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After graduation and your six-month federal student loan grace period, it’ll be time to start paying your dues. If you are on the Standard Repayment Plan, you’ll pay at least $50 a month for 10 years. But there are other ways to pay back your student loans: through income-driven repayment plans.

Not all of these plans have the same repayment strategy, and not all federal loans qualify for income-driven repayment. We’ll help you find the one that aligns with your financial situation before you commit.

How Does Income-Driven Repayment Work?

The U.S. Department of Education offers two income-driven repayment (IDR) plans for holders of federal student loans. (Two other plans, PAYE and Income-Contingent Repayment, are no longer accepting new enrollments.) The current plans are:

•   Income-Based Repayment (IBR)

•   Saving on a Valuable Education (SAVE) Plan

For IDR plans, your monthly payment is calculated as a portion of your discretionary income. The Department of Education defines discretionary income as your adjusted gross income in excess of a protected amount.

Discretionary income under the SAVE Plan, for example, is any adjusted gross income you have above 225% of the federal poverty guideline appropriate to your family size. You’ll have a $0 monthly payment under the SAVE Plan if your annual income doesn’t exceed the protected amount of $32,805 for a single borrower and $67,500 for a family of four in 2023.

If you don’t qualify for a $0 monthly payment on the SAVE Plan, your monthly payment beginning in July 2024 is set at 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average if you have both.

On the IBR plan, your monthly payment is typically set at 10% to 15% of your discretionary income above 150% of the federal poverty guideline appropriate to your family size. But unlike the SAVE Plan, a borrower’s monthly payment on the IBR plan will never be more than what you would have paid through the Standard Repayment Plan.

IDR Loan Forgiveness

All federal IDR plans can end with your remaining loan balance being forgiven after 20 or 25 years, but some borrowers may receive forgiveness sooner under the SAVE Plan. Beginning in July 2024, federal student loan borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments on the SAVE Plan.

For more details on federal IDR debt relief benefits, check out our Guide to Student Loan Forgiveness.

Your personal circumstances and goals may dictate which student loan repayment plan is right for you. You can estimate how much your monthly payments will be through the federal Loan Simulator calculator.

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

The Difference Between Income-Driven Repayment Plans

Deciding which IDR plan is right for you (and that you may qualify for) depends on your financial situation and your loan type(s). Here’s what they mean:

•   IBR (Income-Based Repayment). This plan is based on your income and family size. The potential IBR payment must be less than what you would pay under the Standard Repayment Plan to qualify. Any remaining balance is forgiven after 20 or 25 years.

•   SAVE (Saving on a Valuable Education). This IDR plan replaced the former REPAYE Plan. Anyone with qualifying student loans can enroll into the SAVE Plan. However, you could end up paying more per month under this plan than the Standard Repayment Plan. You’ll have a $0 monthly payment under the SAVE Plan if your annual income falls below 225% of the federal poverty guideline appropriate to your family size.

Alternatives to Income-Driven Repayment Plans

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.

Aside from the Standard Repayment Plan, there are a few options to consider instead of IDR:

Consolidation

If you have federal student loans, you can get a Direct Consolidation Loan. This will move all your eligible federal student loans into one monthly payment. Your new interest rate is the weighted average of all your loans, rounded up to the nearest eighth of a percent.

This can be helpful if you have many smaller loans that each have a minimum monthly payment. It typically won’t lower your monthly payment, however, but it can make it manageable and easier to keep track of. Only federal loans are eligible for a Direct Consolidation Loan.

Refinancing

Refinancing is similar to consolidation. You get one loan to replace all of your other loans, but it’s a new loan with a new interest rate from a private lender or bank. Your credit report and other personal financial factors are considered to see if you’re a responsible borrower. If you previously had a co-borrower, such as a parent, you can look into refinancing without a cosigner.

Many lenders allow you to refinance all of your student loans, not just federal student loans. So if you have a mix of private student loans and federal student loans, refinancing will create one new loan with one payment to replace them.

If you qualify 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. You can explore different scenarios with our Student Loan Refinance Calculator.

You may ask, “Should I refinance my federal student loans?” Refinancing federal student loans with a private lender forfeits your access to Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and federal IDR plans. You can weigh the pros and cons when determining whether student loan refinancing is right for you.


💡 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.

How Do You Calculate Income for an Income-Driven Plan?

The Department of Education considers three different components when calculating a borrower’s income. While this may seem needlessly complicated, it actually benefits borrowers:

Annual Income

Any income that’s taxable counts toward the Education Department’s calculation. That means regular wages, plus interest and dividends from savings and investments, unemployment benefits, etc. On the flip side, any income that isn’t taxed doesn’t count: gifts and inheritances, cash rebates from retailers, child support payments, and so on.

Spouse’s Income

If you and your spouse file a joint tax return, then their income must also be factored in. If you file separately, only your income counts.

Family Size

Your family size is the number of people who live with you and receive more than half their support from you. This includes children but also dependent adults, such as an older parent.

The Takeaway

There are now two income-driven repayment plans for federal student loan holders, IBR and SAVE. The PAYE and Income-Contingent Repayment plans stopped accepting new borrowers as of July 1, 2024, although current enrollees can remain on the plan after that date.

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.

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

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When it comes to higher education, Native Americans face obstacles. Educationdata.org says that postsecondary attendance among American Indian and Alaska Native students “has been in decline since 2010.” Only 0.7% of college students identified as American Indian or Alaska Native in 2022.

“Research has found that American Indians and Alaska Natives have a much lower rate of college completion than the population as a whole,” the Department of Education’s (DOE) Federal Student Aid (FSA) says on its website.

The soaring cost of college could have something to do with this: The average annual cost of tuition at a public 4-year college is 23 times higher than in 1963. The average cost of college for in-state students at a four-year institution in 2022-23 was almost $11K. Students at private nonprofit four-year institutions paid over $39K on average.

According to the DOE, loan forgiveness (or cancellation) is generally the term used if you are no longer required to make payments on some or all of your student loans.

While there are some specific programs to help with Native American student loan forgiveness, it’s important to also research what financial aid, including scholarships and loans, is targeted toward American Indians and Alaska Natives.

Recommended: Student Loan Forgiveness: Programs for Relief and Mass Forgiveness

Picking a Career With Loan Forgiveness

One very important resource: The Bureau of Indian Education provides a list of scholarships and grants available to Native American students, such as the American Indian College Fund.

Many states offer financial aid to Native American students attending college. Some individual colleges and state schools also offer free tuition and room and board to Native American students. For instance, Native American students who are Montana residents can qualify for a tuition waiver
at Montana State University.

Keeping a career in mind when pursuing an education can make a big difference in financial aid and forgiveness options.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Health Services

One of the programs that gives priority to Native Americans is the Indian Health Services Loan Repayment Program. This program, part of the U.S. Department of Health and Human Services, provides funds for health professionals to help repay eligible education loans.

In 2023, the program announced an increase in the maximum annual award amount to $25,000 per year for new awards and extensions starting in Fiscal Year 2023. You can find details about the new award amount here.

In exchange, health professionals agree to an initial two-year service commitment practicing in areas that serve American Indian and Alaska Native communities.

Priority enrollment in this program is given to American Indians and Alaska Natives. Professions across the healthcare spectrum, including behavioral health, dentistry, and dietetics, are available.

The organization says that available opportunities are based on the greatest staffing needs in Native American health facilities. Participants are also eligible to extend their contracts annually until their qualifying student debt is paid.

Public Service Loan Forgiveness

This program, offered by the DOE, is open to all qualified students, not just Native Americans. The careers that may qualify for Public Student Loan Forgiveness Program (PSLF) range from forestry and natural resources to teaching and law enforcement.

To receive loan forgiveness for work in public service, applicants must work full-time for a qualifying government agency or certain nonprofits. After 120 on-time, qualifying payments in an income-driven repayment (IDR) plan, the remainder of the student debt can be forgiven.

The Department of Federal Student Aid offers a PSLF Help Tool to start work on the Employment Certification Form to apply.

Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the program. Loans that may be eligible to be forgiven under PSLF include any non-defaulted loans that you received under the Direct Loan Program from the government. Private loans are not eligible for any federal forgiveness plans.

Recommended: A Look Into the Public Service Loan Forgiveness Program

Teacher Loan Forgiveness Program

For students interested in pursuing a career in teaching, the DOE’s Teacher Loan Forgiveness Program is key. If you teach full-time for five years straight in a low-income school or educational service agency, you might be eligible for up to $17,500 for certain subject areas.

Even if you don’t teach math, science, or special education, you could still receive up to $5,000 in loan forgiveness if you are a qualified full-time elementary or secondary education teacher.

This might be another option for Native American students looking for student loan debt forgiveness by giving back to a community in need.

To qualify, the school or educational agency must be listed in the directory, published by the DOE, for the years you were/are a teacher.


💡 Quick Tip: It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to financial advisors, networking events, and more — at no extra cost.

Lowering Your Student Loan Payments

While student loan forgiveness is often a great solution for debt relief, sometimes you might not qualify for career-based programs. One solution is income-driven repayment (IDR) plan for federal student loans.

The Saving on a Valuable Education (SAVE) Plan is the newest income-driven repayment plan. Like other IDR plans, the SAVE Plan calculates your monthly payment amount based on your income and family size. In addition, the SAVE Plan has unique benefits that will lower payments for many borrowers.

The SAVE Plan lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI). Your payment for federal undergraduate loans could be as low as 10% of your discretionary income -– and that percentage could decrease to 5% in 2024.

The SAVE Plan has an interest benefit: If you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month. This means that the SAVE Plan prevents your balance from growing due to unpaid interest.

Recommended: The SAVE Plan: What Student Loan Borrowers Need to Know About the New Repayment Program

Refinancing Student Loans

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.

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

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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.

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.

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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.

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

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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 student 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.

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.

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

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