Nov
19
2024

What Are HEAL Student Loans?

By | Going to College, Student Loans, student_loan | Comments Off on What Are HEAL Student Loans?

The Health Education Assistance Loan (HEAL) program was created in 1978 to help medical students finance their degrees. The HEAL program worked by insuring loans made by participating lenders to help graduate students in various health care fields — including medicine, dentistry, and clinical psychology — cover the costs of their schooling.

HEAL loans are no longer available; the program was discontinued in 1998. However, there are a number of other ways medical students can finance a degree. In this guide, learn about options that can help borrowers cover the cost of medical school now, as well as what you should know if you’re still paying off HEAL student loan debt from years ago.

Key Points

•   Medical school now costs $276,006 for four years at public institutions and $374,476 at private schools. The average medical school debt of graduates is $243,483.

•   The Health Education Assistance Loan (HEAL) program was created in 1978 to help medical students finance their degrees.

•   HEAL loans typically had variable compounding interest rates and a repayment term of up to 33 years.

•   The HEAL program ended in 1998, but borrowers are still responsible for repaying their outstanding loan debt.

•   Current medical students can use federal Direct loans, private student loans, and HRSA loans offered through the Health Resources and Services Administration to finance their education.

Overview of HEAL Student Loans

Getting a medical degree, which typically takes more than 10 years to earn, can be very expensive. The total average medical school debt of graduates is $243,483, according to the Education Data Initiative.

The cost of medical school continues to rise each year. For the class of 2024, four years of attendance at a public school is $276,006, while private school costs $374,476, according to the American Association of Medical Colleges.

Through the HEAL program, from 1978 to 1998, the U.S. Department of Health and Human Services insured loans made by lenders to graduate students in the health care field to help them pay for medical school. The loans were insured by the federal government against loss due to borrowers’ death, disability, bankruptcy, or default. The program was meant to ensure that funds would be available to future students who needed them.

Key Features of HEAL Student Loans

With HEAL loans, eligible students could borrow up to $80,000 to help pay their medical education costs. Interest accrued and compounded on the loans while the student was in school and during the nine-month grace period allowed by these loans afterward.

HEAL loans typically had variable compounding interest rates, though lenders could offer fixed rates if they chose. With compounding interest, interest is added to the loan balance, and future interest is calculated on the new higher balance.

Borrowers could take up to 33 years to repay their HEAL loans. Because of the long repayment term, HEAL borrowers may still be paying off their loans.

End of the HEAL Program and Current Status

The HEAL program ended on September 30, 1998. In 2014, outstanding HEAL loans were transferred from the U.S. Department of Health and Human Services to the Department of Education. Even though the program ended, borrowers who have outstanding HEAL loans must still repay them.

To simplify the payment process, borrowers who have more than one HEAL loan can consider consolidating their loans into a federal Direct Consolidation loan. Through this process, you pay off your old loans with one new Direct Consolidation loan. Under the new loan, you have one monthly payment. You may also qualify for federal benefits, like income-driven repayment.

If you’re struggling to make your HEAL payments, contact your student loan servicer. Defaulting on HEAL loans has serious repercussions. A borrower’s account can be sent to collections or they can be taken to court, among other consequences. HEAL loans are exempt from statute of limitation laws, so theoretically, a lender can indefinitely pursue a borrower who is in default to try to collect on the loans.

If you’re currently in default on your HEAL loans, contact the Department of Education’s HEAL Program Team at HEAL@ed.gov.

HEAL Loans vs. Current Federal Student Loans

While HEAL loans are no longer available, there are other types of student loans for health professionals, including federal student loans and private student loans.

Medical students can apply for federal financial aid by filling out the Free Application for Federal Student Aid (FAFSA). Although graduate students are not eligible for Direct subsidized loans, they may qualify for other types of federal loans. They can also apply for private student loans. Here’s more information on each loan type.

Direct unsubsidized loans. With these federal loans, medical students can borrow money unsubsidized. This means the borrower is responsible for paying all of the interest on the loan. The interest begins accruing immediately and continues to accrue while they’re in school. Certain medical graduates may take out up to $40,500 per academic year in Direct unsubsidized loans with an aggregate limit of up to $224,000.

Direct PLUS loans. Often called a graduate PLUS loan, the federal Direct PLUS loan covers the difference between the cost of attending school and any other sources of funding, including Direct unsubsidized loans. A credit check is required to get a Direct PLUS loan. These loans are also unsubsidized and they tend to have higher interest rates than Direct unsubsidized loans.

HRSA loans. The Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services, offers loan programs to some schools; these institutions then offer several different types of low-interest loans to qualifying students in need who are pursuing certain health care degrees. Check with your school to see if they offer HRSA loans and whether you are eligible.

Private student loans. Students can supplement federal student loans with private loans to help pay for medical school. These loans are available from banks, credit unions, and online lenders. Private loans may have fixed or variable interest rates, and the interest rate you’re offered will depend in part on your credit history. If the rate you end up with is higher than you hoped for, you could choose to refinance medical school loans later on if you can qualify for a lower rate or more favorable terms.

Private loans typically don’t offer the same benefits as federal student loans, such as income-driven repayment plans and Public Service Loan Forgiveness. For that reason, students may wish to explore other forms of funding first.

The Takeaway

The HEAL Loan Program ended in 1998, but some medical professionals may still be repaying their HEAL loans. If you have outstanding HEAL loans, you might be able to consolidate them into a federal Direct Consolidation loan and potentially qualify for an income-driven repayment plan, which could make repayment easier. Check with your loan servicer for more information.

Current medical students have a variety of funding options today that could help cover the cost of school, including federal loans and private loans. Explore the different alternatives to decide which type of financing is best for you, and remember that it’s possible to refinance student loans in the future once your medical career is underway.

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 still apply for a HEAL loan?

The HEAL program ended in 1998, and these loans are no longer available. However, there are other federal student loans for medical students, including Direct unsubsidized loans, Direct PLUS loans, and HRSA loans through the Health Resources and Services Administration. In addition, there are private student loans for those studying to become medical professionals.

Can HEAL loans be consolidated with other student loans?

Yes, you can consolidate HEAL loans with other federal student loans, including Direct unsubsidized loans, Direct PLUS loans, and Federal Family Education Loans (FFEL), into a Direct consolidation loan. This may allow you to take advantage of income-driven repayment plans and potentially, student loan forgiveness.

What should I do if I’m struggling to repay my HEAL loan?

Contact your loan servicer right away if you’re having trouble repaying your HEAL loan. The servicer can explain your payment options. Whatever you do, avoid missing payments. If you default on HEAL loans, the consequences can be serious. Your account can be sent to collections or you can be taken to court, among other repercussions. If you’re already in default, contact the Department of Education’s HEAL Program Team at HEAL@ed.gov.

Photo credit: iStock/FatCamera

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 FOREFEIT YOUR EILIGIBILITY 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.



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.

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.

SOSLR-Q324-018

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Nov
19
2024

What Is the FAFSA Dependency Override?

By | Going to College, Student Loans, student_loan | Comments Off on What Is the FAFSA Dependency Override?

When you file the Free Application for Federal Student Aid (FAFSA), you’ll answer questions that will determine your status as a dependent or an independent student.

Most students under the age of 24 are considered dependent students. However, students in certain exceptional situations can apply for a dependency override for FAFSA from their school’s financial aid office. The override allows a student to be considered an independent student for financial aid purposes and to exclude parental information on the FAFSA form. This means that only the student’s income and assets will be reported on the FAFSA.

A dependency override can result in more financial aid for a student. Learn about the FAFSA dependency override, the criteria to qualify, and how to apply.

Key Points

•   On the FAFSA, a student’s status is deemed dependent or independent. Dependent students must include their parent’s income on the FAFSA, independent students do not.

•   Students in specific situations may qualify for a FAFSA dependency override that allows them to be considered independent so they don’t need to include their parents’ assets on the FAFSA.

•   A FAFSA dependency override has strict requirements and may be difficult to qualify for.

•   Students must contact their school’s financial aid office to find out about applying for a FAFSA dependency override and the documentation that is required.

•   Schools have up to 60 days after a student enrolls to make a decision about whether the student qualifies for a FAFSA dependency override.

Understanding Dependency Status

A student’s dependency status determines the information they must report when filling out the FAFSA. As part of the steps to complete the FAFSA, dependent students include their parents’ information as well as their own information on the form. Independent students report only their own information on the FAFSA.

According to FAFSA requirements, a dependent student is someone who does not meet any of the criteria of an independent student.

Independent students must be at least one of following:

•   24 or older

•   Married

•   Graduate or professional student

•   Veteran

•   Member of the armed forces

•   An orphan

•   Ward of the court

•   In foster care

•   Someone with legal dependents other than a spouse

•   Emancipated minor

•   Homeless or at risk of becoming homeless

If you meet one or more of the conditions above you are considered an independent student and you’re not required to report information about your parents, including their income, on the FAFSA.

If you don’t meet any of the criteria, but you are unable to include your parents’ information on the FAFSA for very specific reasons, such as cases of abuse or neglect or a parent who is absent from your life or incarcerated, you can file for a FAFSA dependency override. In general, the requirements to qualify for an override are strict.

If you cannot get a dependency override, don’t be discouraged. There is other financial aid you may be eligible for through the FAFSA, including grants, scholarships, and federal student loans.

And keep this in mind: In the future, you can choose to refinance student loans if you can qualify for better rates and terms, which might help make it easier to repay your student loan debt. In other words, you have options.

Recommended: FAFSA Facts for Parents

Eligibility for Dependency Override

As mentioned, the criteria to determine eligibility for a FAFSA dependency override can be strict. That said, don’t be deterred from applying if you think you may qualify.

Qualifying Circumstances

A FAFSA dependency override might be granted to you by your school’s financial aid office if certain circumstances apply to your situation, including the following:

•   An abusive family environment, including sexual, physical, or mental abuse, or domestic violence

•   Abandonment or estrangement by your parents

•   Parents are incarcerated or institutionalized

•   Parents cannot be located

•   Parents are physically or mentally incapacitated

•   Parents are hospitalized for an extended period

What doesn’t qualify for dependency override? Circumstances that are not considered FAFSA dependency override qualifications include:

•   Parents who refuse to help pay for your education

•   Parents who are unwilling to provide information on the FAFSA

•   Parents who refuse to complete FAFSA verification

•   Parents who do not claim the student as a dependent on their taxes

•   Students who are self-supporting and live on their own

Recommended: FAFSA Guide

Documentation Required

Each school has different documentation requirements for the FAFSA dependency override, so it’s best to contact your school directly to find out exactly what’s needed. You may be asked to provide various types of documentation depending on your situation, including:

•   Parental incarceration information such as jail records and sentencing documents

•   Missing person’s reports or police reports for parents who can’t be located

•   Records from homeless shelters or homeless youth centers, and signed statements from counselors or teachers verifying that you’re experiencing homelessness

•   Police, court, medical, and child welfare records that indicate an abusive situation

It’s important to note that if you have been declared homeless or at risk of homelessness by a homeless youth Basic Center, an emergency shelter funded by the U.S. Department of Housing and Urban Development, or a school district homelessness liaison, you can qualify as an independent student without applying for a dependency override.

Likewise, if you were in foster care for even one day after the age of 13, you can also qualify as an independent student without applying for an override.

Applying for a Dependency Override

In addition to the FAFSA, your college or university will require you to submit additional information about your situation, including documents, letters, and proof that explains your situation as described above, to apply for a dependency override.

Here are the actions to take as well as some FAFSA tips:

On the FAFSA form, fill out Steps 1, 2, and 3. For Step 4, if you can’t provide parental information due to one of the qualifying circumstances above, leave the step blank and contact your school’s financial aid office immediately to explain your situation and find out how to proceed.

A financial aid officer will give you information about what’s required for the FAFSA dependency override, the documentation you need to provide, and a timeline of how long it might take for your application to be reviewed. Schools have up to 60 days after the student enrolls to make a decision.

It’s vital for students to contact their financial aid office about an override as soon as possible so as not to miss any deadlines for state or institutional aid. In some states and at some schools, the FAFSA must be fully completed in order to determine the student’s FAFSA amount and for students to be considered for these aid opportunities.

The Takeaway

A student may qualify for a FAFSA dependency override in certain situations such as having a parent who is incarcerated or incapacitated. The override allows students to exclude their parents’ information on the FAFSA form and helps determine the amount of financial aid they may receive from their school.

Dependency overrides have specific requirements and may be difficult to qualify for. If you are ineligible, the FAFSA can still help you access student aid, including federal student loans, grants and scholarships.

You can also take out private student loans to help pay for college. You could then refinance them later on if you can qualify for lower rates and better 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

What are the reasons for a FAFSA dependency override?

A dependency override for FAFSA can help students in exceptional situations qualify as independent and report only their own financial information, and not their parents’, on the FAFSA form. Students who come from situations of abuse or abandonment, or whose parents are incarcerated, hospitalized for an extended time, or institutionalized, among other situations, may qualify.

How often can you request a dependency override?

Thanks to the FAFSA Simplification Act, which went into effect in the 2025-2026 academic award year, students who qualify for the dependency override no longer need to request or recertify their status each year unless their situation changes. Students must still submit the FAFSA each year, however.

Can the dependency override decision be appealed?

If you’re denied a dependency override, these decisions are final at many colleges and cannot be appealed. However, reach out to your school’s financial aid office to find out if it’s possible to appeal. If it is, get specific instructions from them about how to proceed.

Photo credit: iStock/shapecharge

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 FOREFEIT YOUR EILIGIBILITY 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.



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.

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.

SOSLR-Q324-017

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Nov
19
2024

Student Loan Forgiveness for Caregivers

By | Fresh Out of School, Student Loans, student_loan | Comments Off on Student Loan Forgiveness for Caregivers

There are approximately 53 million family caregivers in the U.S., according to the latest data. While caregiving is a labor of love, it can also involve some serious financial challenges. You might have to take time away from your job to care for your loved one, for instance, making it hard to pay your bills and student loans.

Fortunately, there are options that can help, including student loan forgiveness for caregivers. Read on to learn about ways to manage your student loans and get some debt relief.

Key Points

•   Caregivers face financial challenges, including managing student loans, due to caregiving responsibilities that may require them to take time off from or leave their jobs.

•   There may be federal student loan forgiveness options for caregivers, including Public Service Loan Forgiveness (PSLF) and forgiveness through income-driven repayment (IDR) plans.

•   State-specific student loan forgiveness programs may also be available for caregivers.

•   While there typically aren’t many options for private student loan forgiveness, some state programs offer forgiveness for private loans that caregivers may be eligible for.

•   Alternatives to student loan forgiveness for caregivers include deferment, forbearance, and refinancing of student loans.

Managing Student Loans as a Caregiver

Juggling student loan payments and other expenses with caregiving responsibilities can be difficult. Nearly two in 10 caregivers had to leave their job to care for a family member, and four in 10 had to reduce their hours, according to a survey from the Rosalynn Carter Institute for Caregivers. On top of a possible loss of income, many family caregivers are spending money to help their loved ones. Three-quarters of caregivers pay more than $7,200 in out-of-pocket expenses annually related to caregiving, according to a study by the AARP.

Caregivers who are struggling to make federal student loan payments can seek out help by contacting their loan servicer and exploring student loan repayment options and forgiveness programs to avoid missing payments and defaulting on their loans. Federal loan default occurs when you fail to make your scheduled loan payments for at least 270 days. If you go into default, you could suffer credit damage, wage garnishment, and have your tax refunds withheld.

For private student loans, you can contact your lender directly to see how they might be able to help. While private student loan forgiveness options are usually not available, there may be other types of loan modifications the lender might be willing to make.

Another option you may want to consider is to refinance your student loans. If you can qualify for more favorable rates and terms, that might make repayment easier.

Recommended: Student Debt Guide

Forgiveness Programs to Explore

Caregivers may be able to qualify for federal or state forgiveness programs that forgive or cancel the remaining balance of their student loans after a certain amount of time and other specific requirements are met. Here are some forgiveness programs to look into.

Public Service Loan Forgiveness (PSLF). PSLF forgives the remaining balance on your federal Direct loans if you’re employed full-time by the government or not-for-profit organization. To qualify, you need to repay your loans under an income-driven repayment plan or a 10-year standard repayment plan. You must make a total of 120 qualifying monthly payments.

In 2021, and again in 2023, a bill was introduced in Congress to make primary family caregivers for military veterans eligible for PSLF by expanding the definition of “public service job.” The bill is still working its way through Congress, but you may want to keep tabs on it if it applies to your caregiving situation.

Income-Driven Repayment (IDR). IDR offers a pathway to forgiveness. These plans base your monthly student loan payment amount on a percentage of your discretionary income and family size. If you repay your loans under an IDR plan, any remaining balance may be forgiven after 20 or 25 years.

State-specific forgiveness programs. A number of states offer student loan forgiveness programs, and yours may be one of them. For instance, your state may offer forgiveness programs to help certain individuals — particularly those in high-need locations and working in high-need occupations like health care and teaching — pay off some or all of their student loans. Some of these programs forgive both federal and private student loans. Check with your state department of education for more information about these opportunities.

Recommended: Student Loan Forgiveness Guide

Application Process and Documentation

To apply for Public Service Loan Forgiveness, you’ll need to submit a PSLF form by taking the following steps:

1. Make sure you qualify. To be eligible for PSLF, you must have federal Direct subsidized or unsubsidized loans, Direct PLUS loans, or Direct consolidated loans. You must also work full-time for a qualifying employer and be on an IDR plan.

2. Sign up for an IDR plan if you are not already on one. You can sign up at StudentAid.gov. You’ll need a Federal Student Aid (FSA) ID, as well as documentation such as financial information, tax forms, your mailing address, phone number, and email address.

3. Verify that your employer qualifies you for PSLF. The easiest way to do this is to use the PSLF Help Tool. This allows you to see if your employer is in the Department of Education’s database. If they aren’t, you can request that your employer’s eligibility be reviewed.

4. Send the PSLF form to your employer to sign and certify.

5. Sign and submit the fully completed PSLF form.

You’ll need to recertify your employment every year and any time you change jobs to continue to qualify for PSLF.

To apply for state-specific student loan forgiveness, follow the application steps outlined by each plan or program.

Alternatives to Forgiveness for Caregivers

Aside from caregiver student loan forgiveness, there are several other ways to get student loan debt relief. Here are three options to consider.

Deferment: In certain circumstances, including financial hardship, student loan deferment allows you to stop or reduce your payments on your federal student loans for up to three years if you qualify. If you have a subsidized federal loan, interest does not accrue during the deferment period. If you have an unsubsidized federal loan, interest will continue to accrue.

You need to apply for deferment. First, identify the type of deferment you’re requesting, such as economic hardship deferment. Next, fill out and submit a request form to your student loan servicer along with documentation to show that you’re eligible.

Private student loans may or may not offer deferment. Check with your lender.

Forbearance: Similar to deferment, student loan forbearance lets you temporarily stop or reduce your payments for your federal loans if you qualify. However, with forbearance, interest always accrues on your loans and forbearance periods are typically no longer than 12 months.

There are two types of federal forbearance, general and mandatory. To apply, you must identify which type you’re requesting. For family caregivers, general forbearance is likely the most applicable; you may be eligible for it due to financial difficulties, medical expenses, employment changes, or other reasons acceptable to your loan servicer. (Mandatory forbearance is for those serving in AmeriCorps or the National Guard, in a medical or dental internship or residency, or working as a teacher and qualifying for teacher loan forgiveness.) To apply for forbearance, fill out the form for the type of forbearance you’re requesting, and submit it along with documentation showing proof of your financial situation to your loan servicer.

Some private student loans may offer forbearance. Contact your lender to find out.

Student loan refinancing: Another option that might help some family caregivers with their student loans is refinancing. When you refinance, you take out a new loan from a private lender and use it to pay off your existing student loans. The new loan will have a new term and interest rate, which could help some borrowers if they can qualify for a lower rate. Keep in mind, however, that if you extend your loan term to help reduce your monthly payment, you may pay more interest over the life of the loan.

Another important consideration is that if you refinance federal loans, you will no longer qualify for federal benefits such as deferment, forbearance, or income-driven repayment programs. You’ll want to carefully weigh the pros and cons of refinancing.

The Takeaway

If you’re a family caregiver struggling to repay your student loans, there are options that may give you some relief. You might be eligible for Public Service Loan Forgiveness, a state-specific forgiveness program, or an income-driven repayment plan. You can also consider student loan deferment or forbearance to temporarily stop or reduce your payments, or refinance your student loans if you could qualify for more favorable rates or terms. Explore all the possibilities to determine which one can give you the help you need.

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

How long does it take to qualify for loan forgiveness?

It typically takes 10 years to qualify for Public Service Loan Forgiveness (PSLF) because you must make 120 qualifying monthly payments under an income-driven repayment (IDR) plan or the standard repayment plan while working for a qualified employer. At that point, your remaining balance is forgiven. If you instead pursue student loan forgiveness under an IDR plan, it takes 20 to 25 years to qualify for forgiveness, depending on the plan.

Can part-time caregivers qualify?

If you are a part-time caregiver who has federal Direct student loans and works full-time for a qualifying employer, you may be eligible for Public Service Loan Forgiveness. Under PSLF, working “full-time” means at least 30 hours a week or whatever your employer’s definition of a full-time job is. You could also pursue forgiveness under an IDR plan as a part-time caregiver. These plans base your monthly payment amount on a percentage of your discretionary income and family size.

What types of student loans are eligible for forgiveness?

Federal Direct student loans are eligible for Public Service Loan Forgiveness through income-driven repayment plans or the standard repayment plan. Various types of student loans —including, in some cases, private student loans — may be eligible for forgiveness through state forgiveness programs. Check with your state to find out.

Photo credit: iStock/urbazon

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 FOREFEIT YOUR EILIGIBILITY 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.



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.

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.


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.

SOSLR-Q324-014

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Nov
19
2024

Can I Take Out More Student Loans During the Semester?

By | Going to College, Student Loans, student_loan | Comments Off on Can I Take Out More Student Loans During the Semester?

If you get midway through the college semester and realize you can’t meet your expenses, whether that’s due to unanticipated costs or underestimating how much you needed, don’t panic. You can take out more student loans to help cover the extra costs even when the semester is underway.

With the average cost of college reaching $38,270 per year, according to the Education Data Initiative, it’s no wonder that some students find they need extra money during the academic year. Fortunately, student loans and other funding options can help fill the gap if you’re coming up short during the semester.

Which Types of Student Loans Can You Take Out?

You can take out federal student loans and private student loans during the semester. But as you’re considering the options, you should be aware of some important factors.

Federal student loans come from the government, through the U.S. Department of Education, and they tend to offer better rates and terms. Your school determines the type of federal loans you can receive as well as the amount you can get, but there are caps on how much a student can borrow in federal loans per year. There are also deadlines to apply for federal student loans (more on that below).

Private student loans come from such entities as banks, credit unions, and online lenders. Each lender has their own criteria for eligibility, and the interest rate you get generally depends on your creditworthiness.

Here are some of the types of loans you may be eligible for, along with their requirements.

Federal Direct Subsidized Loans

Undergraduates with financial need may be eligible for Federal Direct Subsidized loans. The government pays the interest that accrues on these loans while you’re enrolled in school, during the six-month grace period after graduation, and during any student loan deferment. Direct Subsidized loans also offer fixed interest rates, which means the interest rate doesn’t change.

To qualify for a Direct Subsidized loan, you must file the Free Application for Federal Student Aid (FAFSA), which can help in making college more affordable, by the deadline. For the 2025-2026 academic year, the FAFSA must be submitted by June 30, 2025. Any updates to the form must be submitted by September 14, 2026. However, states and schools may have different deadlines, so be sure to check with yours.

It’s possible that you may have already used a Direct Subsidized loan to help pay your tuition. If so, check to see if you’ve reached the borrowing cap. For example, first-year undergraduate dependent students can take out a maximum of $3,500 in subsidized loans.

Federal Direct Unsubsidized Loans

You aren’t required to demonstrate financial need to get Federal Direct Unsubsidized loans, but you do need to file the FAFSA. With an unsubsidized loan, the interest begins accruing the day the loan is disbursed and continues the entire time you’re in college. That means you will likely end up with a higher loan balance after college than the amount you initially borrowed. Your first payment is due six months after you graduate.

First year undergraduates can take out a maximum total of $5,500 in subsidized loans and unsubsidized loans. That means if you’ve reached the max of $3,500 in subsidized loans, you can take out $2,000 in unsubsidized loans.

Direct PLUS and Parent PLUS Loans

Parent PLUS.

Unlike Direct Subsidized and Unsubsidized loans, borrowers applying for PLUS loans need to undergo a credit check and must have a strong credit history in order to qualify. They must also file the FAFSA. In the case of the Parent PLUS loan, parents are expected to repay the loan — these loans do not transfer to the student.

Private Student Loans

Students may use private student loans to help fill the gap after they max out their federal student loans. There is no mandated limit on the amount you can borrow with private loans, and there is no application deadline. To qualify for a private student loan, you must have strong credit or apply with a cosigner, which is someone who has good credit and who will take over the loan if you default.

Private student loan interest rates may be fixed or variable, and the rates tend to be higher than those of federal loans — though you could consider refinancing student loans at some point if you can qualify for better terms. The interest on private student loans will generally begin to accrue the day the loan is disbursed. Another caveat: With private student loans, you cannot take advantage of income-driven repayment options and forgiveness programs.

How Much Can You Borrow During the Semester?

You can use federal and private loans to cover up to the full cost of college attendance. However, as mentioned, while there is no cap on how much you can borrow with private loans, there’s a limit to how much money you can receive with federal loans.

The amount you can take out in federal loans as a dependent student (meaning that your parents are supporting you) depends on your year in college. For your first year, you can receive up to $5,500 in federal loans, and $3,500 of that can be in subsidized loans. For your second year, the amount rises to a total of $6,500, with $4,500 in subsidized loans; and for your third and fourth years, the total amount you can borrow is $7,500, with $5,500 in subsidized loans.

If you’ve reached the annual limit on what you can borrow with federal loans, you can use a Parent PLUS loan and/or private loans to cover the gap — up to the full school-certified cost of attendance.

How Quickly Can You Get Student Loans Mid-Semester?

Although the time frame is different for each lender, it’s possible to get private student loan funds within a few business days after submitting your application.

Federal student loans generally require more time. Once your FAFSA is processed, the information will then be sent to your school. Each school has its own schedule for disbursing loans; check with your college’s financial aid office for more information.

Other Options if You Run Out of Student Loans

If financial aid isn’t enough to cover your college costs, you do have other options to help pay what you owe. Here are some ideas to look into.

Apply for Scholarships and Grants

While FAFSA typically matches you with any federal scholarships and grants you may be eligible for, there are many other types offered by states, cities, community groups, businesses, religious organizations, associations you or your family may be involved in, and more. Your college may even offer scholarships that you’re not aware of, so be sure to investigate. SoFi’s Scholarship Search Tool can also help you find scholarships that may be a good fit for you.

The best part: Scholarships and grants are considered ”gift aid” and usually don’t need to be repaid.

Reevaluate Your Circumstances

If your family’s financial situation changed over the last few months, you may want to consider appealing your financial aid and asking for more.

For example, if one of your parents lost their job, your parents got divorced or separated, or you faced a medical crisis, you may be able to get more funds. Speak with your college’s financial aid office and explain the situation to see what suggestions they may have. You’ll probably have to submit more documentation as part of the process, but it could be well worth it.

Get a Part-time Job

A part-time job can help you directly cover some of your college costs. You might qualify for a federal work-study job based on financial need as part of your financial aid package. The number of hours you can work at these jobs is determined by your school. Find out from your university’s financial aid office if you qualify for work-study and how many hours of work you’re eligible for.

If you don’t qualify for work-study, you can apply for a part-time job working for a local business, like a coffee shop or retail store.

Consider an Emergency Student Loan

Here’s one of the best-kept financial aid secrets: Some schools offer emergency student loans if you run into financial challenges. These short-term loans don’t cover school-related costs, and the borrowing amounts are usually small — around $500. They’re intended to cover things like food, medical expenses, and monthly bills. Ask your school’s financial aid office if they offer emergency loans, and find out what the interest rates and repayment terms are to see if it might be a good option for you.

Apply for Private Student Loans

Private student loans are another option to help cover your college expenses. Again, these loans have higher borrowing limits than federal student loans, and once you’re approved, the funds are generally disbursed quickly. But private student loans also tend to have higher interest rates, and they don’t give you access to forgiveness and income-driven repayment programs. You’ll need to weigh the pros and cons.

The Takeaway

If you discover that you need more money to cover your costs once the school semester is underway, don’t freak out. There are a number of options you can turn to for the money you need. You may be able to take out more federal student loans, get an emergency loan from your school, or qualify for a scholarship or grant. You could also get a part-time job to help pay the bills. And if you take out private student loans, which typically have higher interest rates, you may be able to refinance your loans at some point for a lower rate or better terms. In other words, there are many different ways to help cover the costs of college — just explore and investigate the options to find what works best for you.

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 you request more financial aid during the semester?

Yes, you can request more financial aid during the semester. For instance, you may be able to appeal the amount you were initially awarded, especially if your family circumstances have changed, such as a parent losing a job. Contact your college’s financial aid office to find out how the appeals process works.

Can you increase your student loan amount?

It is possible to increase your student loan amount. One way to do it is to appeal the amount you were awarded, especially if your family circumstances have changed (such as your parents getting divorced) or there was an error on your Free Application for Federal Student Aid (FAFSA). Contact your college’s financial aid office to find out more about this process.

Can I get student loans in the middle of the semester?

Yes, you can get student loans in the middle of the semester. Just be sure to fill out and submit the FAFSA by the deadline in order to qualify for federal student loans. And be aware that there is a limit to the amount you can get in federal loans depending on what year student you are.

You can also take out private student loans during the semester. There is no set limit on how much you can borrow with these loans and there’s no deadline to meet — you can take them out anytime. However, private student loans do typically have higher interest rates, and you’ll likely need a cosigner in order to qualify. Private loans also don’t offer federal protections and programs.

Photo credit: iStock/miniseries

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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.

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.

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Nov
19
2024
Everything You Need to Know About Credit Card Holds

Everything You Need to Know About Credit Card Holds

By | Credit | Comments Off on Everything You Need to Know About Credit Card Holds

If you’re someone who swipes your credit card for pretty much anything and everything, you know just how disruptive a hold placed on your card can be. This could happen at any time — when you fill up your tank at the gas station or when you pay for a hotel room during a weekend getaway. It can feel like the cash flow equivalent of the power getting shut off in your home.

The good news is that credit card holds are only temporary. And chances are, you’ll be able to tap into your credit card in no time. Learn what a credit card hold is, how long a credit card company can hold your payment, and more.

What Is a Credit Card Hold?

A credit card hold is a two-part process in which the merchant and credit card issuer communicate with one another electronically. On one side, a merchant checks with your card issuer ahead of time if you’re good for a specific, preset amount. On the other side, the card issuer locks in that amount on your credit card balance. That way, the merchant ensures it is paid for the purchase.

In turn, due to how credit cards work, you won’t have access to that amount that’s set aside until either the transaction or the issue gets resolved and the hold is released.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Types of Credit Cards Holds

Here’s a closer look at the two main types of credit card holds: authorization holds and administrative holds.

Credit Card Authorization Hold

A credit card authorization hold is usually the more complex of the two types of holds. They’re also known as “pre-authorizations,” and you can think of them as a security deposit.

A credit card authorization usually happens when you’re using a credit card to make a larger purchase or when the final amount of the transaction is unknown. Merchants in industries such as car rental companies, gas stations, and hotels commonly use these authorization holds. Other industries where a card isn’t present may also make a request.

How Does An Authorization Credit Card Hold Work?

Here’s how it works: When an authorization hold on a credit card is requested, the card issuer makes a portion of your credit card balance unavailable until the transaction is finalized.

For example: Say you book a hotel room, and the grand total is $1,000. The hotel asks the card issuer for a hold. In that case, the issuer will make that $1,000 of your credit limit unavailable. Once the transaction goes through, the authorization hold will be lifted.

Depending on the situation, there might be two authorization holds placed on your credit card. For instance, if you used your credit card to pay for a hotel stay, the first hold would be for accommodations. The second might be for the tab at the mini-bar in your room or for the restaurant bill.

Recommended: What is the Average Credit Card Limit

How Long Does an Authorization Credit Card Hold Last?

An authorization credit card hold can typically last anywhere from one to 30 days. Some holds might be released the same day, while others last for a few days after the transaction is settled. For instance, a hotel hold is usually released a few days after you checkout, while a hold placed by a gas station might be lifted the day you spend money at the pump.

If the transaction doesn’t settle before a hold reaches its expiration, the hold will fall off, and the amount that was held will become available again.

Credit Card Administrative Hold

The other main type of credit card holds are administrative holds. Administrative holds can be broken down into two types:

•   Over-the-credit-limit administrative hold: As the name implies, if you go over your credit card limit, an administrative hold will be placed. And yes, you’ll be barred from using your card until you pay down your card so it falls below the credit limit. This is why it’s important to follow the credit card rule of spending within your limit.

•   Late-payment administrative hold: If you’re behind on your credit card payment, your credit card issuer may place a late-payment administrative hold on your card. In this case, one of two things can happen. If you have a solid credit history, the card issuer might only report the late payment to the credit bureaus, and allow you to continue using your card. But if you keep making late payments or your credit is less-than-stellar, a late-payment hold might be placed until you make several months of on-time credit card payments.

Recommended: When Are Credit Card Payments Due?

When to Use an Authorization Hold

As a cardholder, an authorization hold isn’t really something you have control over. That’s because the merchant is the party that reaches out to the credit card issuer and requests a hold. This is done as a form of security to ensure the merchant gets paid for a purchase.

That being said, there are things you can do to prevent an authorization hold from happening in the first place. (More on that in a moment.)

When Not to Use an Authorization Hold

It’s up to the merchant whether or not to use an authorization hold. This might be requested if there’s a big question mark hovering over the final amount of the transaction.

Such holds are also requested when it’s worthwhile for a merchant to request a hold, given what a credit card is and how they work. This could include if the purchase is for a larger amount, or if the merchant works in an industry where there’s a high rate of non-payment for purchases.

Tips to Avoid Credit Card Holds

You can avoid credit card holds by doing the following:

•   Use a card in-store. To avoid authorization holds, go inside the store and pay at the counter instead of paying online or at the pump.

•   Check the policy beforehand. If you’re concerned about a hold being placed on your account, reach out to the hotel or car rental company ahead of time. See what their authorization hold policy is and what the typical amount and length of the hold is.

•   Check your credit card balance. If you plan on booking a hotel room or car rental, do a quick check of your credit card balance and your card limit. If you’ve already used a lot of your current balance and might go past your limit, consider using another card, or looking for less-expensive options so you can stay within your limit.

•   Pay your card balance. To keep your credit card limits low, aim to pay off your credit card balance. To stay out of late-payment territory and avoid late-payment holds, always make the credit card minimum payment.

Steps for Removing an Authorization Hold

While the merchant can release an authorization hold at any time, as the card holder you’ll need to jump through a few additional hoops to do so. Here’s what you need to do to lift an authorization hold:

•   Request that the hold get lifted right away. As some holds linger a few days after the bill is paid, ask the merchant if the hold can get released as soon as the bill is paid and the transaction settled.

•   Ask the credit card issuer if the hold can be removed. You can also reach out directly to the card issuer to see if a hold can be lifted. In this case, the issuer would contact the merchant and make the ask on your behalf.

The Takeaway

A credit card hold can be a nuisance, but you can also avoid one by taking a few steps. This includes checking your available balance before making a charge and always making sure to make the minimum payments. And if a hold is lingering for longer than you’d like, you can always request that the hold is removed.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How do I remove a credit card hold?

You can remove a credit card hold by reaching out directly to the credit card company or to the merchant.

How long does a pending authorization hold take?

It depends. If it’s an authorization hold from a gas station, the hold can get lifted the same day. If it’s a hold from a hotel or car rental, where the amount you’ll be putting on the card is unknown, it can often take several days after you’ve settled the final bill for the hold to be lifted.

What can go wrong with an authorization hold?

There’s a chance that a hold can remain on your card after it’s been canceled or settled. In that case, the funds you have available through your line of credit will be limited. If this happens, you should reach out to the credit card issuer to have the hold released.

Can authorization holds prevent chargebacks?

A benefit of authorization holds is that they can prevent chargebacks for the merchant. (A chargeback is when the consumer disputes a charge and requests a refund, in which case the credit card company would withhold the funds from the merchant until the dispute is resolved.) Placing a hold would allow the merchant to avoid this scenario because they can delay processing the transaction.

Photo credit: iStock/Alesmunt

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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