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Americans are carrying record levels of credit card debt. And, with the average credit card annual percentage rate (APR) for purchases now averaging 24.28%, the interest on debt can be as crushing as the balance alone.

Getting out from under high-interest debt can seem like a daunting prospect. The good news is that there are ways to make the process more manageable and a lot less overwhelming. While it can take some time, using a mix of smart paydown strategies can help you reduce your debt, lower your interest rates, and put you on the road to debt-free living. Here’s a look at some of the best ways to reduce your credit card debt.

Start by Creating A Budget

If eliminating credit card debt is the destination, creating a budget is like the road map that gets you there. While it may sound like a complicated process, it doesn’t have to be. These simple steps will get you started.

Gather Financial Statements

It might be a little painful to comb through bills and account statements, but the more information you have from the start, the easier it will be to set up a realistic budget. Try to collect the last three months of these statements in digital or paper form:

◦   Mortgage/Rent

◦   Utilities (water, gas, heat, internet, cable, HOA, etc)

◦   Pay stubs

◦   Credit card and auto loan statements

◦   Student loans or other miscellaneous recurring loans and bills

◦   Subscription services (Amazon, Netflix, Spotify, etc)

Taking the time to gather these documents can give you a clearer picture of where your money is going each month. It can also help you spot easy places to cut back on spending, such as a gym membership you no longer use or a streaming service you rarely watch.

Determine Expenses vs Income

Once your finances are all laid out, you can tally up your average monthly income (after taxes) as well as your average monthly spending. Hopefully, the amount you spend each month is less than the amount you bring in each month. You’ll also want to make a list of your usual expenses and divide them into essential and nonessential monthly expenses.

Implement Budgeting Guidelines

A budget is simply a plan for how you will spend your money. Once you see how you are currently spending your money, you may realize that your spending doesn’t necessarily line up with your priorities. There are many ways to look at budgeting, but one easy framework is the classic 50/30/20 budget. It doesn’t require complicated spreadsheets or tricky apps to get started. The 50/30/20 method simply stipulates:

•   Half a person’s take-home pay should go towards “essential spending.” This includes housing costs, health insurance, groceries, utilities, minimum payments on debt, and anything else you need to pay each month.

•   One-third of a person’s post-tax pay should be tagged for “discretionary spending.” This is spending you could cut back on if needed, such as meals out, entertaining, clothing, or a gym membership.

•   Finally, 20% of post-tax income should be set aside for saving and debt payoff. The rest of a person’s paycheck is ideally reserved for retirement, emergency savings, and making debt payments beyond the minimum.

The 50/30/20 budgeting method can work well for beginners because of its simplicity and flexibility. Trying to adhere to the percentages can sometimes show budgeters their blind spots, or perhaps highlight areas where they might need to improve. But, it can also be flexible. Depending on the cost of living in your area and your priorities, you may want to play with the percentages.

Recommended: How to Stop Spending Money

Paying More Than The Minimum

When you have multiple credit card accounts racking up charges and interest, it can sometimes feel overwhelming. You might be unsure which, if any, to prioritize for payoff, and end up just paying the minimum due on every card each month.

But, if you just make the minimum payment due you might be surprised to learn how much more you end up paying in interest as the account balance accrues. Paying more than the minimum amount owed each month could lead to saving in the long run since there’s a smaller balance to charge interest on. SoFi’s credit card interest calculator can give you a general idea of how much you could possibly save on interest by calculating different repayment options.

SoFi’s credit card interest calculator can give you a general idea of how much you could possibly save on interest by calculating different repayment options.

Recommended: All You Need to Know About Credit Card Minimum Payments

Debt Payoff Strategies

Paying off more than the minimum each month is great, but coming up with a payoff strategy could offer a better outcome in the long run. Employing a method that works for your lifestyle could result in things like building momentum, alleviating stress, and possibly making it simpler overall to conquer debt.

There are a number of simple debt-paydown strategies but here are two popular ones to consider.

Snowball Method

Like a snowball rolling down a hill, the snowball method starts with the smallest debt balances first, then builds towards the larger balances. You start by listing your debt balances from smallest to largest, without considering interest rate. You then put extra cash toward the smallest bill, while paying the minimum on all of the others. Once that bill is eliminated, you put extra cash toward the next-smallest bill. You keep the pattern going until all debt is gone.

The snowball method sometimes gets a bad rap because focusing on small debt balances first could mean paying more interest in the long run. But this method can actually have a positive psychological effect. Wiping away smaller debts can give you a sense of accomplishment that helps you power through the debt repayment process.

Avalanche Method

If small wins off the bat don’t matter much to you, then you might turn to the avalanche method. This strategy starts with paying down the biggest interest rate debt first, paying minimums on all other debts. You contribute all free cash to the bill with the highest interest rate until it’s paid down or off. Continue, paying down debt with the next highest interest rate. Keep going until all debt is gone.

This method allows you to save on interest payments over the life of each credit card balance. The downside is that it takes longer to see any “wins.” But, once things start moving, it should have an avalanche effect, with each loan toppling.

Consolidating Multiple Debts

Having multiple bills, due dates, and accounts can lead to confusion over amounts due, resulting in missed payments and late fees. For some, a credit card consolidation loan might help to cut through the confusion by rolling all their revolving debt into one unsecured personal loan.

How can a personal loan possibly help? If you have outstanding amounts owed on multiple cards, you may be able to consolidate all the debt into one personal loan with a single fixed rate payment.

What’s more, unsecured personal loans often come with a fixed interest rate that’s lower than the average credit card rate, which means less interest charges could accrue each month.

Depending on how quickly you pay off a personal loan, you could save money on interest over the life of the loan with a lower fixed APR. Streamlining debt can also lead to more peace of mind, as can having a set term with a final payment date, instead of a revolving debt like a credit card. Rather than having multiple open-ended debts of differing amounts with varied APRs, you end up with one payment a month, with one rate and a payoff date.

Unsecured personal loans aren’t for everyone. While their APRs are generally lower than credit cards, not everyone will qualify for the lowest possible rates. And taking out a personal loan is still taking out additional debt, so it’s important to weigh the ramifications of adding a loan to one’s credit history.

The Takeaway

If you’re struggling with high-interest debt, know you’re not alone. Also know that there are a number of ways you can tackle the problem. A good first step is to look at your current income and expenses, set up a budget, and select a payoff strategy (such as the snowball or avalanche method). You might also consider consolidating your debt to simplify repayment and, ideally, lower your interest rate.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is the fastest way to pay off credit card debt?

One efficient way to wipe out credit card debt is to make extra payments beyond the minimum amount, prioritizing cards with the highest interest rate. This approach is known as the avalanche method. Another strategy to consider is the snowball method, which calls for paying off the smallest debts first and then working your way up to the largest ones.

Is it a good idea to pay more than the minimum on credit card balance?

Yes, it’s generally a smart move to pay as much above the minimum payment as possible. Paying more than the minimum can help you save money on interest, pay off debt faster, and improve your credit utilization ratio — which may help boost your credit score.

What is the 50/30/20 rule of budgeting?

The 50/30/20 rule of budgeting calls for 50% of your take-home pay to go toward necessary expenses, 30% for things you want, and 20% for savings or to pay off debt.

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.

SOPL-Q225-020

Using retirement funds to pay for college may seem like a convenient solution when faced with the high cost of higher education, especially for parents looking to support their children. However, tapping into these savings can have significant financial consequences.

While certain retirement accounts, like IRAs, allow penalty-free withdrawals for qualified education expenses, the funds are often still subject to income tax and may reduce long-term retirement security.

Understanding the pros and cons can help families make informed decisions about whether to use retirement savings for college costs.

Pros of Using Retirement Funds to Pay for College

If you already have the money saved up, there can be some upsides to taking money out of your retirement funds so that your child won’t need to take out student loans.

May Avoid an Early Withdrawal Penalty

If you have an individual retirement account (IRA), taking an early withdrawal typically results in income taxes on the withdrawal amount plus a 10% penalty. However, if you withdraw funds for qualified higher education expenses, the 10% penalty is waived.

That said, the withdrawn funds will still be considered taxable as income. Also, this tax break does not apply to 401(k) accounts. But if you roll over your 401(k) into an IRA, then you would be able to withdraw the funds from the IRA and avoid the penalty.

May Avoid Taxes Altogether

If you have a Roth IRA, you can withdraw up to the amount you’ve contributed to the account over the years without any tax consequences at all.

Paying Interest to Yourself With a 401(k) Loan

In addition to allowing you to take early withdrawals, some 401(k) plans also let you borrow from the amount you’ve already saved and earned over the years.

If you borrow from a 401(k) account, that money won’t be subject to taxes the way an early withdrawal would. Also, when you’re paying that loan back, the money you pay in interest goes back into your 401(k) account rather than to a lender.

Drawbacks of Using Retirement Funds to Pay for College

Before you raid your retirement to pay for your child’s college tuition, here are some potentially negative aspects to consider.

May Be Negative Tax Consequences

Even if you manage to avoid being charged a 10% early withdrawal penalty on your retirement account, some or all of the money you withdraw from a retirement account may be considered taxable income. Depending on how much it is, you could face a larger-than-usual tax bill when you file your tax return for the year.

401(k) Loan Repayment Can Be Affected by Your Job Status

If you take out a large loan from your 401(k), then leave your job, you may be required to pay the loan in full right then, regardless of your original repayment term. If you can’t repay it, it’ll likely be considered an early withdrawal and be subject to income tax and the 10% penalty.

You May Have to Work Longer

Taking money out of a retirement account not only lowers your balance, but it also means that the money you’ve withdrawn is no longer working for you.

Due to compounding interest, the longer you have money invested, the more time it has to grow. But even if you replace the money you’ve taken out over time, the total growth may not be as much as if you’d left the money where it was all along.

Alternatives to Using Retirement Funds to Pay for College

While you can use retirement funds to pay for college, there are other options to consider, too.

Scholarships and Grants

One of the best ways to pay for a college education is with scholarships and grants, since you typically don’t have to pay them back.

Check first with the school that your child is planning to attend (or is already attending) to see what types of scholarships and grants are available.

Then, make sure your child fills out the Free Application for Federal Student Aid (FAFSA®). The information provided in the FAFSA will help determine his or her federal aid package, which typically includes grants, federal student loans, and/or work-study.

Finally, you and your child can search millions of scholarships from online scholarship databases. While your child may not qualify for all of them, there may be enough relevant options to help reduce that tuition bill.

Federal Student Loans

As mentioned above, filling out the FAFSA will give your child an opportunity to qualify for federal student loans from the U.S. Department of Education.

These loans have low fixed interest rates, plus access to federal benefits, including loan forgiveness programs and income-driven repayment plans.

With most federal student loans, there’s no credit check requirement, so you don’t have to worry about needing to cosign a loan with your child.

Parent PLUS Loans

If you’re concerned about the effect of student loan debt on your child, you can opt to apply for a federal Parent PLUS Loan to help cover the costs of college.

Keep in mind that the terms aren’t usually as favorable for Parent PLUS Loans as they are for federal loans for undergraduate students. The interest rates are currently higher, and you may be denied if you have certain negative items on your credit history.

Private Student Loans

If your child can’t get federal student loans, is maxed out on loans, or has pursued all other options to no avail, private student loans may be worth considering to make up the difference.

To qualify for private student loans, however, you and/or your child may need to undergo a credit check. If your child is new to credit, you may need to cosign to help them get approved by being a cosigner — or you can apply on your own.

Private student loans don’t typically offer income-driven repayment plans or loan forgiveness programs, but if your credit and finances are strong, it may be possible to get a competitive interest rate.

Recommended: A Complete Guide to Private Student Loans

The Takeaway

Using retirement funds to pay for college is one way to help your child, but you may not want to risk your future financial security. Take the time to help your child consider all of the options to get the money to pay for school.

Options to pay for college include cash savings, working a part-time job, scholarships, grants, federal student loans, and private student loans.

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

FAQ

Can I use retirement funds to pay for my child’s college education?

Yes, it’s possible to use retirement funds, such as those from an IRA or 401(k), to pay for college expenses. However, this decision carries potential tax implications and penalties, depending on the type of account and how the funds are withdrawn.

What are the tax implications of withdrawing from an IRA for college expenses?

Withdrawals from an IRA for qualified higher education expenses can avoid the 10% early withdrawal penalty. However, the amount withdrawn is still considered taxable income, which could impact your tax bracket and financial aid eligibility.

What are the alternatives to using retirement funds for paying college tuition?

Alternatives include applying for scholarships, federal student loans, Parent PLUS Loans, and private student loans. These options can help cover college costs without compromising your retirement savings.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

SOISL-Q225-043

Replacing windows can range tremendously in price, with basic, standard-size windows costing just $100 or so to expansive, custom bay windows that can run $7,000 or more. Having quality windows can not only make your home look better, it can boost energy efficiency, too. Here, learn more about this important home improvement project and the usual costs.

How Much Do Windows Cost?

A standard new window, installed, can cost anywhere from $500 to $1,000, according to Home Depot. Those prices, however, can go much higher if you are shopping for something special, such as a bay or casement window, wood vs. vinyl windows, or a custom size.

Window frames are commonly made of wood, vinyl, metal, or fiberglass.

•   Of those, vinyl windows are the most popular choice. The average cost of a double-hung, double-pane vinyl window, is around $600 in 2025. Installation, according to HomeGuide, can add another $300 to the cost.

   Vinyl windows typically last for 30 years, don’t need to be painted, and are easy to clean. Compared with their cheaper cousin, aluminum, vinyl windows excel when it comes to insulation and improving energy efficiency, and they will not rust.

•   Fiberglass and fiberglass-composite windows are stronger than vinyl. Like vinyl, they offer a high degree of energy efficiency, and with both types of window, there are options to enhance the energy efficiency. Expect to pay $600 to $2,000 for one fiberglass window, installed.

•   Wood windows can lend a classic look. Expect to pay more — around $875 to $1,875 in 2025, including installation, according to This Old House. Custom sizes and styles can cost significantly more. Wood windows tend to be harder to maintain than vinyl windows, given that the paint can peel or the wood can start to rot if it gets wet.

Recommended: How Much Does It Cost to Remodel or Renovate a House?

When Should I Replace My Windows?

If you’re thinking about replacing your windows, consider these questions. First, do your windows show any damage? Are they drafty, or have you noticed an increase in your electrical bills in the winter when the heat is on, or in the summer when the air conditioning is on?

Is there frequent moisture buildup, or condensation, on the outside of the glass, or is moisture trapped between layers of glazing, signaling leaky seals? Can you hear too much noise outside? Are you ready for a new look?

If the answer to any of these questions is yes, it may be time to consider replacing your windows. Or if you are on a smaller budget, consider repairing them.

If you’re buying a new home, an inspection will be a part of your mortgage process. It’s best to have the windows inspected, and if there are major issues, try to negotiate for their replacement before you close on the house.

Can I Repair Old Windows?

If your windows are in pretty good shape, it may make sense to repair or update them rather than replace them. Doing so can be a cost-effective way to help you save money on energy costs and reduce drafts and moisture in your home.

•   Check windows for air leaks.

•   Caulk and add weather stripping as needed.

•   Consider solar control film that can block heat and reduce glare.

•   If a pane is cracked, in a pinch the glass alone can be replaced with an insulated glass unit.

Recommended: What Are the Most Common Home Repair Costs?

How Long Do Windows Last?

The lifespan of a window depends on a number of factors, such as quality and type of material, local climate, and proper installation. In general, you can expect windows to last 15 to 30 or even 50 years.

Wood windows can last a long time, but might require a bit of maintenance on your part, whereas vinyl or fiberglass windows may require none. Fiberglass typically lasts the longest period of time.

Your local weather can play a big part. Extreme heat or cold can shorten the lifespan, salt spray from the ocean can corrode window exteriors, while humidity can lead to warping or rotting.

Whether or not a window is properly installed can also impact how long it lasts. If it is sealed improperly, for example, moisture may get in and damage the frame.

Finally, consider how much a window is used. Normal wear and tear on parts in windows that are opened and closed frequently can lead to replacement more often than windows that are rarely opened.

Should I Replace All My Windows at Once?

Whether or not you decide to replace all of your windows at once will largely depend on your budget. Consider that the price to replace 10 windows in a modest house could be several thousand dollars.

However, replacing all your windows at once can yield bulk savings, qualify for discounts, and save by having installation done once vs. paying for multiple visits. You might consider a home improvement loan (which is a kind of unsecured personal loan) to get the job done all at once if you don’t have enough cash saved up.

If you don’t have the budget to replace all your windows in one go, it’s common to swap windows out in stages. In this case, windows at the front of the house are generally the first to be replaced. They’re public-facing and add to the curb appeal of the home. The windows in the back of the house tend to come next, followed by any upstairs windows.

What Type of Window Should I Buy?

The first thing to consider is materials. You might consider wood windows if you’re trying to match them to an existing wood exterior or trim. You might choose fiberglass or composite for its durability and ability to look like painted wood. Or you might decide on vinyl for its affordability.

You’ll also want to consider the many types of windows available. For example, single-hung windows are among the most popular and cheapest options. They have a fixed upper window and allow you to open a lower window sash.

Double-hung windows are pricier but have two moving window sashes that allow for increased airflow and easier cleaning. There are also bay windows, arched windows, sliding windows, and many more to choose from.

The glass option you choose is an important decision. There are a variety of insulating options, such as dual-pane or triple-pane windows. Glass can be treated with a low-emittance coating to reflect heat in the summer and keep it in in the winter.

In climates where you need to cool the house for much of the year, consider three-coat low-e glazing, which best reduces heat from the sun. In colder climates that require more heating, it may make sense to go with a two-coat low-e treatment.

The space between glass may be filled with a nontoxic gas that can provide better insulation than air.

What’s the Best Time of Year for Replacing Windows?

Spring and fall tend to be the most popular times to replace windows. That’s because in these more moderate months, you don’t have to worry about winter air getting into your house, requiring you to jack up your heat or close off rooms to control drafts. The same holds true for summer: Avoiding the hot season can help you sidestep blasting the a/c as windows are taken out and replaced. These factors can be especially irksome if you’re having multiple windows replaced.

Weather can affect how materials behave. For example, caulk doesn’t adhere well in extreme cold, nor does it cure well in very high temperatures. As a result, you may want to aim to replace windows when temperatures are between 40 and 80 degrees.

If you can stand the cold, you may be able to secure a discount to have windows installed in the winter. A contractor can help you decide on the right time of year to have your new windows installed.

The Takeaway

The cost of replacing windows depends on the materials (wood, vinyl, fiberglass), style, size, and labor costs. Prices can range from several hundred to several thousand dollars per window. Think of new windows as a long-term investment that may provide energy savings, visual appeal, and, potentially, enhanced resale value. Typically, people finance them from savings or with a personal loan,

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is the average price for replacement windows?

Windows can typically cost anywhere from $100 or so to a few thousand dollars each, depending on such factors as size, material, and where you live and purchase from. As you might guess, custom windows can be pricier than standard-size ones.

Is it cheaper to replace all windows at once?

Yes, it can be cheaper to have all your windows replaced at once. You might save on a bulk purchase, qualify for discounts, and pay less by having installation done just once vs. having contractors make multiple visits.

Should I replace windows that are more than 20 years old?

Yes, windows that are 20 years or more old and are experiencing issues like drafts, condensation, and diminished energy efficiency can benefit from replacement. They may not be at the very end of their lifespan but could probably be nearing the date that they should be upgraded.

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.

SOPL-Q225-049

Whether you’ve been turned down for a private student loan or you’re applying for the first time, it’s important to understand how a cosigner can impact your loan application.

Having a cosigner on a student loan is a bit like a letter of recommendation to get into college. A cosigner can reassure the bank or lender that you are capable of repaying the loan. A cosigner is not always required for student loans, such as with most federal student loans. Depending on a student’s financial history, employment, and what type of loans they’re applying for, the likelihood of requiring a cosigner will vary.

Read on to learn more about what a cosigner is and when it may make sense to add one to your student loan application. This article will also discuss some of the risks involved with being a cosigner, and some tips on how to ask someone to be a cosigner on a student loan.

What Is a Student Loan Cosigner?

A cosigner is a person who agrees to repay the loan if a borrower defaults or is otherwise unable to pay their debt. Adding a cosigner to a student loan application could help the primary borrower secure a lower interest rate, depending on the cosigner’s financial and credit history.

When a cosigner takes on a student loan with the borrower, they’re assuming equal responsibility to repay the loan. Any negative actions on the loan, such as a late payment or defaulting, could harm the cosigner’s credit.

How to Decide If You Need a Cosigner on a Private Student Loan

Before deciding whether you need a cosigner on a private student loan, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA®). This will determine how much aid you’ll receive, and help you and your family determine how much of a gap you’ll need to fill with other sources of funding.

Once all other options are exhausted, students could look into private student loans and consider a cosigner. When considering a cosigner, there are several factors to evaluate, including the type of loan you’ll be applying for, your credit history, credit score, income, and any history of missed payments. Continue reading for a more in-depth discussion of these factors.

1. What Type of Student Loans Are Being Considered?

The type of loans you’re applying for may affect your need for a cosigner.

Federal Student Loans

For the most part, federal loans do not require a credit check or a cosigner. The federal loan types that do not require a cosigner include:

•   Direct Subsidized Loans

•   Direct Unsubsidized Loans

•   Direct Consolidation Loans

The exception is a Direct PLUS Loan, which does require a credit check. Borrowers interested in a Direct PLUS Loan may need an “endorser” for the same reasons they may need a cosigner for a private student loan: if their credit history and other financial factors are lacking.

A Direct PLUS Loan can help graduate students and parents of undergraduate students pay for the entire cost of school attendance, minus any other financial aid. Direct PLUS Loans are the only federal student loans that look at an applicant’s credit history, thus the potential need for an endorser.

An endorser is the equivalent of a cosigner — they agree to repay the Direct PLUS Loan if the borrower defaults or is delinquent on payments.

Private Student Loans

IIf an applicant doesn’t meet the lending requirements on their own, they might need a cosigner to obtain any private student loan. To qualify for a private student loan, you typically have to check more boxes regarding financial history than you would for a federal student loan.

Having a cosigner on a private student loan is incredibly common. More than 90% of private student loans for undergraduates require a cosigner, and more than 75% of graduate and professional students need a cosigner for their student loans.

Recommended: A Complete Guide to Private Student Loans

Both Federal and Private Student Loans

Once a student has a full understanding of the financial aid they qualify for after submitting their FAFSA, they can determine if federal student loans and other federal aid like scholarships and grants will cover the cost of their education or if they need to supplement the amount with a private student loan. While the borrower might not need a cosigner for federal loans, they might require one for private student loans they might take out.

2. Are You an Undergraduate or Graduate Student?

The necessity of a cosigner may vary depending on whether a person is applying for graduate or undergraduate private student loans.

Undergraduate Student

Undergraduates are generally more likely to need a cosigner on their private student loans because they typically haven’t established a lengthy credit history. Without an established credit history, there is no track record for lenders to evaluate. In addition, undergrads might not have a steady income, which can also affect whether they are approved for a loan without a cosigner.

Graduate Student

The type of schooling a person is pursuing won’t have an impact on the need for a cosigner. However, a person’s credit history and income will still factor into the decision.

3. How Does Your Credit Score Factor into the Decision?

Most private lenders will look at an applicant’s credit score (among other factors) to determine eligibility. Having a lower credit score may make it more challenging to get a loan without a cosigner.

FICO® Scores (the most common credit scores used by lenders and financial institutions) range between 300 and 850. If a person wants to check their score, many websites offer free credit scores or credit score monitoring (just be sure to read terms and conditions carefully).

Ultimately, it’s up to each individual lender to consider the credit score and other financial factors before approving a loan, and every lender has different criteria.

4. How Long Is Your Credit History?

A person’s credit history gives lenders a sense of their ability to pay on time, or ability to pay off debt in full. The length of a person’s credit history makes up about 15% of their FICO Score.

Length of credit history is determined by average age of accounts (AAoA). Lenders take the lifespan of a person’s accounts and divide by the number of accounts that person holds. A potential borrower can determine this number by figuring out how long they’ve had each account in their credit history, then dividing by the number of accounts.

The real sweet spot for credit history comes at the seven-year mark. From that point, early negative marks on accounts might have faded away. It shows lenders that a borrower can pay loans and maintain accounts over time.

There are a number of factors at play in lending decisions, but a short credit history could mean that adding a cosigner is beneficial.

5. What Is Your Employment Status?

Lenders want to be sure that you can repay your debts, so they’ll generally also evaluate an applicant’s income.

Employed Full-Time

Generally, if a person is employed full time at a salaried job, it shows lenders they have the capability to repay the loan they’re borrowing. Lending requirements vary based on the lender, but having an established income history may help an applicant avoid needing a cosigner.

Employed Part-Time

While part-time employment can still be beneficial for a loan application, it’s possible that a cosigner might help boost the application. The applicant’s debt-to-income ratio will come into play — that is, how much debt a person owes (credit cards, rent, other bills) divided by the income they earn before taxes and other deductions.

Of course, all lender requirements vary, but significant, consistent income can factor into whether the applicant will still need a cosigner.

Only a Student (Not Employed)

If an applicant is not employed, lenders may be more inclined to approve a loan if there’s a cosigner who is able to show stable income.

6. Have You Ever Declared Bankruptcy?

Lenders can and do consider all aspects of a person’s financial history before granting a loan, bankruptcy included. Declaring bankruptcy negatively affects a person’s credit score, which private lenders pay close attention to with a loan application. A bankruptcy filing can stay on a person’s credit history for a decade.

Bankruptcy filings can affect a credit score in a number of ways, and depending on how long ago it took place, the effects on a person’s score will vary.

7. Have You Defaulted on a Loan?

The terms of each loan are different, but after a period of nonpayment, the loan enters default. Defaulting on a loan stays with a person’s credit history for at least seven years and typically negatively affects their credit score.

If a person has defaulted on a previous loan, they’ll likely need a cosigner on their student loan to potentially improve their chances of approval.

Recommended: Defaulting on Student Loans: What You Should Know

8. Have You Ever Missed a Payment?

On-time payments each month can help show lenders that a person is a responsible borrower. Missing payments or consistently making late payments can have a negative impact on a person’s credit score. Payment history accounts for approximately 35% of an individual’s FICO Score.

Consistently missing payments that have affected a person’s FICO Score might cause a potential lender to require a cosigner. It could also cause concern for a potential cosigner, so students might want to keep that in mind.

A solid history of on-time payments shows a lender that a person is a responsible candidate for a loan and might not need a cosigner.

Choosing a Cosigner

As stated above, the majority of private student loan borrowers have a cosigner. But not all cosigners are built the same, and choosing the right person to cosign a loan could be as important as the terms of the loan itself.

A cosigner should not only have a strong financial history, but also a strong relationship with the applicant. A cosigner might be a parent or blood relation, but they don’t have to be. A cosigner ideally has a stable financial history and a relationship to the applicant where they feel comfortable discussing money.

Asking Someone to Be a Cosigner

There’s a common misconception that cosigning on a loan is as easy as signing a contract, but it actually means more than that. When a person asks someone to be their cosigner, they shouldn’t shy away from discussing the challenging topic.

It may make sense to talk about worst-case scenarios with a cosigner, and make it clear it would be their responsibility to take on the payments if you default. Discuss how you could repay the cosigner in the event that you can’t make payments.

Risks of Cosigning

Beyond the worst-case-scenario discussion, cosigners should know the additional risks they take on when cosigning a student loan:

•   Credit score. Cosigning a loan will affect a person’s credit score, since they’re taking on the debt as well. Even if the borrower makes on-time payments and doesn’t default, the cosigner will see a change in their credit score by taking on the additional debt. On the upside, though, it could potentially benefit their score.

•   Liability. If the borrower defaults on the loan, it becomes the cosigner’s responsibility to pay for it. A lender can come to collect from the cosigner, seizing assets and garnishing paychecks to cover missed payments.

However, the cosigner doesn’t need to stay tied to the loan forever. Private student loans may have a cosigner release policy in place. After a duration of on-time payments and additional paperwork, a lender may release the cosigner from the loan, leaving the borrower on their own.

It might sound easy, but a cosigner release isn’t a guarantee and not all private loans will offer this option. Read the terms of your loan carefully to understand the requirements for cosigner release.

The Takeaway

Like every college application, each loan application is a little different. Certain aspects of a person’s credit history or employment might make them more compelling to a lender. Other elements, like late payments or a limited credit history, might make a person less compelling to lend to.

Adding a cosigner to a private student loan is common and can improve your chance of approval, sometimes even with a lower interest rate than if you applied on your own.

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

FAQ

What is a student loan cosigner, and when might I need one?

A student loan cosigner is someone, typically a parent or close relative, who agrees to share legal responsibility for repaying your loan. You might need a cosigner if you’re applying for a private student loan and have limited credit history or income, as their strong financial background can improve your chances of approval and potentially secure a lower interest rate.

Do federal student loans require a cosigner?

Most federal student loans, such as Direct Subsidized and Unsubsidized Loans, do not require a cosigner or a credit check. However, Direct PLUS Loans, available to graduate students and parents, do require a credit check and may necessitate an endorser (similar to a cosigner) if the applicant has adverse credit history.

What are the benefits and risks of having a cosigner on a private student loan?

Having a cosigner can increase your chances of loan approval and help you secure a more competitive interest rate. However, it’s important to note that the cosigner is equally responsible for repaying the loan. If you miss payments or default, it can negatively impact both your and your cosigner’s credit scores, and the cosigner may be required to repay the loan.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

SOISL-Q225-042

Many students rely on student loans to help them pay for college. In addition to charging interest, student loans may also have other fees associated with them. Fees charged may include origination fees — a fee charged by the lender for processing the loan — or late payment fees.

When students sign up for loans or are in the midst of repayment, they may not even be aware of fees that accompany many private and federal student loans. But by learning about these fees, they can better prepare themselves financially and avoid headaches.

Keep reading to learn more on student loan fees and how you may be able to avoid them.

What Are Student Loan Fees?

Student loan fees are additional charges that may be applied when borrowing or repaying student loans. They may include:

Student loan fees may include:

•   Origination fees

•   Late payment fees

•   Returned-check fees (aka insufficient-funds or non-sufficient-funds fees)

•   Loan collection fees

•   Forbearance and deferment fees

Can a Student Loan Fee Be Waived?

For the most part, student loan fees cannot be waived. In some instances, lenders may be willing to waive late payment fees for borrowers who have not previously made a late payment. Fees and policies may vary by loan type and lender, so contact your lender with specific questions. Continue reading for an explanation of different types of fees that may be associated with a student loan.

Origination Fees

Origination fees cover the cost of processing the loan. They are typically a small percentage of the loan amount.

How Are Student Loan Origination Fees Assessed?

Student loan origination fees are charged as a percentage of the loan amount. Federal student loans have an origination fee, and the information will be included in the Master Promissory Note. The origination fee is deducted from the amount borrowed, so when you receive the loan, it will actually be for less than the amount you borrowed.

Private student loans may or may not charge an origination fee; the policy will depend on the lender.

How Much Are Student Loan Origination Fee?

For federal student loans, the origination fee (also known as disbursement fee) is dependent on the loan type. Direct Subsidized and Unsubsidized Loans disbursed between October 1, 2020 and October 1, 2025 have a 1.057% origination fee. During the same timeframe, Direct PLUS Loans have a ​​4.228% origination fee.

The origination fee on private student loans will vary based on the lender, and not all private lenders charge an origination fee. Review the terms and conditions closely and contact your lender with any questions.

Recommended: Avoiding Loan Origination Fees

Late Payment Fees

Making a loan payment past the due date for a federal student loan can result in a late fee. After 30 days, the late fee may be up to 6% of the loan amount due. Review your Master Promissory Note or contact your loan servicer with questions.

The late fee for a private student loan depends on the lender and loan program. Some private student loan lenders do not charge late fees.

Returned-Check Fees

If a borrower pays using a check that bounces, the student loan servicer could charge a returned-check fee.

Loan Collection Fees

If a borrower defaults on a loan by not making payments for a certain amount of time (270 days for most federal student loans), the loan may be placed with a collection agency and be subject to loan collection fees. Any fees incurred will be in addition to the outstanding principal balance, interest, and fees.

Private student loan companies may charge even higher loan collection fees. Generally, private student loans also enter default sooner than federal student loans. The default period is described in the loan contract.

Forbearance and Deferment Fees

Borrowers who cannot make payments temporarily can request student loan forbearance or deferment. Typically, loan holders can avoid a fee, but they will need to contact their loan provider.

Forbearance and deferment are available for most federal student loans. Private lenders are not obligated to offer either program, but may offer some forms of deferment. If you are struggling to make payments on a private student loan, contact your lender to evaluate the options available to you.

Federal Student Loan Fees

When students want to apply for a loan, they can do it through the federal government or a private company, depending on their circumstances. The loan providers charge different types of fees.

Students will pay an origination fee for a federal student loan. As mentioned previously, for Direct Subsidized and Unsubsidized Loans, the fee is 1.057% of the loan amount. For Direct PLUS Loans (including Grad PLUS and Parent PLUS Loans), the fee is about 4.228% of the loan amount.

A late payment fee will typically be charged within 30 days after the payment is due. The late fee could be up to 6%. At that rate, if your monthly minimum payment is $250, your fee would be $15.

Private Student Loan Fees

Private lenders may not charge origination fees, though there may be an origination fee for a specialty loan, like a loan for medical school.

Some lenders charge late fees — generally a percentage of the late payment amount or a flat fee. They also typically charge for returned checks.

Additionally, most private student loan companies charge a fee for forbearance, a flat fee determined by the lender.

Collection fees will vary from lender to lender. If there is a collection fee on a private student loan, it will typically be included in your loan agreement.

How to Avoid Student Loan Fees

If students need to take out private or federal student loans, they may be able to avoid some of the fees (with the exception of origination fees for federal student loans). Ways to avoid student loan fees include:

Paying on Time

Paying on time is always recommended, not only to avoid late fees but to keep a credit report healthy. To avoid late fees, returned-check fees, and collection fees, borrowers can set up automated payments from a bank account. Otherwise, they can set up reminders on their phones and calendars that go off when their payments are about to come due.

Communicating with Your Lender

In terms of deferment fees, borrowers having trouble making payments on time can call their student loan servicer and ask for extensions or other options so that they don’t go into default.

Students shouldn’t be afraid to reach out to their loan servicer as soon as they can’t make a payment.

Choosing No-Fee Lenders

Some private lenders offer student loans with no origination, application, or late payment fees. Comparing lenders and reading the fine print can help you steer clear of unnecessary charges.

Paying for College

Paying for college may require a combination of resources. One of the first places for students to start their financial aid journey is by filling out the Free Application for Federal Student Aid (FAFSA®) every year. This application allows students to find out if they are eligible for federal financial aid, including federal student loans, grants, scholarships, and work-study. Additional ways to pay for college include private student loans and personal savings.

Private Student Loans

Private student loans are offered by private lenders such as banks, credit unions, and other financial institutions. To apply, potential borrowers will need to file applications with individual lenders. The interest rate and loan terms are generally determined based on the applicant’s personal information, such as their income and credit score. It’s generally worth shopping around to find the best rate and loan terms for your personal situation.

Private student loans can be helpful tools to pay for college. However, when comparing private student loans vs. federal student loans, it’s important to note that private student loans lack the borrower protections afforded to federal student loans — things like income-driven repayment plans or deferment options. For this reason, they are generally considered an option after all other financial resources have been depleted.

Personal Savings

Some students may have the money saved to go to college, or someone in their family might be able to finance their education. For instance, perhaps their parents or grandparents opened a 529 savings plan for them when they were younger and funded it with money to put toward college.

Grants

Grants are a type of funding that typically don’t need to be repaid. Grants are generally awarded based on financial need and can be found from sources such as the federal or local government, college, or even nonprofit organizations.

Each grant application may have different application and eligibility requirements so be sure to read the instructions closely.

Scholarships

Scholarships are another type of aid that recipients are not required to repay. Often, they are awarded based on merit, though they can be awarded based on other criteria, as well.

Students can look for scholarships in schools, nonprofit and community organizations, companies, and more.

Take a look at your school’s financial aid website to see what scholarships are available. There are also online databases that aggregate information on available scholarships, as well.

The Takeaway

Student loan fees, like an origination fee or late payment fees, can increase the total cost of the loan. The types of fees on student loans will vary based on the loan type. Federal student loans, for example, charge an origination fee which varies based on the type of federal loan, and there are late payment fees associated with payments that are 30 days late or more.

Private loans may or may not have an origination fee or late payment penalties. The policies will vary by lender.

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

FAQ

How much is the origination fee for student loans?

The origination fee on a student loan will likely vary depending on the loan type and lender. For federal student loans, the origination fee from October 1, 2020 through October 1, 2025 is 1.057% for Direct Subsidized and Unsubsidized Loans and ​​4.228% for Direct PLUS Loans.

The origination fee on a private student loan will vary by lender.

Do unsubsidized student loans have an origination fee?

Yes, unsubsidized loans through the federal government’s Direct Loan Program do have an origination fee of 1.057% for loans disbursed between October 1, 2020 and October 1, 2025.

Can a student loan origination fee be waived?

Federal student loans have an origination fee and it’s unlikely to have this fee waived. Some private student loans may not charge an origination fee and lenders that do may be willing to negotiate with borrowers.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

SOISL-Q225-041