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It’s not uncommon for students to use loans to help pay for their education. The average annual cost of tuition and fees at four-year institutions reached $10,940 for public in-state schools, $28,240 for out-of-state public schools, and $39,400 for private schools in 2022–23, College Board data shows.

The average undergraduate or graduate student typically needs education loans to help pay for the cost of college. The two major umbrellas to consider are federal student loans and private student loans. Federal student loans are backed by the U.S. Department of Education, while private student loans are offered through financial institutions, including banks, online lenders, and credit unions.

Knowing what types of student loans are available to you and understanding your student loan statement can help you figure out the best way to save money in the long run.

What Are The Different Types of Student Loans?

One of the first things to understand is the difference between federal and private student loans.

The U.S. Department of Education offers federal student loans at a fixed interest rate and with certain restrictions. Depending on borrower needs, students can qualify for either subsidized or unsubsidized federal loans (more on those, later). Federal student loans come with protections like income-driven repayment (IDR) options, deferment, forbearance, and access to the Public Service Loan Forgiveness (PSLF) program.

The Saving on a Valuable Education (SAVE) Plan is one of the IDR options available to most federal student loan borrowers. The SAVE Plan can give you a $0 monthly payment if your income is within 225% of the federal poverty guideline (or less than $32,805 for a single borrower and $67,500 for a family of four in 2023).

For some students, federal student loans aren’t enough to cover the cost of a college education. Some turn to scholarships, grants, or a part-time job to fill in the gaps. Other students rely on private student loans, offered by lenders and financial institutions, to cover the cost of college. Private student loans are not eligible for IDR plans or PSLF.

💡 Quick Tip: When shopping for a private student loan lender, look for benefits that help lower your monthly payment.

Applying for Federal Student Loans

The first step in the federal student loan process is to fill out the Free Application for Federal Student Aid (FAFSA®). That may involve compiling your family financial history. Even students who don’t think they’ll qualify for financial aid should still fill out the FAFSA.

All federal student loans require the FAFSA first. And some schools use information from the FAFSA to determine eligibility for other types of aid like scholarships or grants.

After filling out the FAFSA, students may receive a financial aid package of grants, work study, and loans. Depending on your financial circumstances, the loans will either be subsidized or unsubsidized.

The Different Types of Federal Student Loans

Think of federal student loans as an overarching category. There are different types of federal student loans, each of which have different eligibility requirements, borrower maximums (or not), and interest rates. Understanding all of your options means you’ll be better prepared to determine the best way to finance your education.

The interest rates on newly issued federal student loans are fixed and set annually by a formula specified in the Higher Education Act of 1965.

For the 2023–24 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 5.50%. The rate on Direct Unsubsidized loans for graduate and professional students is 7.05%, while the rate on Direct PLUS loans for graduate students, professional students, and parents is 8.05%.

Federal student loan borrowers are typically expected to make loan payments when due. The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1 and payments to resume in October 2023.

Recommended: Private Student Loans vs. Federal Student Loans

Direct Subsidized vs Unsubsidized Loans

Federal Direct loans, also known as Stafford Loans, can be either subsidized or unsubsidized. With a subsidized student loan, the government will cover the accrued interest while the borrower is enrolled in school, during the grace period, and during any periods of deferment. Not having to pay interest on your loans during school can really help—especially since interest accrues and capitalizes, or gets added to the principal loan amount, and then accrues more interest. There are no subsidized federal loans for graduate students—only for undergrads.

The government does not pay the interest on unsubsidized Direct loans. That means, even while you’re in school, the loans are accruing interest. You don’t have to make payments on the loans while you’re a full-time student, but interest is building up. As the interest accrues, it is added to the loan’s principal.

That’s why it’s possible to have a higher remaining loan balance than the initial loan amount after graduation. Individuals with an unsubsidized student loan do have the option to make interest-only payments on the loan during periods of deferment, including while they’re in school, but are not required to do so.

Federal loans have fixed interest rates (that are set annually), meaning they don’t change over the life of the loan.

Recommended: Student Loan Grace Periods: What You Need to Know

Interest Capitalization and Federal Borrowing Limits

Individuals with an unsubsidized student loan do have the option to make interest-only payments on the loan during periods of deferment, including while they’re in school, but are not required to do so. A federal student loan borrower who exits a period of deferment on an unsubsidized loan may face capitalized interest.

Interest capitalization is when unpaid interest accrues over time and gets added to your principal loan balance. The U.S. Department of Education eliminated most instances of federal student loan interest capitalization effective July 2023.

Federal student loan borrowing limits vary depending on factors like your year in school and whether or not you are a dependent student. For example, first-year undergrads who are considered independent or whose parents are not able to take out parent loans have a maximum borrowing amount of $9,500 (of which only $3,500 can be subsidized) annually. The maximum for dependent students is $5,500 in their first year, with the same $3,500 cap on subsidized loans.

PLUS Loans

Direct PLUS loans can be borrowed directly by a graduate student, or Parent PLUS loans can be taken out by an undergrad’s parents. PLUS loans, in both forms, have the same benefits as other federal loans in that the interest rate is fixed and there are flexible repayment options.

Unlike other federal loans, PLUS loans require a credit check. They’re designed for graduate and professional students, who have had more time to build up a credit score. The maximum PLUS loan amount you can borrow is the full cost of tuition less any other financial assistance.

When taking out student loans for college, a lot of the options depend on your FAFSA and your family’s financial need or ability to pay. If you’re a dependent student, then there will likely be some expectation of parental contribution, and your parents may be offered the option of taking out Parent PLUS loans.

Parent PLUS loans are similar to Direct PLUS loans, except parents are expected to begin repaying the loan while the student is still in school—though they can request a deferment until graduation.

Direct Consolidation Loans

After graduation, students might have a number of different federal student loans. That can obviously be confusing. If you want to consolidate all federal loans into one place, then you may be able to pool them into a Direct Consolidation Loan. This allows you to only make one monthly payment toward all your federal student loans.

A Direct Consolidation Loan will not lower your overall interest rate. The interest rate on your new Direct Consolidation Loan is simply a weighted average of the interest rates, rounded up to the nearest eighth of a percent, of your existing federal loans. Consolidation could wipe out any history of payments you were making toward PSLF. Only federal loans can be consolidated with a Direct Consolidation Loan.

Private Student Loans

Students who don’t receive enough funding from the federal government may look to private student loans as an option to finance their education. Private loans are offered by banks, online lenders, and credit unions.

💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Applying for Private Student Loans

Private lenders do not use the FAFSA to determine a potential borrower’s creditworthiness. Instead, students interested in borrowing private loans will fill out a loan application directly with a lender. Before applying, lenders will generally allow people to get a quote to see if they prequalify and at what rates. This can be helpful when evaluating different lenders.

The terms, interest rates, and borrowing limits on private loans may vary by lender. Lenders typically use factors like the borrower’s credit score to determine the interest rate they qualify for. When borrowing a private student loan you’ll generally have the option to choose between a fixed or variable interest rate.

Private lenders offer different student loan repayment options. Some offer deferment plans while the borrower is enrolled in school, and others require payments to start as soon as the loan is disbursed.

Another private student loan option is to consolidate or refinance your existing student loans after graduation. This might be beneficial if it lowers your interest rate and saves you money over the life of your loan. You may pay more interest over the life of the loan if you refinance with an extended term. Refinancing federal student loans with a private lender forfeits your access to PSLF, Teacher Loan Forgiveness, and federal IDR plans.

Understanding the Student Loan Statement

When you take out a loan, you sign a promissory note, which outlines the interest rate, loan amount, and repayment terms. If you hold federal student loans, when you graduate you select a repayment plan. If you don’t do anything, you’ll automatically be put on the Standard Repayment Plan.

For most federal loans, the Standard Repayment plan is a set monthly payment for up to 10 years. There are a few other repayment plans to choose from, including four income-driven repayment plans. The different plans allow you to pay back your loan over different time periods. The longer the repayment term, the more you’ll pay in interest over the life of the loan.

When you look at your student loan statement, you may see each loan listed as the total loan amount, how much principal remains, how much interest has accrued since your last payment, your current interest rate, and how much your current monthly payment is—in addition to any fees, such as late fees, you might owe.

The Benefits of Refinancing Student Loans

It’s possible to consolidate both federal and private student loans into one new loan when you refinance your student loanswith a private lender. If an applicant qualifies for a lower interest rate and a shorter term, it could reduce the amount of money paid in interest over the life of the loan. As mentioned earlier, you may pay more interest over the life of the loan if you refinance with an extended term.

Make sure to weigh the benefits that come with your federal loans against the value of refinancing. When you refinance federal loans they will no longer be eligible for federal borrower protections.

The Takeaway

The two main categories of student loans are private and federal. Federal loans are awarded to students based on information they provide in their FAFSA annually. Federal loans issued since July 2006 have a fixed interest rate and are eligible for a variety of federal repayment plans.

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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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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.

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

SoFi 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.

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

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

SOSL1023011

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Graduating from college in three years, instead of the typical four, isn’t just a proposition for overachievers. Adding a few extra credits here or there over the semesters won’t just help get you out the door faster, it could also help you save on tuition and room and board.

Sounds great, right? Well, before you go filling up your class schedule with all your required courses, it might be worth considering whether graduating early is the right path for you both personally and financially. The average cost of undergraduate tuition, fees, and room and board across all U.S. postsecondary institutions stood at $26,903 in the 2021–22 school year, according to the National Center for Education Statistics.

Americans owe about $1.77 trillion in federal and private student loans as of 2023. But, college isn’t only about dollars and cents and a final piece of paper.

Here are some key things to consider when deciding whether to graduate from college early and leave your student life behind.

Pro: You Could Start Grad School Sooner

If a master’s degree, medical school, law school, or another advanced degree path is in your future, completing your undergraduate work in three years may sound highly attractive. After all, you will be spending several more years in school to complete your higher education.

Just take care that your undergraduate grades remain up to snuff to increase your chances of placement in the graduate school of your choice.

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

Con: You May Miss Out on Learning Opportunities

By rushing through undergraduate general education classes, you may be tempted to do the bare minimum in order to pass.

But in doing so, you could be denying yourself valuable learning opportunities, and you could be missing out on subjects that interest you personally or professionally.

You might want to make sure your workload is heavy enough to graduate on your own timeline, yet light enough to actually soak in all that new knowledge—and that it allows you time to pursue new passions. Isn’t college all about trying new things?

Pro: You Can Enter the Workforce Sooner

By completing your degree sooner, you could enter the workforce earlier, which could help you start earning a salary ASAP.

Want to max out your post-collegiate earnings? Some degrees offer a better financial ROI than others.

Con: You May Miss Out on the Full College Experience

Sure, you could start working a year earlier, but while you’re at your job, all of your college buddies will be enjoying their senior year together. And it’s not just about partying. The extra year together might give you and your classmates more time to bond with one another and to network with peers and professors.

Those relationships can play an incredibly valuable role in the workforce down the road. This can also be true for internship opportunities, which you may not have time for as an ultra-full-time student trying to fit four years of work into three.

There are other once-in-a-lifetime opportunities you could miss out on, too, such as studying abroad. While some of your friends may be off learning both life and academic lessons around the world, you could be stuck on campus having to cram in all your credits to graduate early.

Pro: You Could Save Money

As mentioned earlier, the average cost of undergraduate tuition, fees, room, and board across all U.S. postsecondary institutions stood at $26,903 in the 2021–22 school year.

If you graduated early, you could save a pretty penny by skipping an entire year of tuition, fees, and room and board. Prices for college tuition and fees increased 4.7% from February 2020 to February 2023, according to the U.S. Bureau of Labor Statistics.

When considering an ultra-full-time course load, don’t forget to calculate the cost of summer school, “overload” credits, and a year-round dorm.

Many schools have limits on the number of credit hours you can take at a time, and they may require you to get permission to go over the max (overload). You may also have to pay more for those credits.

Recommended: Living On Campus vs. Off Campus

Con: You May Have to Start Paying Off Student Loans Sooner

Most students who have taken out federal student loans have a six-month grace period before they need to begin repayment.

That means six months after you graduate (or drop out or drop below half-time enrollment), you will likely need to start paying back those loans. This is not necessarily a con, but keep it in mind and be prepared.

Refinancing your federal student loans with a private lender could give you a lower interest rate. However, you may pay more interest over the life of the loan if you refinance with an extended term.

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

Need Help With Those Student Loans?

Graduating from college early doesn’t eliminate your burden to repay any student loans you’ve borrowed. The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1, 2023, and payments to resume in October 2023.

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

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

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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.

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

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

SOSL1023009

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

What Are Student Loan Statements?

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

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

Why Is It Important to Know How Much You Owe?

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

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

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

If you default on a federal student loan, usually after payment is 270 days past due, the government can collect your debt by withholding money from your wages and your income tax refund and other federal payments. But a temporary “on-ramp” protection will generally prevent most federal student loans from entering defaulted loan status from the 12-month period of October 2023 through September 2024.

Where Do I Find My Student Loan Statement?

Your student loan statement will typically come by mail from your student loan servicer unless you’ve opted to receive statements online.

Borrowers are generally expected to make required loan payments when due. The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1, 2023, and payments to resume in October 2023.

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

Private Student Loans

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

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

Recommended: Guide to Private Student Loans 

Federal Student Loans

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

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

Recommended: FAFSA Guide

Student Loan Statements

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

Payment Summary

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

Monthly Payment

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

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

Recommended: 7 Tips to Lower Your Student Loan Payments

Amortization Schedule

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

Current Balance

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

Original Balance

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

Interest Rate

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

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

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

Negative amortization — having your loan balance grow over time if your monthly payment amount is less than the interest accruing — generally won’t occur if you make payments on the Saving on a Valuable Education (SAVE) Plan. That’s because the SAVE Plan offers a permanent interest subsidy that helps prevent your federal loan balance from growing if you qualify for a $0 (or very low) monthly payment.

Managing Your Student Loans

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

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

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

Private lenders may have their own flexible repayment plans. They may offer you the choice of deferring payments, paying interest only, paying your full monthly payment, or making a low fixed payment while you’re still in school.


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

Should You Refinance or Consolidate to Simplify Repayment?

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

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

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


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

The Takeaway

Your student loan statements give all the details of your debt. Federal student loan borrowers can expect to receive billing statements now that the pandemic-related payment pause has ended.

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

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

FAQ

What is a student loan statement?

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

How do I get to my student loan statement?

Federal student loan borrowers can get their student loan statements from their loan servicer. If you don’t know who your loan servicer is, visit your Federal Student Aid account dashboard.

Private student loan borrowers can contact their lender directly to ask for student loan statements. If you’re unsure who your lender is, you can get a free credit report from each of the three credit reporting agencies or contact your school’s financial aid office.

How do I read student loan statements?

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

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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.

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

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

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

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

Photo credit: iStock/Ridofranz
SOSL1023004

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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance of federal student loans. As a result, student loan interest accrual resumed on Sept. 1, 2023, and payments in October 2023.

Although the pandemic-related pause that began in March 2020 is no longer in effect, the Biden administration has implemented a temporary “on-ramp” protection. Any federal student loan borrower who received the Covid-19 forbearance relief will be eligible for the 12-month on-ramp protection automatically. This means you’ll be protected from having your federal student loans reported as delinquent if you fail to make any required loan payments from October 2023 through September 2024.

Below we highlight how the on-ramp protection works and how federal student loan borrowers may also benefit from the Saving on a Valuable Education (SAVE) Plan.

What Is a Student Loan Forbearance Extension?

Congress authorized the initial Covid-19 student loan forbearance in March 2020 when it passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act suspended federal student loan payments and federal student loan interest accrual through September 30, 2020.

Two presidential administrations — starting with the Trump administration — extended the Covid-19 forbearance through executive action. The Biden administration issued several extensions to the Covid-19 forbearance up until the 2023 debt ceiling bill ended the practice.

Federal student loan borrowers facing financial difficulties may request a general forbearance, and some borrowers may qualify for a mandatory forbearance. A general or mandatory forbearance can temporarily suspend making loan payments during an approved period.

Federal student loan forbearances typically have 12-month durations, but you can request an extension if you meet the requirements. The cumulative limit on a general forbearance is three years.

Recommended: What Is Student Loan Forbearance?

Will Student Loan Forbearance Be Extended?

The passage of the 2023 debt ceiling bill guarantees the Covid-19 forbearance will not be extended. Federal student loan interest accrual resumed Sept. 1, 2023, and borrowers are now expected to make required payments when due.

So the Covid-19 student loan forbearance will not be extended, and the Biden administration’s one-time student loan forgiveness plan under the HEROES Act will not take effect. The Supreme Court rejected Biden’s broad debt relief plan in June 2023, finding the HEROES Act did not authorize the program.

Although the Covid-19 forbearance will not be extended under the HEROES Act, the Biden administration has implemented temporary “on-ramp” protections.

If you’re covered by the on-ramp, you’re protected from having your federal student loans reported as delinquent or placed in default from October 2023 through September 2024. But federal student loan interest will still accrue during the on-ramp, so failing to pay may increase your student debt burden.


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

How to Extend or Pause Student Loan Payments in General

If you’re concerned about your ability to resume student loan payments beyond the temporary on-ramp protection, consider talking to your student loan servicer about:

•   General student loan forbearance

•   General student loan deferment

•   An income-driven repayment plan

•   Public Service Loan Forgiveness program

Income-Driven Repayment (IDR)

Based on your income and family size, an IDR plan can set your student loan payments at an affordable repayment amount per month for you. There are four plans, which last for a certain number of years and forgive any remaining balance after that:

•   Saving on a Valuable Education (SAVE) Plan

•   Pay As You Earn (PAYE) Plan

•   Income-Based Repayment Plan

•   Income-Contingent Repayment Plan

The SAVE Plan replaced the former REPAYE Plan in July 2023. If you were enrolled in the REPAYE Plan at that time, you’ve been automatically enrolled in the SAVE Plan.

The SAVE Plan can give you a $0 monthly payment if your income is within 225% of the federal poverty guideline (or less than $32,805 for a single borrower and $67,500 for a family of four in 2023).

Another benefit to the SAVE Plan is that your loan balance won’t grow over time if your monthly payment amount is less than the interest accruing.

Refinancing

It’s possible to consolidate both federal and private student loans into one new loan when you refinance your student loans with a private lender. If an applicant qualifies for a lower interest rate and a shorter term, it could reduce the amount of money paid in interest over the life of the loan. You may pay more interest over the life of the loan if you refinance with an extended term.


💡 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.

Alternative Student Loan Financing Options

As you’re thinking about college funding, keep this in mind: You can choose from a number of college financing options, including scholarships, grants, and private student loans:

•   Scholarships. Scholarships are awarded based on merit or need, and students do not need to repay them. Students can get scholarships through businesses, colleges, and other organizations. There are online scholarship search tools that can help you find opportunities you might be eligible for.

•   Direct PLUS Loans. Direct PLUS Loans can help graduate or professional students pay for college. They can also help parents of dependent undergraduate students pay for their child’s college education. You might want to consider a parent PLUS loan refi to a lower rate if you’re repaying a PLUS loan.

•   Grants. Students can get grants from states, the federal government, a public body, and/or other organizations to pay for college.

•   Private student loans. Private student loans are given by commercial lenders, not the U.S. Department of Education. Unlike most federal student loans, you will undergo a credit check and possibly have to get a cosigner to sign on the loan with you.

The Takeaway

The Covid-19 forbearance is no longer in effect and won’t be extended under the HEROES Act. This means federal student loan borrowers are generally expected to make required loan payments when due. (A temporary on-ramp protection from October 2023 through September 2024 may protect you from typical delinquency impacts, but it won’t stop your interest from accruing.)

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

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

FAQ

How do I know when my student loan payments will resume?

Federal student loan payments resumed in October 2023. You may receive billing statements from your federal loan servicer going forward.

What does student loan forbearance mean?

Forbearance means a borrower can temporarily suspend making loan payments during an approved period. There are two main types of forbearance for federal student loans: general and mandatory. This does not include the former Covid-19 forbearance, which ended as required under the bipartisan Fiscal Responsibility Act of 2023.

What are income-driven repayment plans?

An alternative to forbearance, income-driven repayment plans can set your monthly loan payments at an affordable amount for you. There are four plans. Each lasts a certain number of years and forgives any remaining balance after that. Beginning in July 2024, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments under the SAVE Plan.

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Photo credit: iStock/Andrea Migliarini

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.

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

SoFi 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.

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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No one plans for their student loans to outlive them. We all expect to have paid off loans for college or graduate school long before middle age, let alone within our lifetimes. But it’s important to have a grasp of what happens to student loans when you die. Not knowing the policy can cause you a lot of anxiety. Will the loan be wiped away? Will the burden fall on your parents or spouse? The answers depend on what kinds of loans you have.

If you die before your student loan is paid off, your loan will be discharged – but only if it’s a federal loan. Your family will not be responsible for repaying a federal student loan. With a private loan, it will also most likely be discharged, but in certain cases there could be complications. And if you had a cosigner, it’s more likely there will be complications.

According to EducationData.org, 6.2% of federal borrowers are 62 years of age and older. The average 62-year-old federal borrower owes $41,780 in federal educational debt, including Parent PLUS loans. So if you’re one of these older borrowers, getting the facts now may help put your mind at rest. Here’s what can happen to your loans in a variety of scenarios.

What Happens to Federal Student Loans?

If you took out student loans from the federal government, the loans will be discharged when you die. When a loan is discharged, the balance becomes zero and the government won’t try to collect on the loan.

There is currently no tax burden once loans are discharged as a result of death. However, this is only true until 2025, at which point this tax code expires and policies could change.

Also, your parent’s PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.

You’ll likely want to make sure that your loved ones have the information they need now—at a minimum, the name of your loan servicer and, ideally, your loan ID numbers and your Social Security number.

Family or friends would need to provide your loan servicer with that documentation to confirm the death, usually an original or copy of your death certificate. They can call your loan servicer to ask about the specific requirements.

The bottom line: If you have any kind of federal student loan, you don’t need to worry about your relatives being burdened with the debt if you pass away.


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

What Happens to Private Student Loans?

More than 93% of all student loan debt is made up of federal student loans, according to Educationdata.org. What happens to private student loans when you die? The rules are different than those covering federal student loans. It is possible that with a private student loan, someone will be pursued for repayment after you die.

The Consumer Financial Protection Bureau says, “Unlike federal student loans, there are no legal requirements to cancel private student loans for borrowers who die or become disabled. In certain cases, private lenders have special provisions to discharge loans.”

So yes, some private lenders will cancel the loan upon the loan holder’s death, but it typically depends on the type of loan and the laws in your state.

Make sure to read your private loan agreement carefully now to see what protections your lender offers. If you have questions, it might be wise to consult a lawyer.

In the case that your lender doesn’t discharge your loans after death, the lender would first try to collect the money from your estate. If you don’t have an estate, they would turn to your student loan cosigner, if you have one.

If there isn’t one, then the lender would likely try to collect from your spouse. Whether your spouse would actually be liable depends on the state in which you live. If you live in a community property state–Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin–and took out the student loan while you were married, your spouse could be responsible.

What Happens If You Have a Cosigner?

Federal student loans almost never involve a cosigner, but private loans often do in order to improve a borrower’s financial profile. Enterval Analytics said that in 2022, 90.78% of undergraduate private loans were cosigned.

A cosigner has agreed to pay the debt if you default, which means they will be just as responsible for the loan as you are. If you die, a private lender could seek to collect payment from the cosigner. However, some lenders may waive the remaining debt if the primary borrower (student) dies. Again, you need to check the policy.

If you have a loan with a cosigner and want to take this burden off of them, you could consider trying to refinance the loan in only your name. This could be an option if your credit, income, and employment history have improved since you took out the loan, and you can now qualify on your own.

It’s worth asking what happens if the situation is reversed: What if your cosigner dies? In some cases, your loan would go into “student loan auto-default,” meaning the lender would immediately require you to pay the full amount of the remaining loan, even if you’ve been making payments regularly until then.

If you cannot pay the full amount as requested, the holder on the loan could put you into this immediate default. That would harm your credit rating for a number of years.

However, not all banks will invoke the “auto-default” if your cosigner dies. Also, this depends on the bank being aware that the cosigner is no longer alive.

If you are in the terrible situation of knowing that your cosigner will die soon, you might want to be proactive to avoid the auto-default possibility. You may want to ask your lender for a release of the cosigner. Be aware that it might not be easy to obtain a release if your credit profile isn’t strong.

Recommended: Applying for a Student Loan Cosigner Release

What Can You Do to Protect Loved Ones?

It is pragmatic to worry about what happens to student loans when you die. To ensure that your spouse or cosigner doesn’t end up with a large debt burden in the event of that happening, one course of action is to pay off your student loans faster.

You can do this by increasing the amount you pay every month, going above your minimum monthly payment, or possibly shortening the payment term through refinancing.

Another option is to build a savings cushion that can be put toward your debt if you die.

How Student Loan Refinancing Can Help

Do student loans die with you? Not always. But there are things you can do now, including releasing any cosigners to make it less likely they’ll be pursued for the debt after your death. Refinancing your student loans may also be a good way to speed up repayment, leaving less of a potential obligation behind in case you die.

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

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

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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.

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.

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

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

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

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