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If you have an 810 credit score, congratulations. The score is considered excellent and could help you qualify for loans with more favorable terms or premium rewards credit cards.

Let’s take a closer look at what an 810 credit score means and some different strategies that could help boost your credit score.

What Is a Credit Score?

A credit score is a three-digit number that reflects a consumer’s creditworthiness, or ability to pay back loans in a timely manner. Scores range from 300 to 850. Generally speaking, the higher the credit score, the better you tend to appear to a potential lender.

The two most popular credit scoring models are FICO and VantageScore. To calculate your score, both use credit history information provided by the three major credit bureaus: Experian, TransUnion, and Equifax.


💡 Quick Tip: Your credit score updates every 30-45 days. Free credit monitoring can help you learn about your score’s normal ups and downs — and when a dip is cause for concern.

Reasons to Care About Credit Scores

There are several reasons why a good credit score is essential to your financial health. Here are three to keep in mind.

It can increase your chances of being approved for a loan

The higher your credit score, the more likely lenders will approve loan or credit card applications. Whether it’s to purchase a house, buy a car or private student loans, having access to loans can help you achieve some big financial goals. Note that some banks may also run credit checks before issuing you an account.

You may have access to better loan rates and terms

Lenders are more likely to offer consumers with better credit scores lower interest rates and more favorable terms because they’ve proven they pay back their loans on time. A higher credit score may also get you access to other types of products such as premium rewards credit cards.

You could save money

When you move into a new home, the utility company or your landlord may check your credit score to determine how much of a security deposit you’ll need to put down. Typically, the lower your score, the higher your deposit. Though the money is often refundable, it’s usually held in a third-party account that you won’t have access to. Potential employers may also run a credit check before you’re offered a job.

Is an 810 Credit Score Considered Good or Bad?

An 810 credit score is considered very good. In fact, just 21% of consumers in the U.S. have a credit score of 800 or higher, according to Experian. By comparison, the national average credit score is 715.

What Does an 810 Credit Score Mean?

Having an 810 credit score means you’ve proven through your credit behavior that you are likely to pay back loans on time. As mentioned above, a score of 800 or above places you in the top tier of consumers.

You are also considered to be in the “exceptional” range for your FICO score and “superprime” for your VantageScore. This means lenders are more likely to approve you for loans and offer you access to products such as loans with lower interest rates and premium credit cards. Landlords and utility companies may also ask for a lower security deposit amount (if at all).

How to Build Credit

Looking to build your credit? You have several avenues to explore. Below are a few to consider. Note that there’s no one-size-fits-all solution, so it’s a good idea to research all the options available to you.

Use a Credit Card

Even if you’re just starting out in your career or only have fair credit, you may still be able to be approved for a credit card. For instance, you can open a credit card that’s specifically for college students. Or you may want to consider a secured credit card, where you pay a refundable security deposit that acts as your credit line.

Whatever purchases and payments you make on the card are reported to the three major credit bureaus. This in turn helps to establish your credit history.

Become an Authorized User

An authorized user means that your name will be put on someone else’s credit card account. You can use the credit card much like the primary cardholder can, though this person is ultimately responsible for ensuring the minimum payments are paid on time.

If the primary cardholder has a good credit score, then their positive credit history may be added to yours.

Add Monthly Bills to Your Credit Report

Some free credit monitoring services will report your utility and rent payments to your credit report. Doing so can help build your credit history. Even if there is a small fee involved, it may be worth using for a few months, depending on your financial situation.

Take Out a Credit Builder Loan

Credit builder loans are designed to help borrowers who are looking to build their credit. They’re similar to a personal loan, except you don’t initially receive the loan proceeds. Instead, the money will be held in a separate savings account until you pay off the loan. Meanwhile, your payment activity will be reported to the credit bureaus.

How Long Does It Take to Build Credit?

It can take several months for you to establish and build credit. This is because credit scoring models need enough information from your credit history in order to assess your creditworthiness.

As you work on building your credit, do your best to practice good financial habits, such as making on-time payments.

Credit Score Tips

Even if you have an excellent credit score, it’s a good idea to keep up good credit behavior. This includes:

•   Consistently making on-time payments

•   Keeping your credit utilization, or the percentage of the available limit you’re using on revolving credit accounts, as low as possible

•   Avoiding applying for too many new loan or credit accounts at once

•   Keeping your longest credit card or loan account open

•   Regularly monitoring your credit score

•   Checking your credit history and immediately disputing any errors you find

How to Check Your Credit Score

Wondering how to find out your credit score for free? You have several options. The first is your credit card statement. Many credit card issuers provide customers with a complimentary look at their score. To find it, you may need to log into your account or check your monthly credit card statement.

Another option is to use credit score monitoring tools; some are free, others require a payment. Before opening an account, compare each tool to see which one best serves your needs.


💡 Quick Tip: One way to raise your credit score? Pay your bills on time. Setting up autopay can help you keep your account in good standing.

The Takeaway

It’s good news if you have an 810 credit score and a sign that you have a track record of paying back your loans. A good score may help improve your access to loans with better terms or premium or luxury credit cards. If you want to improve your score — or just maintain it — you can try practicing good financial habits, like consistently making on-time payments, keeping tabs on your credit score, and disputing any errors.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a decent credit score for a 23-year-old?

Chances are, at 23 you’re probably still building your credit. According to Experian data, the average credit score for people aged 18 to 25 is 679. If yours is higher, then it’s considered above average.

What is the highest credit score possible in 2024?

The highest credit score you can achieve is 850 for both FICO and VantageScore scoring models.

Is a credit score of 800 good at age 23?

Whether you’re 23 or not, an 800 credit score is considered excellent.

Photo credit: iStock/Makhbubakhon Ismatova

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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.

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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Are you a little obsessed with planning your next big trip? We hear you! The excitement of seeing new places — whether that means a faraway tropical island or a neighboring state — is a powerful lure. But there’s one thing that may get in the way: Money.

Let’s be real, travel can be expensive. Even if you’re hopping in the car for a short weekend road trip, the cost of gas, food, entertainment, accommodations, and more can get a bit overwhelming. Fortunately, with a little bit of planning, you can make your travel dreams a reality. And it can all begin by creating a travel fund.

What Is a Travel Fund?

A travel fund is exactly what it sounds like — a fund exclusively used for gallivanting around the world. It’s a place to stash some cash that you don’t use for rent, bills, repaying student loans, or any other monthly financial obligations. This fund is just for your passion in life. And your passion is clearly traveling.

How to Fund Traveling

Unfortunately, a travel savings account will not grow by magic. If only! You’ll need to find ways to funnel some cash towards your travel plans. There are a variety of ways to do this. Perhaps you got a raise recently (nice!) and can put that amount directly towards travel. Or, maybe you can automatically whisk $25 or $50 per paycheck into your savings. Or, you might give up concert tickets or takeout food for a while to allow some wiggle room in your budget that goes towards paying for your next getaway. There are many options — some of which we’ll explore below.

Recommended: 15 Easy Ways to Save Money

Setting Up a Dedicated Travel Savings Account

There are a few options for where to keep your travel fund. Yes, you could keep your vacation fund in the same account as your day-to-day savings, but separating the fund could provide even more clarity.

Keeping your travel fund in a separate account can make it easy to see how close you are to reaching your travel goal. It allows you to see exactly how much money you’ve saved for the cause with ease. Having the money in a separate account also allows you to set up automatic contributions, just as you might already be doing with your other accounts.

Automating your savings towards travel means you can eliminate another task from your to-do list. You’ll be making progress toward your dream of cruising down the Nile without even having to think about it. And since it’s stashed separately, you don’t need to worry that you’ll use it on, say, entertainment or new shoes without realizing it.

Tips on Selecting an Account to Use

When it comes to setting up a dedicated travel fund, the first order of business is usually to pick an account type. There are a variety of options to choose from. Part of what will likely influence your decision is how long you plan on saving. If you want to take a trip in just a few months, a savings account may be a good vehicle. You can easily contribute to it, and you’ll earn some interest.

To help your travel fund grow faster, you may want to go with a high yield savings account. These accounts typically pay a much higher annual percentage yield (APY) than traditional savings accounts, giving you the ability to earn more on your money while still enjoying the security of a federally insured account. These days, many high-yield savings accounts offer APYs of up to 5% or more — many times more than the average national rate of 0.46%.

Some of these accounts may come with certain restrictions, like a limited number of withdrawals a month or maintaining a minimum balance, so be sure to read the fine print on each account you might be considering.

Another is a certificate of deposit (CD), which locks up your money for a particular term, typically from six months to a few years. This type of account can sometimes offer a more competitive interest rate than a traditional savings account but comes with withdrawal restrictions. If you choose to withdraw the money before the term ends, you’ll likely have to pay a penalty or fee.

Yet another option is to use a cash management account with a brokerage firm. These accounts are meant as an option for your uninvested money. They can also be great for putting away some extra money to save, but again — do read the fine print. Fees may be involved, plus commissions if a broker steps in to help you with your investments. Make sure that these won’t cut into your savings.

All of these options will allow you to keep your vacation fund separate from your checking account, emergency savings, or regular savings account. You may even be able to give it a unique name like “travel fund” or even more specific like “Tahiti fund.” It’s much more exciting to watch “dream trip to Bali fund” grow than just “account: 3283052.”

Growing Your Travel Fund

After you’ve created your unique travel fund, it’s time to put in some savings work. And that begins with your budget. If you already have a budget, that’s great. All you need to do is add in “travel fund” as a new line item and shift as much money as you feel comfortable moving to this new account each month.

But, if you’re starting from scratch, that’s OK too. Trying to save for the trip of a lifetime is just as good an excuse as any to start budgeting.

To build a budget, you’ll want to start by figuring out your average monthly take-home income (what you earn after taxes are taken out). Next, it’s good to create a list of all your monthly expenses. You’ll want to include all the basics like rent or mortgage, car payments, student loans, credit card statements, food, gas, insurance, gym memberships, streaming accounts, and any money you currently put towards saving and investing. Make sure to get as granular as possible about your spending.

Next, subtract your average monthly expenses from your average monthly income to see how much you have leftover. If it’s more than $0, that’s excellent news! You can put the excess towards your travel fund. If not, you’ll need to find some places to cut back on spending.

Recommended: How to Make a Budget in 5 Steps

Finding Extra Cash for Your Travel Account

If you’d like that leftover number in your budget to be higher, maybe it’s time to take a look at both your spending and your current income level. Perhaps you can see where changes can be made.

One of the potentially easiest ways to create more cash for your travel fund is to look deeply at your monthly spending. Are you still subscribing to that streaming service you never (or rarely) watch? Are you signed up for the premium version of that social media platform you haven’t been on in months?

What about that gym membership? How’s that going for you? Go ahead and get rid of things that aren’t bringing you joy or are dispensable. Then, refocus those funds in your travel fund.

If there’s no room for cuts, then it might be time to increase your income. Of course, you could always ask for a raise at work, but if that doesn’t come through, explore some other options — like a side hustle. A side hustle is a gig you take on outside your normal work to make some extra money. If you can, pick something you really enjoy doing so it feels less like “work.” For example, if you love dogs but aren’t ready to own one, maybe walking dogs before work would be fun for you.

If you are a handy person who likes to fix things, creating a listing on a site like Thumbtack or TaskRabbit may be a good idea. If you have other talents like photography, writing, or graphic design, you might do some networking to see if you can drum up some freelance work. That way, you can get paid for what you love to do and save for what you love too.

Recommended: How Families Can Afford to Travel on Vacation

SoFi: Your Partner in Creating a Travel Fund

By now, you’ve committed to adjusting your budget and setting aside cash in a new fund. The only thing left to do is find the best place to stash your cash.

When choosing where to put your travel fund, you’ll want to find an account that pays a competitive yield, keeps your money safe, and allows you to easily access your funds when it’s time to set off for your next adventure.

SoFi Travel has teamed up with Expedia to bring even more to your one-stop finance app, helping you book reservations — for flights, hotels, car rentals, and more — all in one place. SoFi Members also have exclusive access to premium savings, with 10% or more off on select hotels. Plus, earn unlimited 3%** cash back rewards when you book with your SoFi Unlimited 2% Credit Card through SoFi Travel.

FAQ

How much should I keep in my travel fund?

To come up with a travel savings goal, you’ll want to determine how much you’ll need for your trip and when you want to take it. From there, you can determine how much you’ll need to transfer into your travel fund each month to reach your goal. For example, if your trip will cost $2,500 and you plan to travel in six months, you’ll need to set aside around $33 a month.

How do I set up a travel fund?

Setting up a travel fund can take only a matter of minutes. It can be as easy as opening a savings account online and then directing money towards it. You can also go into a brick-and-mortar bank to set up an account.

How can I save money on a travel fund?

To save money on a travel fund, look for a savings account that doesn’t charge monthly fees and offers a competitive interest rate. These two factors will help boost your savings and get you on your dream vacation as quickly as possible.

**Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.

When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.

Your mind and body may be ready for a sunny beachside spring break in Cancun, but if you’re living that broke college kid life, you may imagine your spring break looking more like a week at home, scrolling through Instagram and binging Netflix.

However, it is possible to plan a spring break trip on a limited budget. And yes, even a college student’s budget can be stretched for spring break fun! If you’re wondering how to plan a spring break trip without living off instant noodles for the next month, we have some tips to help you get a well-deserved vacation from those long nights spent studying in your dorm room.

Keep reading for some of our best tips on making your spring break trip dreams happen on a budget.

1. Start Planning Early

Waiting until the last minute to plan a trip could mean missing out on cheaper flights, hotels, and even popular ticketed attractions. If you’re going to a hot destination during a peak travel season, which includes spring break for many destinations, then you could blow your travel budget on the flight alone, leaving you without enough money for food and lodging.

2. Make a Budget & Stick to It

Before you even leave for your destination, it’s smart to create a travel budget. What can you reasonably afford to spend on accommodations, transportation, entertainment, meals, and shopping? Having a budget could help you avoid splurging on expensive dinners or overspending at local shops.

Recommended: How to Save for a Vacation: Creating a Travel Fund

3. Find Off-Season Destinations

If Cancun for spring break is too pricey for your college student budget, don’t stress. There are a number of great destinations that are off-season in the spring, ranging from the more rugged Jackson County, North Carolina to the Big Apple.

4. Only Travel as Far as You Can Drive

It’s about the journey, not the destination, right? You can make that (semi) true by taking a road trip with a few friends. On a road trip, you don’t need to follow any set schedule. Since there’s no flight or train to catch, and often no hurry to reach a destination, you can make spontaneous decisions and discover hidden gems along the way.

5. Avoid Tourist Traps

Doing spring break on a budget generally means skipping touristy destinations like Miami, New Orleans, and Cabo. However, there are plenty of cheaper alternatives to these locations that can save you money and that will probably be far less crowded, too.

6. Reach out to Friends & Family

If you have friends or family in another city, reach out and ask if they’d be willing to host you. If they agree, you could get some free lodging and meals out of it. Plus, you’d be connecting with locals who could guide you through the city and give some tips on cool and free stuff to do that you might not have found otherwise.

Recommended: How to Balance the Urge to Travel and the Need to Save

7. Ditch the Plane Ticket

Planes and cars aren’t the only way to land at your tourist destination. You can do spring break on a budget by hopping on an Amtrak train or a Greyhound bus, both of which have destinations all over the country. The best part? You can catch up on some work, sleep, or relaxation while you enjoy the ride.

8. Don’t Forget about Cruises

You could spend a fortune going to just Miami or Los Angeles. Or, you could check out some cheaper cruise options that could potentially take you all over Alaska, the Caribbean islands, or a slew of other destinations for less. There are even cruise options designed specifically for college students.

9. Consider Pitching a Tent

Do you get motion sickness in cars or boats? With camping, your feet will be firmly planted on the ground, and your budget will also likely stay down to earth. You can camp out in many destinations across the U.S. and even abroad, be it under the stars near a national park or near a great fishing hole in the Carolinas.

10. Look For a Deal

Sites like Groupon and LivingSocial offer a number of travel and hotel deals both for individuals and for group travel. Checking out which hotels are offering promotions could help you save when booking accommodations. You can also find deals on attractions near where you’re vacationing, too.

11. Sign Up for a Spring Break Volunteer Experience

Many colleges offer a program called “alternative break,” which allows students to travel and volunteer during their spring break. If your college doesn’t offer any alternative break trips, you can still find some opportunities through organizations like Habitat for Humanity and United Way.

12. Be a Tourist in Your Own State

If airfare is out of the question for your spring break budget, a budget-friendly alternative could be touring your own state. You can take a spring break road trip around your state or even take multiple day trips, the latter of which could allow you to have most of your meals at home with no hotel needed.

13. Fly on Unpopular Days

No, it’s not just your imagination: There are some days that are cheaper to fly on than others. If you’re not tied to a set departure and/or return date, use the flexible date search on a travel or airline site. This can help you find the cheapest travel dates for your trip.

14. Sign Up for Price Alerts

One helpful way to ensure you’re getting the best possible deal on your trip is to sign up for price alerts, a free service offered by several travel companies, such as Kayak, Skyscanner, and Google Flights. These sites track prices daily and alert you in real-time when the price changes for a flight, hotel, or rental car you want.

15. Ask for Extra Snacks

If you’re flying to your destination, be sure to grab the airplane snacks. And if you like the snacks, ask for seconds! You may be able to snag a free snack to help tide you over between meals when you land. The worst thing that can happen is that they say no.

16. Consider Airbnbs or Hostels

For those looking for the best tips on how to plan a spring break trip, one not-so-obvious one may be skipping hotels altogether. Staying at an Airbnb or hostel could be a cheaper travel hack than even a budget motel, especially if you don’t plan on spending much time in your room anyway.

17. Use Public Transportation

While Uber may be one of the handiest apps to have while traveling, relying on ridesharing and taxis could end up costing you a small fortune, especially if you’re traveling in a big city. Using public transportation could cost you a fraction of the price of an Uber, plus it will allow you to explore more of your destination as you navigate around subway and bus stations.

18. Bring Your Own Food

Grocery costs may be on the rise, but the cost of dining out can really wreak havoc on your spring break budget. If you want to try the local cuisine, you can typically do so much cheaper by going to a local grocery store and buying premade meals there or, better yet, making your own meals using fresh, local ingredients. This option may only be available if you’re staying at an Airbnb or hotel with a kitchenette, though.

19. Eat Out for Lunch, not Dinner

Eating out for dinner will often cost you far more than eating out for breakfast or lunch. And if you decide to eat out for dinner still, skip the drinks and desserts. These items typically have higher markups than other items on the menu. Plus, when it comes to desserts, the quality (and quantity!) may not be worth it — many restaurants don’t even make the desserts they serve.

20. Ask About Complimentary Hotel Meals

Students looking for spring break trips on a budget won’t want to miss out on this tried-and-true travel budget saver: Before booking your hotel, ask if they have any complimentary meals, such as a continental breakfast. It may not be as fancy or Instagram-worthy as the hottest brunch spot in town, but it will likely be a lot better for your budget.

21. Use The Free Hotel Coffee

Most hotels offer free coffee either in the lobby in the mornings or through small coffee makers in your room. It may not be as fancy as your usual Venti Coconutmilk Latte with two pumps of salted caramel, but it won’t cost you anything.

22. Look out for Free Samples

Looking to score some more free snacks? Add local farmers’ markets to your itinerary. Many markets are full of free samples, so you may even be able to scrounge together a free lunch. You may also be able to score free swag, like t-shirts and reusable bags, from local vendors and businesses, your hotel, or the local visitor’s center.

23. Prioritize Free Activities

Sure, you can spend $50 for a museum ticket. Or, you could search online for some free museums nearby. Many hot spring break destinations offer free walking tours, free museum days, and a plethora of other free activities, such as parks and beaches.

24. Find a Travel Buddy (or Four!)

You’ll find that going on a budget-friendly spring break trip can be a lot easier if you team up with friends. Pooling your college budgets together may even help you to afford nicer accommodations or a more far-flung destination.

25. Cash in Credit Card Rewards…

If you have a rewards or cashback credit card, you may want to save up your points to help fund your epic spring break. Having a travel rewards card can be an easy way to save on travel, especially if you’re able to use that card on purchases before heading out on vacation, which could help you build up even more rewards points.

26. …And Earn More Rewards While Traveling!

Using your rewards credit card on vacation may not help you save for your current trip. But if you rack up more rewards during your trip, you’ll already have a new vacation fund started before you even come back from spring break.

27. Research Student Discounts

Catching a movie or eating out during spring break? Ask about a student discount! You may be able to score some sweet savings even before your vacation, as companies like Expedia often offer student-only travel deals. You can also try StudentUniverse , which helps students get discounts on hotels, airfare, and more.

28. Ask About Membership Discounts

A ton of college discounts exist, but don’t rule out membership discounts you could get from family members. For instance, Costco, Sam’s Club, AAA, and AARP all offer travel discounts to their members. It may be worth asking some relatives about their memberships to save big on your spring break trip.

29. Avoid Transaction Fees

Transaction fees can be a real budget-killer if you’re traveling abroad. And even if you’re stateside, ATM fees can also put a dent in your spring break savings. So you may want to ask your card issuer about fees and plan accordingly to make sure you have enough cash on hand to avoid them.

30. Use Hotel Toiletries

TSA-approved toiletries can be overpriced, and buying them when you arrive at your destination may also mean overpaying for toiletries that you have loads of at home. The best alternative? Decant your own shampoo and conditioner into smaller bottles you can snag at The Dollar Store. Or, better yet, just use the hotel toiletries. They may not be what you’re used to, but your budget will thank you.

The Takeaway

Wondering how to plan a spring break trip on a budget? It may not be as hard as you think. If you’re willing to try off-peak destinations and hunt for discounts, you can save a ton of cash. Spring break trips on a budget don’t have to be a drag, either. You can still go to popular destinations if you create (and stick to) a spring break travel budget. Using rewards and cashback cards can also help you save on airfare and other travel expenses.

SoFi Travel has teamed up with Expedia to bring even more to your one-stop finance app, helping you book reservations — for flights, hotels, car rentals, and more — all in one place. SoFi Members also have exclusive access to premium savings, with 10% or more off on select hotels. Plus, earn unlimited 3%** cash back rewards when you book with your SoFi Unlimited 2% Credit Card through SoFi Travel.

Photo credit: iStock/onurdongel

**Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.

When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.

Approximately 61% of college graduates have student loan debt, according to data from the National Center for Education Statistics, and most of that money owed (more than 90%) is in the form of federal student loans. In other words, if you have student debt, you are not alone.

Federal student loan programs are funded by the federal government, and while virtually no one likes being in debt, there’s an upside here. These programs can not only help you pay for college but also repay what you owe in different ways, to suit your particular situation.

In this guide, you’ll learn about the types of federal student loans available and the tactics federal student loan borrowers can use to eliminate their debt. There’s likely to be a plan that helps you balance your budget and enjoy life while paying off what you owe.

Types of Federal Student Loans

The types of federal student loans include the following. The federal student loan program includes the Direct Loan program, and the Direct Subsidized, Unsubsidized, PLUS, and Consolidated loans exist under that umbrella.

•   Direct Subsidized loans: Direct Subsidized loans help undergraduate students (who are eligible and demonstrate financial need) cover the education costs. In terms of when the interest accrues, that doesn’t happen while you are in school at least half-time or during deferment.

•   Direct Unsubsidized loans: Direct Unsubsidized loans, on the other hand, help undergraduate, graduate, and professional students cover the costs of education. These loans are not need-based, but the government does not cover the interest while you’re in school.

•   Direct PLUS loans: Graduate or professional students and parents of dependent undergraduate students can get Direct PLUS loans. You do not have to demonstrate financial need to get a Direct PLUS loan, but you must undergo a credit check.

•   Direct Consolidation loans: Direct Consolidation loans let you combine your eligible federal student loans into a single loan with a single loan servicer. This helps reduce the complexity of paying on multiple loans.

How do you get a federal student loan? You file the Free Application for Federal Student Aid (FAFSA), and as long as you’re eligible for federal student aid, the financial aid will appear on your financial aid package at the school you apply for.


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

Federal Programs for Student Loan Borrowers

Among the federal programs for student loan borrowers are government grants and tax deductions, as well as federal student loan programs that can help with repayment. Among these are income-driven repayment plans, deferment and forbearance, and forgiveness. Here’s a closer look at some of your potential options as you pay off student loans (yes, you will make it happen).

1. Government Grants

Federal grants can also help cover college costs for students attending college or career school. You don’t have to pay back grant money unless you fail to meet the qualifications for the grant. (In this way, they aren’t repayment plans but coverage of educational costs upfront.)

For example, you may be able to take advantage of a Pell Grant or a Teacher Education Assistance for College and Higher Education (TEACH) grant.

•   Pell Grant: The Pell Grant is a need-based grant awarded by the US Department of Education to undergraduate students with high financial need. The Federal Pell Grant maximum is $7,395 for the 2023-2024 award year between July 1, 2023 and June 30, 2024.

•   TEACH Grant: The TEACH Grant offers funds to students who plan to teach full-time for at least four years in a high-need field. They must meet the service obligation after graduation. For example, they must work in a low-income elementary school, secondary school, or educational service agency.

2. Income-Driven Repayment Plans

When it comes time to pay off federal student loans, the Department of Education has the following income-driven repayment plans, which aim to keep student loan payments at a comfortable level:

•   Saving on a Valuable Education (SAVE) plan: The SAVE plan, which replaces the REPAYE plan, calculates your monthly payment amount based on your family size and income. It offers the possibility of forgiveness in as little as 10 years for some borrowers, and the payment cap is 10% of discretionary income and that may drop to 5% for some from the summer of 2024 onward.

•   Pay As You Earn (PAYE) Repayment plan: The PAYE plan means your monthly payments equal to 10% of your discretionary income, divided by 12. It will never amount to more in payments than the 10-year Standard Repayment plan amount. Expect a 20-year term.

•   Income-Based Repayment (IBR) plan: The IBR plan means your monthly payments are equal to 10% (15% if you’re an older borrower whose loans date to before July 1, 2014) of your discretionary income. Repayment terms are 20 years for new borrowers; 25 years for older borrowers.

•   Income-Contingent Repayment (ICR) plan: The ICR plan means you’ll make monthly payments — the lesser of what you would pay on a repayment plan with a fixed monthly payment over 12 years or 20% of your discretionary income, divided by 12. The term is typically 25 years.

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

3. Tax Deductions

Looking for good things about filing your taxes? Here’s one: When you claim the student loan tax deduction, you claim the interest you paid on your student loans, whether they are federal or private. You can deduct student loan interest up to $2,500; you don’t need to itemize to get the deduction.

To be eligible to deduct student loan interest, you must pay interest on a qualified federal or private student loan for you, your spouse, or a dependent child during the tax year. You must meet modified adjusted gross income (MAGI) requirements, which is your annual gross income minus certain deductions. You must not have a filing status of married filing separately, and someone else may not claim you as a dependent.

4. Military Service

You may remember the original G.I. Bill from history class, which allowed military service members to attend school after World War II. You can still get help paying for school if you currently serve in the military.

The branches of the United States Military offer loan payment programs that can help you pay off your federal student loans, such as the Air Force JAG program, Army College Loan, Army Reserve Loan, National Guard Loan, and Navy Student Loan repayment options.

Research how military loan repayment programs work for your respective military branch to potentially pay off a significant portion (or even all) of your student loan debt.

5. AmeriCorps

You can also consider using AmeriCorps as a vehicle for paying off your student loans. AmericCorps is an organization through which individuals can dedicate themselves to service and volunteering in the United States.

AmeriCorps volunteers can qualify for Public Service Loan Forgiveness (PSLF), meaning they can get their federal Direct student loans forgiven (“forgiveness” means you don’t have to pay back the loan and can stop repayment) after making 10 years (120 months) of qualifying payments. AmeriCorps service is considered the “employer” for PSLF.

6. Deferment and Forbearance

Deferment and forbearance are similar in that they allow federal loan borrowers to temporarily lower or stop making payments on their federal student loans for a certain period. The steps to achieve deferment and forbearance are also usually the same: Contact your loan servicer, submit a request, and provide the requested documentation.

However, the main difference is that interest does not accrue on some Direct Loans during a deferment. When your loan is in forbearance, you must pay the interest that accrues on your loans.

7. Forgiveness

Another option if you’re looking to pay off federal student loans could be forgiveness. As noted above, this term means that you don’t have to pay back some or all of your federal student loans.

As with serving in AmeriCorps, you may be able to get your federal student loans forgiven via the PSLF program if you work for a government or nonprofit organization. The PSLF program forgives the remaining balance on your Direct loans after you make 120 qualifying monthly payments under an accepted repayment plan and as long as you work full-time for an eligible employer.

You may also receive forgiveness of up to $17,500 on Direct Subsidized and Unsubsidized loans under the Teacher Loan Forgiveness (TLF) program. You may receive forgiveness if you teach full-time or complete five years in a low-income school or educational service agency and meet other qualifications. You may also receive forgiveness for consolidation loans, which occurs when you combine all your loans into one payment.

Note: Private student loan forgiveness is not available as it is with federal student loans. Still, there are avenues you can pursue if you are struggling to repay what you owe, such as discussing hardships with your private loan lender or seeking credit counseling.

The Takeaway

The majority of college graduates have student loan debt, and paying it off can be a stressful process. But there is help. If you have federal student loans and are looking for ways to pay them off as affordably as possible, you likely have plenty of options. Tapping into income-based repayment plans, considering military service or AmeriCorps, deferment, forbearance, or forgiveness can help you as you work to manage and eliminate those student loan payments.

For some people, refinancing their federal loans with a private loan may make sense and be a way to lower their payments or speed up their repayment schedule. However, it’s important to note the following:

•   If you refinance federal loans with a private loan, you forfeit access to federal protections and benefits, such as the deferment, forbearance, and forgiveness programs mentioned above.

•   If you refinance for an extended term, you may pay more interest over the life of the loan, so think carefully if this suits your overall financial picture.

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.

Photo credit: iStock/PeopleImages

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.

If you have student loans, you may sometimes see the total loan balance go up, thanks to such factors as your interest rate, your repayment term, or loan fees.

Whether your student loans are in a period of deferment or you’ve diligently been making payments every month, it can definitely be frustrating to see your balance increase instead of go down. Having student debt can be stressful enough without feeling as if it’s growing vs. being paid off.

For information and support in this situation, read on. You’ll learn more about this scenario, including:

•   Why can your student loan balance increase?

•   What factors contribute to a student loan balance increasing?

•   How can you reduce your loan total?

•   What repayment options could help?

Understanding Loan Balances

Here’s one of the basics of student loans: When you first take out a loan, your loan balance is the amount you borrowed. However, that loan balance can increase or decrease depending on your payments, interest charges, and fees.

Some factors that can affect your loan balance include:

•   Loan principal: This is the amount you originally borrowed. If you took out a $25,000 student loan to pay for school, your principal amount is $25,000.

•   Interest rate: Interest is the cost of borrowing money and can be part of what you owe on your student loan balance. Federal Direct loans for undergraduates currently have fixed interest rates of 5.50%, while Direct Unsubsidized Loans for graduate students have a fixed rate of 7.05%. Direct PLUS loans have a rate of 8.05%.

The rates on private student loans vary, but they may currently range from around 4% to 16%, depending on your credit, the lender you choose, and when you borrowed. Private student loan rates may be fixed or variable. If your rates are variable, meaning they fluctuate with market conditions, it can be extremely challenging to predict exactly how your loan balance will change over time.

•   Annual percentage rate (APR): You typically see this term attached to private student loans, rather than federal loans. It’s a more inclusive measure than interest rate alone, since it includes interest, fees, and other charges. This also is a way of gauging how much you will pay for your student loans.

•   Fees: Some loan fees that could impact your student loan balance include disbursement fees, origination fees, and late payment fees. These charges can contribute to your loan balance.

When you sign into your student loan account, your loan balance is the total amount you currently owe on your loan.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Factors that Contribute to Increased Loan Balances

Whether you’re in a period of deferment or active repayment, you probably don’t expect your student loan balance to be increasing over time. Unfortunately, there are various factors that can cause your federal student loan balance to go up, including the following:

•   Interest charges: Most student loans come with a grace period, meaning you don’t have to make payments while you’re in school or for six months or so after you graduate. However, most loans, with the exception of Direct Subsidized Loans, start accruing interest right away from the date of disbursement. If you borrowed as a freshman in college and deferred payments the whole time you were in school, your loan balance could significantly increase after four and a half years of non-payment.

•   Loan fees: Student loan fees can also increase your balance. For instance:

◦   Federal student loans come with loan fees of 1.057% or 4.228%, depending on your loan type.

◦   Some private lenders charge such fees as origination fees.

◦   You might also rack up fees if you make late payments or get charged for non-sufficient funds in your bank account. Student loans that go into default can also incur a significant amount in collections fees.

•   Deferment and forbearance: You may postpone payments through deferment or forbearance if you go back to school, encounter financial hardship, or have another qualifying reason. Most loans accrue interest during this time, causing your loan balance to grow. The only exception is Direct Subsidized Loans, which don’t accrue interest during periods of deferment.

•   Interest capitalization: In some circumstances, interest charges capitalize, or get added onto, your principal balance. For example, interest can capitalize on federal student loans if you consolidate them with a Direct Consolidation Loan. Then, you’ll end up paying interest on top of interest, resulting in higher borrowing costs.

•   Repayment plan: If you stay on the standard 10-year plan, you should see your balance go down as you make payments. However, income-driven plans base your monthly payment on your income, not on what will pay your balance off within a certain timeframe. If your monthly payments are low, you could see your balance increase over time (this is known as negative amortization). Note that IDR plans eventually offer loan forgiveness if you still have a balance after 20 or 25 years.

•   Insufficient monthly payments: If you pay a lower amount than your required monthly payments, you’ll also see your balance increase. Plus, you could be subject to late fees, and your loan may go into delinquency and, eventually, default.

Strategies for Managing and Reducing Loan Balances

Student loans are a phase you’re going through, so try not to let them weigh too heavily on you. They are akin to having a mortgage or car loan; you will get out from under this kind of debt.

Now that you’ve learned what increases your total loan balance, consider these strategies for reducing it.

•   Pay on time: Making your monthly payments on time will help you avoid late fees and penalties.

•   Use autopay: By setting up automatic payments from your bank account, you’ll be less likely to miss a payment. Many lenders also offer a 0.25% rate discount for using autopay.

•   Stay on the standard plan, if possible: If you have federal student loans, sticking with the standard 10-year plan will help you pay off your balance in 10 years, assuming you don’t use deferment or forbearance during that time.

•   Make extra payments: Throwing extra payments toward your loan balance, whether on a one-off or monthly basis, can help you pay it down faster and save money on interest.

•   Pursue loan forgiveness: A loan forgiveness program like Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness can help discharge all or part of your student loan balance at once.

Here are some other strategies that may not reduce your federal student loan balance, but could help you manage it better:

•   Apply for income-driven repayment: IDR plans can reduce the money you pay toward student loans each month. Plus, the new SAVE Plan (which replaces the REPAYE Plan) comes with an interest subsidy, meaning the government will cover any unpaid interest charges from month to month.

Paying your federal loans on an IDR plan is also required to qualify for PSLF.

•   Consolidate your loans: Consolidating your loans with a Direct Consolidation Loan can simplify repayment, especially if you owe multiple loans with different due dates to different servicers. Watch out for interest capitalization, though.

•   Refinance your student loans: If you have good credit (or a creditworthy cosigner), you might consider refinancing student loans for a better interest rate and new repayment terms. Some potential advantages of refinancing student loans can include lowering your monthly payment, saving money over the life of the loan, and/or paying off your balance faster.

However, it’s important to note the following: Refinancing federal loans with private ones means you forfeit access to federal benefits and protections, including forgiveness programs. Also, if you refinance for an extended term, you may pay more interest over the life of the loan. For these reasons, refinancing student loans requires careful thought to decide if this is the right next step for you.

💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Long-Term Financial Impact of Growing Loan Balances

A growing student loan balance is not only stressful, but it can also harm your overall financial health.

The amount of debt you owe, for example, makes up 30% of your FICO® credit score. Owing a sizable amount of debt can drag down your score, making it difficult to qualify for new loans or credit cards or get affordable rates. Plus, a high debt load increases your debt-to-income ratio (or DTI), which lenders prefer you to keep under 36%.

To avoid escalating balances, it’s important to develop a repayment plan for your student loans. Take a look at your budget, and review the various repayment plans available to you. Consider what steps you can take to manage your student loan balance and minimize its impact on your daily life as well.

Tips for Preventing Loan Balance Increases

To prevent your loan balance from increasing, make sure you understand the terms and conditions of your loans. If your loan accrues interest right away, consider making full or interest-only payments while you’re in school to prevent your balance from rising during your grace period.

Make a budget and check in with your finances often, so you can choose a repayment approach that works for you. If you haven’t borrowed yet, consider the full array of financing options to reduce your reliance on student loans.

For example, applying for grants and scholarships, accessing a federal Work-Study or other job, or choosing a school with lower tuition costs could help you keep student loan borrowing to a minimum.

Navigating Loan Repayment Options

If you borrowed one of the various types of federal student loans, you have a variety of repayment plans at your fingertips, which can prove helpful when eliminating your loans. These include:

•   Income-Driven Repayment (IDR) Plans, which adjust your monthly payments to a percentage of your discretionary income and eventually provide loan forgiveness

•   Standard Repayment Plan, which involves fixed payments over 10 years

•   Graduated Repayment Plan, which requires lower payments at first that increase over time

•   Extended Repayment Plan, which spans 25 years

You may also qualify for loan forgiveness or repayment assistance if you work in public service. (Postponing loans through deferment or forbearance is an option during financial hardship, though both can cause your loan balance to increase.)

Private student loans don’t come with as many repayment plan options, but your lender may be willing to modify payments if you’re struggling to make your monthly payments. Private loans also aren’t eligible for federal forgiveness, though some states and private organizations offer repayment assistance if you work in a certain field or area.

In addition, it can be valuable to get qualified, reputable credit counseling if you are struggling to pay private student loans. The Consumer Financial Protection Bureau provides more information on this kind of credit counseling .)

Before picking a repayment plan, make sure you understand how it will impact your loan balance and overall costs. A longer plan can reduce your monthly payments, as noted above, but it tends to increase the amount of interest you pay over the loan’s term.

Recommended: Private Student Loan Guide

The Takeaway

Student loan debt, as many Americans know, can be stressful, and seeing your loan balance rise can add to this situation. Understanding what increases your student loan balance (such as your interest rate, loan fees, and repayment plan) can help you avoid paying more than you need to on your debt.

Everyone’s situation is unique, so consider your budget, financial goals, and any plans for loan forgiveness when choosing a repayment strategy that works for you. You may find that changing your federal loan repayment plan or refinancing your existing loans can help you better manage your student loan debt.

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.

Photo credit: iStock/:Olemedia

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.