you start making your payments by the due date each month, you may see that your student loans can become a more positive part of your credit report. Again, while these options provide short-term relief, they generally will result in paying more over the life of the loan.

The Takeaway

While you generally can’t remove student loans from a credit report unless there are errors, it isn’t a bad thing if you make payments on time, as that can help build your credit profile. If a loan is delinquent, it will be removed from your credit report after seven years, though you will still be responsible for paying back the loan.

If you’re having trouble making loan payments, there are ways to make repayment easier. Borrowers with federal student loans can look into forgiveness, an income-driven repayment plan, or a change to the loan’s terms.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


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

FAQ

Is it illegal to remove student loans from a credit report?

There’s no legal way to remove student loans from a credit report unless the information is incorrect. If you think there’s an error on your credit report, you can contact your loan servicer with documentation and ask them to provide accurate information to the credit reporting agencies. It’s also a good idea to send a copy of the dispute to the credit bureaus as well.

How do I get a student loan removed from my credit report?

If you paid your student loan off in full, it may still appear on your credit report for up to 10 years as evidence of your positive payment history. It takes seven years to have a defaulted student loan removed from a credit report. Keep in mind you are still responsible for paying off the defaulted loan, and you won’t be able to secure another type of federal loan until you do.

How can I get rid of student loans legally?

If you have federal student loans, options such as federal forgiveness programs or income-driven repayment plans can help decrease the amount of your student loan that you need to pay back. If you have private or federal student loans, refinancing can help lower monthly payments by securing a lower interest rate and/or extending your loan term. If you refinance a federal loan, however, you will no longer have access to federal protections and benefits. And you may pay more interest over the life of the loan if you refinance with an extended term.


SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance 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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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