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The Fresh Start Program offers federal student loan borrowers who are in default a second chance at regaining federal aid benefits. This program allows defaulted borrowers to pull themselves out of the consequences of default, but borrowers must take action to enroll in the program by the impending deadline.

According to StudentAid.gov, more than six million borrowers are eligible for the Fresh Start student loan program. If you’re among the millions of borrowers who could benefit from what this temporary relief program can offer, here’s what to know and how to act on this limited-time opportunity.

Who Qualifies for the Fresh Start Program?

Federal student loan borrowers with qualifying loans are eligible to participate in the one-time Fresh Start program. Students loans that qualify include:

•   All defaulted William D. Ford Federal Direct Loans and Family Federal Education Loans (FFEL) that went into default before March 13, 2020.

•   Defaulted Perkins loans that are held by the Department of Education.

Defaulted loans that aren’t eligible for Fresh Start include Perkins loans that are held by schools, Health Education Assistance Loan (HEAL) Program loans, and Direct Loans and FFEL Loans that went into default after the COVID-19 payment pause ended. Loans that are pending litigation under the Department of Justice are also not eligible for the Fresh Start Program.

Do Private Student Loans Qualify?

Since the Fresh Start student loan program is a federal initiative, it’s only accessible to borrowers who’ve defaulted on the qualifying federal student loans mentioned above. If you have a private student loan that’s in default, it is ineligible for this government program.

It’s important to speak to your lender as soon as possible if you can’t make your loan payment. Lenders might send a defaulted private student loan to collections to get payment, and report the default to credit bureaus which harms your credit history and score.

Benefits Available Through the Fresh Start Program

If your defaulted federal student loans qualify for the Fresh Start initiative, enrolling in the program can unlock crucial benefits that are typically inaccessible with a defaulted loan status. Here’s how the Fresh Start program for student loans can help you:

•   Re-access federal student loans and grants. By lifting your loan out of default through the Fresh Start program, you’ll regain eligibility for federal student loans and grants.

•   Enroll in an income-driven repayment (IDR) plan. Fresh Starts lets you enroll in an IDR which you weren’t eligible for with a defaulted loan. This includes the newest Saving on a Valuable Education (SAVE) Plan which, according to the Department of Education, lowered monthly payments for 50% of SAVE Plan participants to $0.

•   Requalifies you for loan forgiveness. Loans in default don’t qualify for loan forgiveness, so Fresh Start can help you regain student loan forgiveness eligibility for that debt.

•   Erases the default from your credit history. Fresh Start changes the loan’s status from “default” to “current” on your credit report. This essential change not only has a positive impact on your finances, like qualifying for lower rates on new credit accounts, but also in your everyday life, like for a rental application.

•   Dodges wage garnishment actions. Some borrowers with defaulted federal loans might have up to 15% of their wages garnished as a way for the government to collect the unpaid debt. Under Fresh Start, the wage garnishment practice for qualifying defaulted loans is avoided.

•   Avoids withholding other federal benefit payments. Benefit payments from federal sources, like Social Security and tax refunds, can be automatically withheld and applied to the defaulted loan balance. By getting your loan out of default through Fresh Start, you can avoid this outcome.

Applying for the Fresh Start Program

The student loan Fresh Start application is straightforward, and enrollment only takes a few minutes. For defaulted federal student loans that are held by a guaranty agency, you must contact the agency that holds your loans to enroll in Fresh Start. If you’re unsure which agency oversees your defaulted loan, call the Debt Resolution Group at 1 (800) 621-3115.

For defaulted loans that are held by the Department of Education, there are three ways to enroll:

•   Online. Create a myeddebt.ed.gov account if you don’t already have one; otherwise, log into your myeddebt.ed.gov account. Under the Account Information page, find the Fresh Start Transfer Information section and click on the link to “enroll.”

•   Phone. Call 1 (800) 621-3115 to speak to a representative with the Debt Resolution Group. When you’re asked for the reason for your call, say that you’d like to “get out of default through Fresh Start” or similar wording. You can also express your interest in enrolling in an IDR plan while making this phone call.

•   Mail. Mail a request letter with your name, Social Security number, date of birth, mailing address, and the following language: “I would like to use Fresh Start to bring my loans back into good standing.” All letters must be postmarked before October 1, 2024 and mailed to: PO Box 5609, Greenville, TX 75403.

Does the Fresh Start Program Have a Deadline?

Generally, the main Fresh Start eligibility criteria is ensuring the federal loan that’s in default qualifies for the program. A vital part of participating in the program is requesting enrollment into Fresh Start by the September 30, 2024 deadline.

After this date, the program is closed to enrollment, and currently, there are no announced plans to extend the deadline. Don’t miss out on this one-time opportunity to get your federal student loans back into good standing.

Next Steps After the Fresh Start Program

When your loan is successfully out of the default standing, it’s assigned to a new loan servicer. The loan’s status will show on your account as “in repayment,” and the Department of Education will request the removal of the loan’s default record from your credit report.

Your new loan servicer will contact you once your loan is successfully transferred. Shortly afterward — typically within a week — you can then apply for an income-driven repayment plan to help make your payments more manageable.

The Takeaway

Fresh Start offers easy and fast relief from federal student loan default. If you have qualifying Direct or FFEL Program loans, this temporary program not only helps you get a defaulted federal loan back into good standing and re-access certain federal programs, it can improve other areas of your life and finances by removing the adverse default status from your credit record.

But with the upcoming September 30, 2024 deadline to enroll, you must act quickly to recover the benefits you lost as a result of default.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What is the deadline for the Fresh Start program?

Enrollment into the Fresh Start Program ends on September 30, 2024. Currently, the program will be inaccessible to student loan borrowers with defaulted loans after this date. Keep in mind that defaulted loans aren’t automatically enrolled in Fresh Start. If you have a qualifying student loan that’s in default, you must take action to request enrollment into the program.

Where can I find more information about the Fresh Start program?

Visit StudentAid.gov for more information and resources about the Fresh Start program. You can also contact your loan servicer to speak to a representative about your eligibility and enrollment into the initiative.

Can I still participate if I have multiple student loans?

Yes, if you have other federal student loans that are not in default, you can still participate in the Fresh Start student loan program for your qualifying defaulted student loans.

Photo credit: iStock/GaudiLab

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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

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

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

SOSL-Q224-1926145-V1

ROTC, short for Reserve Officers’ Training Corps, offers college scholarships to students who commit to serving in the U.S. Armed Forces after graduation. ROTC college scholarships can cover significant college costs, including tuition and other fees. While in college, you get to experience campus life just like any other student; however, once you graduate, you step into a role in the U.S. Armed Forces.

Keep reading to learn about ROTC eligibility requirements, service commitments, and how to apply.

What Are ROTC College Scholarships?

Back in 1916, Congress passed the National Defense Act to strengthen the military reserve and National Guard. This led to the creation of ROTC scholarships, encouraging more students to join and introducing many young people to military opportunities.

Today, the ROTC program stands as a unique educational path, blending military science courses with your regular college classes and preparing students to become officers of the U.S. military post-graduation: Army, Navy, or Air Force. Scholarships through ROTC can cover college costs like room and board, fees, and tuition, but they aren’t guaranteed upon joining. Like other scholarships, they’re competitive and require students to earn them.

If you get an ROTC college scholarship, you’re committing to serve in the military after college — for at least three to 10 years, depending on the program. Some candidates might even have the chance to serve part-time in the U.S. Army Reserve or Army National Guard while kick-starting their civilian careers.

Recommended: What Types of Scholarships Are There?

How Much Does ROTC Pay for College?

ROTC offers scholarships lasting two to four years, depending on your remaining time until graduation. Eligible students can receive up to full coverage for tuition, room and board, and fees.

Types of ROTC Scholarships

Here’s a breakdown of the scholarship options and the qualifications you need to meet.

Army ROTC Scholarships

The Army ROTC Scholarship program offers financial support for students who want to become US Army, Army Reserve, or Army National Guard officers after earning their bachelor’s degree. Scholarships are available for two, three, or four years, depending on how much time you have left in school.

These scholarships cover full tuition and provide additional financial support. You’ll receive up to $420 monthly during the school year to help with living expenses and $1,200 annually for books.

You’re not required to commit to serving as an Army Officer until your junior year. When you sign a contract, you can serve part-time in the Reserves for eight years or full-time in active duty for three or four years, depending on whether you had an ROTC scholarship.

Army ROTC also offers a nursing program for candidates considering a nursing degree.

Navy and Marine Corps Scholarships

The Navy ROTC college scholarship program is designed to help you become a strong leader and successful Navy or Marine Corps officer. With this program, you’ll have the chance to participate in three summer training cruises with Navy surface ships, aviation squadrons, and submarines. You can use your scholarship money to cover tuition and fees or room and board, and you’ll receive a monthly stipend starting at $250, which increases each year.

The program also lets you explore a variety of career paths, including nursing, aviation, surface warfare, submarine warfare, and special warfare, all while enjoying a traditional college experience.

For those on a Navy ROTC scholarship, the service obligations are pretty straightforward. Navy midshipmen must serve at least five years of active duty, with additional requirements for certain roles. The Marine Corps and Navy Nurse Corps must serve at least four years on active duty.

Air Force ROTC Scholarships

The Air Force ROTC program can cover full college tuition and authorized fees at any qualifying institution, setting you up to become a U.S. Air Force or Space Force leader. Depending on your scholarship, you may also receive a monthly stipend for living expenses and a $900 annual book stipend. The monthly stipend increases yearly: $300 for first-year students, $350 for sophomores, $450 for juniors, and $500 for seniors.

If you’re a high school scholarship recipient, your travel expenses from home to college are covered, with reimbursement typically arriving about 30 days after school starts. However, the scholarship doesn’t cover room and board.

After completing the Air Force ROTC program and earning your degree, you’ll be commissioned as a second lieutenant in the Air Force or Space Force. Service commitments vary by career — most officers serve four years, pilots serve 10, and Combat System Officers and Air Battle Managers serve six years.

JROTC Scholarships

If you’re interested in starting a military career early, consider joining the Junior Reserve Officers’ Training Corps (JROTC) while still in high school. Eligible cadets can begin earning school-specific scholarships as early as 9th grade.

Some schools offer up to $6,000 per year for JROTC participants, with additional funds of up to $3,375 annually for cadets in leadership roles. It’s a great way to kick-start your path toward a military education and leadership experience.

Many cadets may use the JROTC program as a springboard to qualifying for the ROTC scholarship. However, it’s not a requirement.

Eligibility Requirements and Service Commitment

To qualify for an ROTC college scholarship, you need to:

•   Be a U.S. citizen

•   Be at least 17 years old

•   Have a high school diploma or equivalent

Each ROTC program has specific qualifications, requirements, and service commitments. Here’s an overview of what each scholarship program requires.

How to Apply for ROTC

Once you confirm your eligibility, you can begin the application process with a few straightforward steps:

•   Create an account to get started with your application.

•   Complete the online application.

•   Submit required materials and documentation such as your work history, extracurricular activities or achievements, planned college major, and a few scholarship application essays.

If you receive a scholarship, you might have to undergo a medical exam and meet ROTC physical standards.

For all the details and to ensure you’ve got everything you need, it’s best to visit the official websites of the Army ROTC , Air Force ROTC , and Navy ROTC programs . That’s also where you’ll find the online application process.

Pros of ROTC

Here are some of the benefits of qualifying for an ROTC scholarship and completing the program.

•   Leadership Development: As an ROTC cadet, you’ll learn essential leadership skills, such as setting examples, counseling, strategizing, and motivating others. These leadership skills are valuable in many career paths, including corporate management roles.

•   Military Training: ROTC gives you hands-on training in leadership, military skills, and exciting activities. You’ll learn in classrooms and out in the field while managing your college life.

•   Financial Aid: Whether you’re getting ready for college or already there, ROTC scholarships provide financial help. This support lets you pursue your education and career goals without taking on a lot of student debt.

Cons of ROTC

Here are some drawbacks worth considering before you apply for an ROTC program.

•   Scholarship Commitment: When you accept an ROTC scholarship, you’re committing to serve in the Armed Forces for several years after graduation. If you can’t fulfill this commitment, you might have to repay the scholarship funds you received, which could put a strain on your finances.

•   Service Obligation: ROTC prepares you to become an officer in the Armed Forces, so you’ll have a service commitment of four to 10 years, depending on your scholarship. This could affect your plans after college and limit your flexibility in choosing career paths.

•   Extra Academic Requirements: In addition to regular classes, ROTC programs often include extra coursework, labs, and leadership training. These can be demanding and require good time management to balance your studies and personal life.

Alternative Options

If you don’t qualify for an ROTC scholarship, there are other options available.

GI Bill

The GI Bill provides educational perks for military members, veterans, and their families. Eligible individuals can receive financial support covering college tuition, fees, housing, books, supplies, and relocation costs for rural residents.

To find out the benefits you may qualify for, you can use the GI Bill Comparison Tool from the U.S. Department of Veterans Affairs. It helps you estimate what you qualify for based on your military background, the type of school you plan to attend, and whether you’ll be studying in-person or online. It’s a helpful resource for understanding the range of support available to you.

Student Loans

The U.S. Department of Education administers the Federal Direct Loan Program, offering various student loan options. For undergraduates, subsidized loans are based on financial need, with the Department covering interest during school and certain periods afterward. Unsubsidized loans are also available, where interest accrues from the beginning.

If federal loans don’t cover your needs, look into private student loans from banks, credit unions, or online lenders. These loans aren’t need-based and may require a credit check or cosigner. Compare rates and terms carefully before deciding.

Recommended: Guide to Military Student Loan Forgiveness

Out-of Pocket

If you’ve been saving for college, now’s the time to make those savings count. You might have a 529 savings plan in your name, which is a special account designed for college expenses and comes with tax benefits. When you contribute money to this plan, it gets invested, and you can withdraw it later without paying taxes as long as it’s used for education-related costs. It’s a smart way to make your college savings work for you.

The Takeaway

Qualifying for an ROTC Scholarship can help with college costs, tuition, and more. Just keep in mind that it also means you’re signing up for military service after college, which could be three to 10 years, depending on which program you choose. It’s a significant commitment, but it comes with valuable leadership training and sets you up for a career as a military officer.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Can I join ROTC after starting college?

Yes, undergraduate students with at least three years remaining in their studies can typically join the ROTC program. This includes second-semester freshmen, sophomores, and other eligible students.

What GPA is required for an ROTC college scholarship?

High school students need at least a 2.5 GPA for Army ROTC, 2.75 for Navy ROTC, and 3.0 for Air Force ROTC scholarships.

How many years of service are required after ROTC?

The service requirements depend on the ROTC program you join, usually ranging from three to 10 years.

Photo credit: iStock/SDI Productions

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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

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

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

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One of the most popular benefits the U.S. military offers is the GI Bill, which helps current and former service members pay for college or vocational school.

This federal benefit can help veterans transition to civilian life and achieve their educational and career goals. But because a veteran’s eligibility for education assistance can vary based on when and how long they served, their branch of service, and other factors, understanding and maximizing these generous benefits can be a challenge.

If you’ve been wondering how — and how much — the military pays for college, here’s a look at some GI Bill basics.

What Is the GI Bill?

The GI Bill, formally known as the Servicemen’s Readjustment Act of 1944, was signed into law by President Franklin D. Roosevelt at the end of World War II. The program was originally designed to offer various financial and social benefits to World War II veterans after they returned home. Those benefits included small business loans, mortgages, and education grants.

Today, the GI Bill specifically refers to any U.S. Department of Veterans Affairs (VA) education benefit offered to active-duty service members, veterans, and their families. The Post-9/11 GI Bill is the most frequently used VA education benefit program. Depending on how long you were in the military, it provides up to 100% of your tuition, money for housing, and a stipend for books and supplies.

Besides the GI Bill, serving in the military can give you access to other education-related benefits. As a service member on active duty, for example, you may qualify for certain perks or special repayment options for any federal or private student loans you’ve already taken out.

Types of GI Bills

Since it was enacted in 1944, the GI Bill has been extended — and expanded — several times. As a result, there are multiple parts and programs that can be used to pay for college. Here’s a closer look.

Post-9/11 GI Bill

This current version of the GI Bill is designed to support the latest generation of service members and veterans. If you have served on active duty for at least 90 days since Sept. 10, 2001, you are likely eligible for Post-9/11 GI Bill benefits. This is the case if you’re still in the military, or if you have already separated with an honorable discharge.

The Post-9/11 GI Bill can help cover the cost of college or an advanced degree, technical training, on-the-job training, or licensing/certification. Eligible service members can also transfer unused education benefits to their spouse and children.

Recommended: What Are Student Loans for Military Dependents?

Montgomery GI Bill

The Montgomery GI Bill (MGIB) is an older GI Bill program that provides up to 36 months of education benefits to those who have served on active duty and meet the requirements.

The Active Duty Montgomery GI Bill (MGIB-AD) is for veterans and current members of the military who have served at least two years on active duty. It provides a monthly benefit payment to use for education and training costs.

The Selected Reserve and Guard Montgomery GI Bill (MGIB-SR) provides educational assistance to eligible members of the Selected Reserve, including National Guard members. Similar to the MGIB-AD, the MGIB-SR provides a monthly payment based on the type of education or training a recipient is getting.

Recommended: What Is a Trade School and Is It Right for You?

Other GI Bill Programs

The GI Bill also includes other education programs available to service members both during and after service, as well as their families. These include:

Veterans Readiness and Employment (VR&E)

If you have a disability connected to your military service that limits your ability to work or prevents you from working, the VR&E program can help. This GI Bill program can help you explore employment options and get the education or job training you might need to work. In some cases, your family members may also qualify for certain benefits.

Survivors’ and Dependents’ Educational Assistance (DEA)

The DEA program is for eligible spouses and children of veterans who were disabled, died, went missing in action (MIA), or were held as a prisoner of war (POW) during their service. It provides monthly payment to help cover the cost of education or job training for these family members.

Recommended: Guide to Military Student Loan Forgiveness

GI Bill Eligibility for Veterans

GI Bill veterans’ benefits are generally based on when you served, how long you served on active duty, and other factors. You also have to have been honorably discharged.

Though you may qualify for more than one type of GI Bill educational benefit, you can generally use only one benefit for a period of service; so you may have to decide which one is the best fit for your needs. (You can call the VA at 888-442-4551 if you need help making a choice.) Here are the eligibility requirements for different GI Bill programs.

Post-9/11 GI Bill Eligibility

If you served in the military after Sept. 10, 2001, you may be eligible for Post-9/11 GI Bill benefits. The amount you receive (which could range from 50% to 100% of the full benefit) will be based on how long you served on active duty and other criteria.

To be eligible for Post-9/11 GI Bill Benefits, you must meet one of these qualifications:

•   You have served at least 30 days of continuous active-duty service after Sept. 10, 2001, and have been discharged due to a service-connected disability. Or:

•   You have served an aggregate of 90 days of active-duty or federal service after Sept. 10, 2001, and received an honorable discharge.

Recommended: Finding Free Money for College

Montgomery GI Bill Eligibility

You may be eligible for the MGIB-AD if you:

•   Served between two and four years after June 30, 1985.

•   Have a high school diploma, GED, or 12 hours of college credit.

•   Had your military pay reduced by $100 a month for the first 12 months of service.

You can find a full list of eligibility criteria here.

You may be eligible for MGIB-SR benefits if you:

•   Agreed to serve for a period after June 30, 1985 (or for some types of training, after Sept. 30, 1990)

And either:

•   Agreed to serve six years in the Selected Reserve, or:

•   You’re an officer in the Selected Reserve and you agreed to serve six years in addition to your initial service obligation.

You can find a full list of eligibility requirements here.

Benefits Provided

Here’s a breakdown of the benefits offered by the Post-9/11 GI Bill.

Tuition/Fee Coverage

If you’re a veteran who qualifies for full benefits and you attend a public school as a state resident, the Post-9/11 GI Bill will pay all of your tuition and any mandatory fees directly to your school. You also may be eligible to receive the in-state tuition rate for an out-of-state school.

If you choose to attend a private or foreign institution of higher learning, or a qualifying non-college degree program, a predetermined maximum amount (currently up to $27,120.05) will be paid to your school annually. Benefits for flight training and virtual/online schools, which have their own maximums, also may be available.

Monthly Housing Allowance

The Post-9/11 GI Bill also pays a monthly college housing allowance. The program will pay you a percentage of the full monthly housing allowance based on the percentage of Post-9/11 GI Bill benefits you’re eligible for, as well as how many credits you’re taking.

If you are taking 100% of your classes online, you may be eligible for a monthly stipend equal to half of the national average stipend, which is currently $967.40.

Book and Supplies

Under the Post-9/11 GI Bill, you may be able to receive an annual stipend of up to $1,000 per year to pay for books and supplies. This stipend is paid out at the beginning of each term and is based on the percentage of benefits you’re eligible for and the number of courses you’re enrolled in for the year.

Recommended: How to Pay for College Textbooks

Applying for GI Bill Benefits

If you’re a veteran and interested in getting the military to pay for college, you’ll need to apply for GI Bill benefits. Here’s a look at what’s involved.

Required Documents

Some of the information you’ll be asked for when you apply may include:

•   Your Social Security number

•   Direct deposit bank account information

•   Education history

•   Military history

•   Basic information about the educational institution or training facility you want to attend

Application Process

You can apply for benefits online at the VA’s website. Alternatively, you can apply by mail. Simply call 888-442-4551 to request an application. Once you receive the application and fill it out, you can send it to the VA regional processing office that’s right for you (you can use this online VA locator). You can also apply by visiting your nearest VA regional office.

It takes the VA an average of 30 days to process an application. If the VA determines you are eligible for educational benefits, you’ll receive a Certificate of Eligibility (COE) that you can provide to the school you’ve chosen.

Military Tuition Assistance

The U.S. Department of Defense (DOD) also offers education benefits to current active-duty, National Guard, and Reserve Component service members who wish to pursue post-secondary education in their off-duty time. This is one of the many ways you can save money while serving in the military.

Called the Military Tuition Assistance program, it will pay up to 100% of tuition and course-specific fees, with a limit of $250 per semester credit hour and an annual limit up to $4,500. Degrees and programs of study covered include undergraduate and graduate programs, vocational/technical, distance learning, and independent studies. (Housing, books, and other expenses aren’t covered.) Details are available through each service branch’s website.

State Benefits for Veterans

Many states offer education benefits that veterans can use along with, or as an alternative to, their federal GI Bill benefits. To find out about these benefits — which may include tuition waivers, scholarships, grants, and other programs — you can visit the Department of Veterans Affairs or Department of Education website for your state. Your military branch also may have information about the various benefits available in your state.

Local and regional veterans service organizations also offer scholarship opportunities to qualified candidates. And your employer may provide help with tuition or student loan repayment as part of their veteran financial well-being programs.

The Takeaway

If you’re hoping to further your education when your military service is complete, the GI Bill can help you pay for college, graduate school, and a variety of training and certification programs. Depending on when you served, how long you served, and some other factors, you may receive help paying for a large portion of your education expenses, including tuition and fees, education-related supplies, and housing costs.

Beyond the GI Bill, you also may qualify to receive assistance through state resources, local and regional organizations, your employer, and federal 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.

FAQ

Can the GI Bill be transferred to dependents?

If you meet certain service requirements, you may be able to transfer your Post-9/11 GI Bill benefits to an eligible dependent. You can apply for a Transfer of Education Benefits (TEB) through the Department of Defense.

Do GI Bill education benefits expire for veterans?

It depends. If you were discharged from active duty on or after Jan. 1, 2013, your benefits won’t ever expire. But if you were discharged before Jan. 1, 2013, your Post-9/11 GI Bill benefits will expire 15 years after you separate from the military.

Montgomery GI Bill benefits must be used within 10 years after your separation date. After that, you could lose any benefits you haven’t used, although the Department of Veteran Affairs (VA) may grant an extension under certain circumstances.

What education benefits can I get if I’m still in the military?

If you’re still serving in the military, you may be eligible for education benefits through the GI Bill, the Department of Defense’s Military Tuition Assistance, and other programs. You can get information at the Department of Veteran Affairs (VA) website or through your military branch.

Photo credit: iStock/Drazen Zigic

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi 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.

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

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

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Private student loans can be discharged in bankruptcy (meaning you are released from your debt obligation), but the process is notoriously difficult. Not only does the bankruptcy filing require an additional step called an adversary proceeding, but you’ll also need to prove your student loans cause undue hardship by passing certain tests. The process can also be expensive and damage your credit for years to come.

However, successful applicants may see their private student loan debt discharged or temporarily restructured with more affordable payments. Read on for a closer look at bankruptcy and private student loans so you have a clear understanding of your options.

Private vs Federal Student Loans

Student loans can help pay for the cost of higher education. According to the Education Data Initiative, the average cost of a year at college is currently $38,270, including books and daily living expenses.

A few points to note:

•   Private student loans come from private lenders, such as banks, credit unions, and online loan providers.

•   Federal student loans, on the other hand, are issued by the Department of Education, specifically its office of Federal Student Aid. Federal loans have some benefits and protections that private loans don’t have. These can include deferment and student loan forbearance (a temporary postponement or reduction of your student loan payments).

Student Loans and Bankruptcy

There are different paths for student loans to potentially be discharged in bankruptcy. In the past, federal student loan discharge through bankruptcy was even more difficult than private loan discharge. However, the Department of Justice announced changes to the process in November 2022 that simplified the process for federal loan borrowers.

Under the new rules, borrowers can complete a 15-page attestation form to show that their student loans cause undue hardship. The Department of Justice also introduced new guidelines for undue hardship to make them more fair and consistent for debtors.

Private student loans don’t qualify for this new process, but it’s still possible to include them in a bankruptcy proceeding. It may be best to consult a student loan lawyer who can help guide you through the process.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

Private Student Loans and Bankruptcy Laws

Private student loan discharge is available under section 523(a)(8) of the Bankruptcy Code — if the debtor can prove that their student loans cause undue hardship. While undue hardship has historically not been clearly defined, most courts use what’s known as the Brunner Test to make this determination (more on this below).

Whether or not student loans are discharged also depends on the type of bankruptcy you file for, meaning whether it’s Chapter 7 or Chapter 13.

•   Chapter 7 bankruptcy: Chapter 7 bankruptcy can discharge your debts after liquidating your assets. This type of bankruptcy stays on your credit report for 10 years.

•   Chapter 13 bankruptcy: Chapter 13 bankruptcy reorganizes your debts with a new repayment plan that spans three to five years. Some unsecured debts (such as credit card debt or personal loans) may be discharged at the end of the plan, but take note: You’ll still be responsible for your student loans — the remaining balance, plus interest. Collections will be paused during this time, but your loans will accrue interest. Chapter 13 bankruptcy stays on your credit report for seven years.

There are a few other circumstances where private student loans can be discharged, according to the Consumer Financial Protection Bureau. For instance, you may qualify for private student loan discharge if:

•   You borrowed more than your school’s cost of attendance.

•   You got loans for a school that wasn’t eligible for Title IV funding, such as an unaccredited college or trade certificate program.

•   Your loans were used to cover fees and living expenses while you studied for a professional exam, such as the bar exam.

•   Your loans were used to cover fees, living expenses, or moving costs while you were in medical or dental residency.

•   Your loans were made while you were attending school less than half-time.

If any of the above scenarios apply, you may be able to discharge your private student loans in bankruptcy without having to meet the more difficult standard of the Brunner Test.

Recommended: Student Loan Guide

Understanding the Bankruptcy Process

Your first step in declaring bankruptcy is filing for bankruptcy and paying the associated fees.

•   The initial filing fee for Chapter 7 bankruptcy (which focuses on unsecured debt, such as credit card debt and personal loans) is usually around $338.

•   The filing fee for Chapter 13 bankruptcy (which typically involves discharging unsecured debt while catching up on secured debt, such as a mortgage) is likely to be around $313.

In addition, attorney costs can vary and may add up to thousands of dollars. While this can be a steep expense, an experienced attorney or student loan lawyer can help you navigate the process, as well as help you determine which type of bankruptcy fits your financial circumstances.

What Is the Process of Getting Student Loans Discharged?

To get private student loans discharged through bankruptcy, you’ll need to take the extra step of filing an adversary proceeding. This is basically a lawsuit within the bankruptcy. Essentially, the adversary proceeding means that you’re suing your student loan lender or servicer. The fee to file an adversary proceeding is often around $350.

After filing this adversary proceeding and outlining your case, a judge will determine whether you qualify for private student loan discharge through bankruptcy.

What Is the Brunner Test?

Most courts use the Brunner Test to determine whether your student loans cause undue hardship. The Brunner Test has three main guidelines:

1.    Repaying your student loans would make it impossible for you to maintain a minimal standard of living.

2.    Your financial difficulties are likely to persist throughout a significant portion of your student loan repayment period.

3.    You’ve shown a good-faith effort to pay back your student loans in the past.

Some courts use an alternative test called the totality of circumstances test. With this test, the court considers your past, present, and future financial resources, along with your living expenses and other relevant circumstances. Basically, they look at your entire financial picture to determine whether your student loans cause undue hardship and would qualify for discharge through bankruptcy.

Recommended: Finding Student Loans and Scholarships

The Takeaway

Discharging private student loans through bankruptcy is difficult, but not impossible if you can prove they cause undue financial hardship in your life. Filing and qualifying for bankruptcy is complex, however, so you’ll likely need to hire an attorney to help you navigate the process. It’s also a last resort, as it can be expensive and can negatively impact your credit for years to come.

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.

FAQ

Can private student loans be discharged through bankruptcy?

Private student loans can be discharged through bankruptcy if you can prove they cause undue hardship. When filing for bankruptcy, you’ll have to take the extra step of filing an adversary proceeding, which is essentially an additional lawsuit against your student loan lender or servicing company.

Are private student loans treated differently in bankruptcy?

Private student loans are treated differently than other types of debt in bankruptcy. You’ll have to meet a higher standard to have them discharged, typically the Brunner Test or totality of circumstances test. Plus, student loans aren’t discharged at the end of a Chapter 13 repayment plan — you’ll still owe your remaining balance, plus interest.

What are the requirements to prove undue hardship?

The requirements to prove undue hardship vary, but you typically must show the following: repaying your student loans would prevent you from maintaining a minimal standard of living, your financial situation is likely to persist throughout your repayment period, and you’ve made a good-faith effort to pay back your student loans.

Photo credit: iStock/damircudic

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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The income needed for a $450,000 mortgage varies based on a few factors, but generally speaking, an income of $130,000 would put you in the position to afford a $450,000 mortgage. You can estimate how much you need to make by focusing on principal and interest. Together, these two factors account for a majority of a home’s monthly mortgage payment and reveal an approximate income you’ll want to bring in.

For a more accurate monthly payment estimate, you’ll need to know the home’s property taxes, home insurance costs, as well as which type of home loan you plan on using. Certain loans come with monthly fees that will increase your monthly housing costs.

If you’re thinking about borrowing $450,000 to buy a home, here’s what you need to know.

Income Needed for a $450,000 Mortgage

The income needed to qualify for a $450,000 mortgage varies on a few factors. However, the principal and interest (P&I) payment for a $450,000 mortgage would be $2,996 for a 30-year term with a 7.00% interest rate. For a 15-year term, the payment is $4,047. Keep in mind that these calculations do not include other fees that will increase how much you actually pay.

Many lenders want borrowers to stick to a 28% housing cost, meaning that they will not approve loans that take up more than 28% of the borrower’s gross monthly income. A mortgage calculator can do the math for you, but for a payment of $2,996 each month to equal 28% of your monthly income, you would need to earn about $10,800 per month, or about $130,000 per year. However, these calculations do not factor in other fees that contribute to your monthly mortgage payment.

To get a more accurate monthly payment, use a mortgage calculator with taxes and insurance included.

Recommended: First-Time Homebuyer Guide

How Much Do You Need to Make to Get a $450K Mortgage?

The income needed for a $450,000 mortgage varies based on:

•   Loan term

•   Interest rate

•   Property taxes

•   Home insurance

•   Loan-specific fees

However, the loan term and interest rate determine a majority of the costs for any monthly mortgage payment.

What Is a Good Debt-to-Income Ratio?

The maximum debt-to-income (DTI) ratio lenders often accept is 36%, with a maximum of 28% going toward housing costs. Some lenders have higher margins, and some are willing to work with borrowers who have unusually high incomes and amounts of debts.

What Determines How Much House You Can Afford?

The two biggest factors that determine how much house you can afford are your income and DTI ratio. Regardless of your debts, the mortgage payment cap is often 28% of the borrower’s gross income.

What Mortgage Lenders Look For

Mortgage lenders typically look for a low DTI ratio, a strong credit score, a history of stable employment, and a high income. All of these factors suggest you are not only responsible enough to take on a mortgage but are financially capable of repaying your debts.

$450,000 Mortgage Breakdown Examples

When determining a home’s affordability, compare loan terms. A 30-year loan may enable you to buy a more expensive home, but increases the amount you pay in interest. For example, if you borrow $450,000 with a 30-year mortgage at 7.00%, over the life of the loan you will pay about $628,208 in interest in addition to the $450,000 principal. Borrow the same amount at the same rate but pay it back over 15 years and your interest charges shrink to around $278,236.

Remember, the above calculations do not include property taxes, home insurance, and loan-specific fees.

Pros and Cons of a $450,000 Mortgage

A $450,000 mortgage loan comes with its share of pros and cons. Here are a few things to consider:

Pros:

•   You build equity with each monthly payment

•   Equity can be used to secure a low rate loan

•   Fixed housing costs

•   Freedom to make changes to the property

Cons:

•   Yearly home maintenance costs

•   Large down payment

•   Large closing costs

How Much Will You Need for a Down Payment?

The minimum down payment a buyer can make for a conventional loan is 3%, and this low rate is often only available to first-time buyers. Assuming your mortgage is for $450,000, this means the purchase price must be $463,918. A 3% down payment would be $13,918.

Can You Buy a $450K Home With No Money Down?

It’s possible to buy a $450,000 home with no money down using a loan from the U.S. Department of Agriculture or the U.S. Veterans Administration (a VA loan). All other traditional mortgages require a down payment. However, other options do exist.

Can You Buy a $450K Home With a Small Down Payment?

USDA and VA loans do not have down payment requirements. The lowest amount needed for a conventional loan for some buyers is 3% of the purchase price. FHA loans require a 3.5% down payment.

Is a $450K Mortgage with No Down Payment a Good Idea?

It certainly can be. For example, if you use a loan that doesn’t require a down payment, such as a USDA loan, you could use the money for something else. If you were to fix up the home and sell it after a few years, those renovations might bring in a good return on your investment.

Ultimately, however, it depends on the monthly payment. As long as you can comfortably afford the monthly payment, whether the mortgage requires a down payment or not doesn’t matter too much.

Can’t Afford a $450,000 Mortgage With No Down Payment?

You may want to consider lowering your maximum purchase price if you can’t afford the P&I payment.

If housing prices are high where you live, another thing you may want to consider is looking in another area. Consider looking at the cost of living by state with data that rates the most affordable states. You may find moving to a new location deserves some consideration.

You may also consider the following tips.

Pay Off Debt

Debts like student loans, credit cards, and car loans eat up your monthly income. As they are paid off, three things happen:

•   You free up cash

•   You lower your DTI ratio

•   You cultivate a better credit score

Once you do this, you may be approved for a higher loan amount or the monthly payment on a $450K mortgage will become more manageable.

Look into First-Time Homebuyer Programs

First-time homebuyer programs help homebuyers with down payments and closing costs. They often come in the form of grants, forgivable loans, or low interest loans. Many programs can be found through HUD and are first-come-first-served. Apply early if you’re interested.

Build Up Credit

The stronger your credit score, the more confidence lenders have in you. This will likely result in a lower rate, and may also result in a higher loan limit. However, your lender will still likely want you to stick to a 28% DTI for housing costs.

Start Budgeting

Create a monthly budget to intentionally track how much you spend and save. See if there are places where you can cut back to help save up for a larger down payment.

Alternatives to Conventional Mortgage Loans

There are alternatives to conventional mortgage loans, but they involve working with a seller who is open to nontraditional financing methods. Some nontraditional methods include seller financing and lease-to-own options.

Another option is a portfolio loan, which some banking institutions offer. A portfolio loan is a loan lenders don’t sell to another institution. Instead, they keep it in their own books, which enables them to allow for looser eligibility requirements.

Recommended: Home Loan Help Center

Mortgage Tips

Here are a few quick tips to qualify for a mortgage:

1.    Get preapproved as early as possible: The mortgage preapproval process helps with a lot of things, and it will tell you how much house you can afford.

2.    Use a mortgage calculator when shopping online: This will help you quickly crunch some numbers. There are many types of mortgage calculators online, including home affordability calculators.

3.    Compare loan types: There are many different types of mortgage loans, each of which comes with different requirements and different fees.

4.    Pay down your debts: The fewer debts you have, the more room in your budget you’ll have for a higher mortgage.

5.    Know that you can always refinance in the future: A mortgage refinance will take a fresh look at your credit score and income, and will also include your existing home equity when determining your new rate.

The Takeaway

You’ll need an annual income of around $130,000 if you want to be in a good position to make payments on a $450,000 home mortgage loan. Remember that your payments will likely include principal and interest, but also homeowners insurance and property taxes. Getting preapproved by a lender can help make your search less stressful.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

How much do you need to make to qualify for a $450K mortgage?

Just considering the P&I payment of a $450K mortgage, the minimum you would need to make is around $130K a year. This is for a 30 year mortgage with a 7.00% interest rate.

What would my mortgage be on a $450,000 house?

How much money you would have to borrow to buy a $450,000 house would depend on the size of your down payment. First-time homebuyers can sometimes put down as little as 3% ($13,500). In this case, you would need a home mortgage loan for $436,500. If you put down 20% ($90,000), you would need a mortgage loan for $360,000.

Can you buy a house with a $40,000 salary?

Yes, but it depends on the purchase price of the home. The gross monthly income is $3,333, which means the maximum amount spent on housing should be $933. This puts the purchase price around $140,000.

Photo credit: iStock/FreshSplash

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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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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

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

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.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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