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Q: How Long Do Student Loans Remain on a Credit Report?

If your loan delinquency is reported to the credit bureaus, it will remain on your credit report for seven years. The exception to this is a Federal Perkins Loan. This type of loan will remain on your credit report until you pay it off in full.

Q: How Do I Dispute a Student Loan on My Credit Report?

There are three reasons your student loan might have been erroneously placed in default and reported to the credit bureaus by mistake: If You Are Still in School, If You Were Approved for Deferment or Forbearance, and Inaccurate Reporting of Payments.

Oct

2023

Can You Remove Student Loans from Your Credit Report?

By Lisa Moran | Credit, personal_loan, Student Loans, student_loan | No Comments

Paying student loans on time can have a positive effect on your credit score and help build a good credit history. On the flip side, when you have a late or missed student loan payment, that can be reflected on your credit report as well. Delinquent payments can lower your credit score and have financial repercussions, such as impacting your ability to qualify for a new credit card, car loan, or mortgage.

If you’re wondering how to remove student loans from a credit report, the answer is that it’s only an option if there’s inaccurate information on the report. Student loans are eventually removed from a credit report, however, after they’re paid off or seven years after they’ve been in default. Here’s what to know about student loans on a credit report, what happens when you default on a loan, and how to remove student loans from a credit report if there’s inaccurate information.

Key Points

• Accurate student loan information is crucial for credit reports; incorrect details can be disputed to ensure accuracy.

• Defaulted student loans appear on credit reports for seven years from the original delinquency date.

• Student loans paid in full can remain on credit reports for up to ten years, potentially boosting credit scores.

• Removing student loans from a credit report is only possible if the reported information is inaccurate.

• Regularly reviewing credit reports allows individuals to verify that student loans are reported correctly.

What Is a Credit Report?

Before considering the impact of student loans on your credit report, it’s helpful to review what a credit report is. It’s a statement that includes details about your current and prior credit activity, such as your history of loan payments or the status of your credit card accounts.

These statements are compiled by credit reporting companies who collect financial data about you from a range of sources, such as lenders or credit card companies. Lenders use credit reports to make decisions about whether to offer you a loan or what interest rate they will give you. Other companies use credit reports to make decisions about you as well – for example, when you rent an apartment, secure an insurance policy, or sign up for internet service.

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Defaulting on Student Loans

It’s also worth reviewing what happens when a student loan goes into default. One in ten people in the United States has defaulted on a student loan, and 5% of total student loan debt is in default, according to the Education Data Initiative.

The point when a loan is considered to be in default depends on the type of student loan you have. For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan (FFEL) Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months).

For a loan made under the Federal Perkins Loan Program, the holder of the loan may declare the loan to be in default if you don’t make any scheduled payment by its due date. The consequences of defaulting on student loans can be severe, including:

• The entire unpaid balance of your student loans, including interest, could be due in full immediately.

• The government can garnish your wages by up to 15%, meaning your employer is required to withhold a portion of your pay and send it directly to your loan holder.

• Your tax return and federal benefits payments may be withheld and applied to cover the costs of your defaulted loan.

• You could lose eligibility for any further federal student aid.

And you don’t have to default on your student loans to experience the consequences of nonpayment. Even if your payment is only a day late, your loan can be considered delinquent and you can be charged a penalty fee.

Temporary Relief for Borrowers Behind on Payments

The pandemic-era pause on federal student loan payments that was established in March 2020 finally came to an end in the fall of 2023. After more than three years of having this financial responsibility off their plates, federal student loan borrowers must now fit payments back into their budgets. However, in order to protect financially vulnerable borrowers from facing the steep consequences of missing payments during this transition, the Biden Administration established a 12-month “on-ramp” program to help them adjust.

From Oct. 1, 2023, to Sept. 30, 2024, borrowers who don’t pay their federal student loans will be free of the usual repercussions. Specifically, this means that:

• Loans will not be considered delinquent or in default.

• Missed payments will not be reported to the credit bureaus.

• Missed payments will not be referred to debt collection agencies.

• Unpaid student loan interest will not capitalize (be rolled into the principal balance) once the on-ramp period ends.

However, payments missed during this period will be due once it ends. Additionally, any missed payments will not count toward forgiveness under income-driven repayment or Public Service Loan Forgiveness (PSLF).

How Long Do Student Loans Remain on a Credit Report?

If you are delinquent on your student loans or go into default, that activity is reported to the credit bureaus. It will remain on your credit report for up to seven years from the original delinquency date.

The good news is that the more time that passes since your missed payment, the less impact it has on your credit score.

The exception to this is a Federal Perkins Loan, which is a low-interest federal student loan for undergraduate and graduate students who have exceptional financial need. This type of loan will remain on your credit report until you pay it off in full or consolidate it.

On the other hand, if you made timely payments on your loan and paid it off in full, it may appear on your credit report for up to 10 years as evidence of your positive payment history and can boost your credit score.

How Do I Dispute a Student Loan on My Credit Report?

It’s a good habit to periodically check your credit report. You can request a free report from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—by visiting annualcreditreport.com. The bureaus are required by law to give you a free report every 12 months. However, through the end of 2023, you may request your report weekly at no cost.

There are three reasons your student loan might have been wrongly placed in default and reported to the credit bureaus by mistake. Here’s how to begin the process to correct these errors:

1. If You Are Still in School

If you believe your loan was wrongly placed in default and you are attending school, contact your school’s registrar and ask for a record of your school attendance. Then call your loan servicer to ask about your record regarding school attendance.

If they have the incorrect information on file, provide your loan servicer with your records and request that your student loans be accurately reported to the credit bureaus.

2. If You Were Approved for Deferment or Forbearance

If you believe your loan was wrongly placed in default, but you were approved for (and were supposed to be in) a deferment or forbearance, there is a chance your loan servicer’s files aren’t up to date. You can contact the loan servicer and ask them to confirm the start and end dates of any deferments or forbearances that were applied to your account.

If the loan servicer doesn’t have the correct dates, provide documentation with the correct information and ask that your student loans be accurately reported to the credit bureaus. Under the Fair Credit Reporting Act, a borrower may appeal the accuracy and validity of the information reported to the credit bureau and reflected on their credit report.

3. Inaccurate Reporting of Payments

If your loan has been reported as delinquent or in default to the credit bureaus, but you believe your payments are current, you can request a statement from your loan servicer that shows all the payments made on your student loan account, which you can compare against your bank records.

If some of your payments are missing from the statement provided by your loan servicer, you can provide proof of payment and request that your account be accurately reported to the credit reporting agencies.

Recommended: How to Build Credit Over Time

In all three cases, if you believe there is any type of error related to your student loan on your credit report, it’s best practice to also send a written copy of your dispute to the credit bureaus so they are aware that you have reported an error.

Why Your Student Loans Should Stay on Your Credit Report

You generally can’t have negative, but accurate, information removed from your credit report. However, you can dispute the student loans on your credit report if they are being reported incorrectly.

On the bright side, if you’re paying your student loans on time each month, that looks good on your credit report. It shows lenders that you are responsible and likely to pay loans back diligently.

💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

When You’re Having Problems Paying Your Student Loans

If you’re having difficulty making regular payments on your federal or private student loans, there are steps you can take before the consequences of defaulting kick in.

One option is to apply for student loan deferment, which allows you to reduce or pause your federal student loan payments for up to three years. During this time, interest on subsidized loans does not accrue. Or you could pursue student loan forbearance, which allows you to reduce or pause payments for up to a year if you’re facing a temporary financial hardship.

You can also contact your loan servicer to discuss adjusting your repayment plans.

Additionally, if you’re having trouble paying your student loans on time, you may be able to make your loans more affordable through a federal income-based repayment plan. These plans, including the new Saving on a Valuable Education (SAVE) plan, cap your payments at a small percentage of your discretionary income and extend the repayment term out to 20-25 years. Once the repayment period is up, any remaining balance is forgiven (though you may be subject to income taxes on the canceled amount).

Refinancing your student loans may also be an option—if you extend your term length, you may qualify for a lower monthly payment. Note that while these options provide short-term relief, they generally will result in paying more over the life of the loan.

When you start making your payments by the due date each month, you may see that your student loans can become a more positive part of your credit report. Again, while these options provide short-term relief, they generally will result in paying more over the life of the loan.

The Takeaway

While you generally can’t remove student loans from a credit report unless there are errors, it isn’t a bad thing if you make payments on time. If a loan is delinquent, it will be removed from your credit report after seven years, though you will still be responsible for paying back the loan.

If you’re having trouble making loan payments, there are ways to make repayment easier. Borrowers with federal student loans can look into forgiveness, an income-driven repayment plan, or a change to the loan’s terms.

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

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

FAQ

Is it illegal to remove student loans from a credit report?

There’s no legal way to remove student loans from a credit report unless the information is incorrect. If you think there’s an error on your credit report, you can contact your loan servicer with documentation and ask them to provide accurate information to the credit reporting agencies. It’s also a good idea to send a copy of the dispute to the credit bureaus as well.

How do I get a student loan removed from my credit report?

If you paid your student loan off in full, it may still appear on your credit report for up to 10 years as evidence of your positive payment history. It takes seven years to have a defaulted student loan removed from a credit report. Keep in mind you are still responsible for paying off the defaulted loan and you won’t be able to secure another type of federal loan until you do.

How can I get rid of student loans legally?

If you have federal student loans, options such as federal forgiveness programs or income-driven repayment plans can help decrease the amount of your student loan that you need to pay back. If you have private or federal student loans, refinancing can help lower monthly payments by securing a lower interest rate and/or extending your loan term. If you refinance a federal loan, however, you will no longer have access to federal protections and benefits. And you may pay more interest over the life of the loan if you refinance with an extended term.

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Oct

2023

What is the Capital Asset Pricing Model (CAPM)?

By Brian O'Connell | Growing Wealth, invest, Investing | Comments Off

The Capital Asset Pricing Model (CAPM) is an investment assessment formula that shines a light on the relationship between the systematic risk in a security and its estimated return. Investors use the CAPM to determine whether an investment’s expected return is the same as its risk-free return, and to determine an asset’s expected returns.

CAPM Defined

The Capital Asset Pricing Model makes the process of measuring investment return and risk more efficient, to determine whether a particular asset offers an acceptable rate of return.

CAPM is especially helpful when an investor faces significant investment risk, such as when trading equity options. The formula helps the investor determine whether the transaction has an acceptable measure of risk. By using CAPM, the investor is able to accurately assess if the potential investment return on a security is worth taking on.

Evaluating the fair value of a security is an ongoing endeavor, as investment risk factors and other variables change all the time. When those risks shift (think interest rate changes, company management changes, or a geopolitical crisis erupts, among other potential threats), investors can still use the capital asset pricing model to weigh an investment against constant risk and return variables.

Investors can factor market impactors, like interest rate flows, currency valuations, and stock market cycles, among other issues, into their CAPM analysis to better weigh risk versus return. Basically, the bigger the chance of risk, the more important CAPM becomes to investors weighing that risk against potential returns.

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What Is the CAPM Formula?

CAPM can help evaluate an investment’s viability in a time of significant market angst, by measuring three important barometers in an investment equation – risk-free return, the market risk premium, and the investment beta.

Let’s take a look at how CAPM is calculated with all three factors included.

The (capital asset pricing model) CAPM formula is represented as below:

Expected Rate of Return = Risk-Free Premium + Beta * (Market Risk Premium) Ra = Rrf + βa * (Rm – Rrf)

The calculation reflects a series of financial metrics, which taken together can offer a balanced look at a potential investment’s risk and return, with the aforementioned metrics front and center.

Risk-Free Return (Rrf)

This metric represents the value given to an investment (like a stock or commodity trading, for example) that provides return with no risk. U.S. Treasury bond, backed by the full faith and credit of the United States government, are a good example of risk-free return in action.

Since the U.S. government guarantees the bonds, and there is virtually zero chance of the U.S. defaulting on its debt obligations, Treasuries are considered among the safest investments available. That’s a big reason why risk-free return value reflects the yield delivered by a 10-year U.S. government bond.

The Market Risk Premium (Rm-Rrf)

This financial metric represents the return an investor earns – or anticipates earning – from owning a more risk-abundant portfolio. The MPA is an important component of CAPM, as it enables an investor to assess risk and decide if the market premium rate is superior to an investment in a risk-free investment like U.S. bonds.

The Beta (Ba)

Wall Street analysts rely on beta to weigh the volatility of a given security against a broader market.

For instance, an investor looking to buy 100 shares of an emerging biotech company can use beta to evaluate that investment and see how it may perform if the broader stock market turns volatile. In that scenario, that biotech stock’s beta may be 13%, which means it would trigger a 130% variation from any significant (based on the exact calculation) of any shift in the broader stock market. Beta is always equal to 1 in any market evaluation equation, meaning it’s parallel to any potential shifts in a broader market

CAPM Formula Explained

Factoring in each component to the CAPM equation, the resulting formula looks like this:

Expected return = Risk-free rate + (beta x market risk premium).

The risk-free component focuses on the time value of money, or the concept that a cash amount in present form is potentially higher than the same amount of cash down the road, primarily because of money’s current earnings potential. A CAPM formula may also factor in excess risks taken on by an investor.

Next, beta is assessed to figure out just how much risk is on the table relative to the broader market. For instance, if ABC stock offers more risk than the broader market, its beta is higher than 1 (one). A beta that is lower than 1 assumes the investment will curb portfolio risk, which may make a security more palatable to risk-averse investors.

With the beta calculated, beta is multiplied by the market risk premium, and the result (value) is added into the investment’s risk-free rate to provide the security’s estimated rate of return.

In conducting a CAPM exercise, the investor must acknowledge some level of risk in any investment, primarily in two ways.

• Loss is always possible, as common market securities like stocks, commodities, funds, or currencies may lose money, making them a depreciation risk.

• The higher level of risk in a specific security often correlates to a higher potential investment return, as history shows that specific investments carry more risks and more rewards than others (stock options and future.

Advantages to Capital Asset Pricing Model

The chief advantages to the capital asset pricing model are that it’s relatively simple and easy to use, it takes systemic risk into consideration, it has a wide range of potential uses (when other models may not do the trick, for instance), and for that reason, is often seen as a superior model to others, such as the WACC formula.

Problems with the CAPM

While the CAPM is an extremely useful tool for investors, it does have some drawbacks. One such drawback is the reliance on the risk-free rate and the beta. As such, CAPM must be constantly recalculated in order to remain useful. It also does not account for transaction costs such as taxes and fees, which could make a potential investment less favorable than the model shows.

Efficient Frontiers and the Capital Asset Pricing Model

In theory, if an investor adhered perfectly to CAPM all of their investments would exist on the efficient frontier, meaning that all returns justify the risks taken. The efficient frontier is the optimal baseline for a portfolio, Since every investment comes with some risk, it’s important to make sure that the returns correspond to the level of risk.

CAPM and the Security Market Line (SML)

The security market line, or SML, is a graphical representation of the CAPM formula, and shows expected returns for a security. Specifically, it shows the relationship between beta and expected return. When used in conjunction with the CAPM formula, investors can use the SML to try and get a sense of whether a prospective investment offers a good enough expected return when all risks are taken into account.

Practical Value of the CAPM

Many investors probably wonder if, when it comes down to it, CAPM has much practical value. While that will ultimately depend on the individual investor, it may be fair to say that the CAPM has value in that it’s widely used, and can give investors a broad or general idea of the risks and potential returns involved with a single investment. Again, it’s not the only model or formula that does that – but can be yet another tool that an investor can have in their analytical tool box.

The Takeaway

CAPM can help investors understand how the risk and return of a given investment relate to each other. Having the answer to that question can help investors make more knowledgeable portfolio decisions on an ongoing basis.

CAPM is also a fairly high-level investing concept, and one that many investors may never use or encounter. That’s not to say it doesn’t have its uses – but if you feel that it’s over your head or too advanced, you can always consult with a financial professional for guidance.

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Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What are some of the assumptions built into the CAPM model?

A few assumptions built into the CAPM model are that all investors are naturally risk-averse, that investors are evaluating investments within the same time period, and that investors have unlimited capital to borrow at a relatively risk-free rate of return.

What are alternatives to the CAPM?

Some alternatives to the CAPM include arbitrage pricing theory, or APT, and the Fama-French Model. There are others out there, too, which may or may not be perfect substitutes or alternatives to the CAPM.

What is the International Capital Asset Pricing Model (ICAPM)?

The International Capital Asset Pricing Model, or ICAPM, is more or less an extension of the CAPM, and incorporates or includes international investments.

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Oct

2023

Understanding the Different Stock Order Types

By Austin Kilham | Growing Wealth, invest, Investing | Comments Off

There are several ways to execute stock trades, from the common and relatively simple market order, to more complex stop orders and timing instructions. Each type of order is a tool tailored to specific situations and needs of an investor or trader, and can result in a different outcome.

It’s important to understand the types of order in the stock market thoroughly to know when and how to use them. That way you’ll be able to know which order will best help you reach your goals as you buy and sell stocks.

Stock Order Types Explained

Different types of stock orders have different outcomes for investors. The best stock order type for you will depend on your investing style and risk appetite. You’ll need to understand each of them, particularly if you’re working with a self-directed brokerage account.

Recommended: 50 Investment Terms Decoded

Here’s a look at the different types of stock orders:

Market Order

Market orders are one of the most common types of trade you’ll encounter. A market order is an order to buy or sell a security as soon as possible at its current price. These types of orders make sense when you want to get a transaction done as quickly as possible.

A market order is guaranteed to be carried out, or executed. Investors buying stocks with a market order will pay an amount at or near the “ask” price. Sellers will sell for a price at or near the “bid” price.

However, while you’re guaranteed that your order will execute, you do not get a guarantee on the exact price. In volatile markets, stock prices may move quickly, deviating from the last quoted price, although.

For example, if you put in an order to buy a stock at an ask price of $50 per share, but many other buy orders are executed first, your market order may execute at a higher price as demand rises.

Recommended: What Is a Market-On-Open Order (MOO)?

Limit Order

Limit orders are another common type of stock orders. They are orders to buy or sell stock at a specific price or better within a certain time period. There are two basic types of limit orders:

• Buy limit orders can only be executed at the limit price or lower. For example, say you want to buy shares in a company only when prices hit $40. By placing a limit order for that amount, you can ensure your order only executes when that price, or a lower price, is reached.

• A sell limit order executes when stock hits a certain price or higher. For example, if you don’t want to sell your stock until it hits $40 or more, a sell limit will ensure that you own the stock until it hits that price.

Stop Order

In addition to the more commonly used market orders and limit orders, brokerage firms may also allow investors to use special orders and trading instructions, such as the stop order, also known as a stop-loss order. Stop orders are orders to buy or sell a stock when it reaches a predetermined price, known as the stop price. Stop orders help investors lock in profits and limit losses.

You enter a buy stop order at a price that is above current market price, which can help protect profit, especially if you are selling short. On the other hand, a sell stop order is an order to sell a stock at a price below the current market price, which can help you limit their losses.

When a stock’s price reaches the stop order price, the stop order becomes a market order. Like a market order, the stop price is not a guaranteed price. Fast moving markets can cause the execution price to be quite different.

Stop-Limit Order

Stop-limit orders are a sort of hybrid between stop orders and limit orders. Investors set a stop price, and when a stock hits that price, the stop order becomes limit order, executed at a specific price or better.

Stop-limit orders help investors avoid the risk that a stop order will execute at an unexpected price. That gives them more control over the price at which they’ll buy or sell.

For example, say you want to buy a stock currently priced at $100 but only if it shows signs that it’s on a clear upward trajectory. You could place a stop-limit order with a stop price of $110 and a limit of $115. When the stock reaches $110, the stop order becomes a limit order, and it will only execute when prices reach $115 or higher.

💡 Quick Tip: The best stock trading app? That’s a personal preference, of course. Generally speaking, though, a great app is one with an intuitive interface and powerful features to help make trades quickly and easily.

Trailing Stop Loss Order

Investors who already own stocks and want to lock in gains may use these relatively uncommon orders. While stop-loss orders help investors buy or sell when a stock hits a certain stop price, trailing stop loss orders put guardrails around an investment.

For example, if you buy a stock at $100 per share, you might put a trailing stop loss order of 10% on the stock. That way, if, at any time, the stock’s share price dips below 10%, the brokerage will execute the order to sell.

Bracket Order (BO)

Bracket orders are similar to stop-loss orders in that they’re designed to help investors or traders lock in their profits or gains. They effectively create an order “bracket” with two orders: A buy order with a high-side sell limit, and a sell order with a low-side limit.

With a bracket order set up and in place, an order will execute when a security’s value goes outside of the predetermined range, either too high or too low.

Timing Instructions

Investors use a set of tools, known as timing instructions, to modify the market orders and limit orders and tailor them to more specific needs.

Day Orders

If an investor does not specify when an order will expire, the brokerage enters it as a day order. At the end of the trading day, it expires. If at that point, the brokerage has not executed the trade, it will have to be reentered the following day.

Good ‘Til Canceled (GTC)

A GTC order allows investors to put a time restriction on an order so that it lasts until the completion or cancellation of an order. Brokerage firms typically place a time limit on how long a GTC order can remain open.

Immediate or Cancel (IOC)

IOC orders allow investors to ask that the brokerage execute the buying or selling of stock immediately. It also allows for partial execution of the order. So, if an investor wants to buy 1,000 shares of a company but it’s only possible to buy 500 shares immediately, these instructions will alert the broker to buy the shares available. If the broker can not fulfill the order, or any portion of the order, immediately, the broker will cancel it.

Fill-Or-Kill (FOK)

Unlike IOC orders, fill-or-kill orders do not permit partial execution. The brokerage must execute the order immediately and in its entirety, or cancel it.

All-Or-None (AON)

Similar to FOKs, all-or-none orders require the complete execution of the order. However, AONs do not require immediate execution, rather the order remains active until the broker executes or cancels it.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

Which Order Type Is Best?

The type of order or special instructions you use when buying and selling stock depends on your goals with the transaction. Most beginner investors probably only need to execute market orders and perhaps limit orders.

Those trying to execute more complicated trades in shorter time frames, such as professional traders, may be more likely to use stop orders and special timing instructions.

The Takeaway

There are numerous types of stock orders, including limit orders, stop orders, bracket orders, and more. Investors and traders can use each individually or in concert to execute their strategy, though beginner investors likely won’t dig too far into their order tool kit when learning to navigate the markets.

Before using any of trade orders or timing instructions it’s critical to understand their function and to think carefully about how and whether they apply to your specific needs. Using the right order for your situation can potentially help you reduce risk and protect your portfolio, no matter how many stocks you own.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What is the safest type of stock order to use?

The stock order type that is all but guaranteed to execute per an investor’s desires is a market order, which executes immediately and at a given price. Other order types depend on specific conditions dictated by the investor and the market.

What is the difference between stop-loss vs stop-limit orders?

The main difference between a stop-loss order and a stop-limit order is that a stop-loss order guarantees to execute a market order if the stock hits the stop price, while a stop-limit order triggers a limit order when the assigned value is reached.

What is a standard stop-loss rule?

An example of a more or less standard stop-loss rule would be setting the stop-loss order parameters at 2% of the buy price, which would mean that an investor is not putting more than 2% of their initial investment at risk.

Photo credit: iStock/Alina Vasylieva

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Oct

2023

PAYE vs Repaye vs SAVE: What’s the Difference?

By Sulaiman Abdur-Rahman | Financial Independence, Student Loans, student_loan, Terminology | No Comments

Struggling to make your federal student loan payments? An income-based repayment plan may ease the burden. Previously, two of the primary income-based plans were Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE). But the former is no longer taking new enrollees, and the latter has been replaced by a new program — the SAVE Plan. In all cases, the plans adjust your monthly loan payments based on your income and family size. In this article we’ll look at how SAVE compares to the old REPAYE, as well as to the PAYE Program.

Table of Contents

PAYE vs REPAYE: An Overview
SAVE vs REPAYE
SAVE vs PAYE
What Is the Interest Subsidy?
Answers to Common Questions
Income-Driven Repayment Alternatives
The Takeaway

PAYE vs REPAYE: An Overview

The former PAYE and REPAYE federal student loan payment plans were similar, but differed in a few key areas. Both plans had income-based repayment terms generally set at 10% of a borrower’s discretionary income.

Some borrowers didn’t qualify for PAYE because the initial enrollment step required partial financial hardship as determined by your annual discretionary income and family size. You couldn’t enroll into PAYE if your federal student loan monthly payment would be lower under the Standard Repayment Plan. You also cannot enroll into PAYE after June 30, 2025; however, current PAYE enrollees can remain on the plan after that date.

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 under any federal student loan repayment plan.

Here are the key differences between the former PAYE and REPAYE plans:

• PAYE required partial financial hardship to sign up for first-time enrollment

• No new PAYE enrollees are being accepted, but borrowers already enrolled in PAYE can continue repaying under that plan after July 1, 2025

• REPAYE did not require low-income, moderate-income, or partial financial hardship to enroll

• REPAYE no longer exists as a federal student loan repayment plan

SAVE vs REPAYE

March 26, 2025: The SAVE Plan is no longer available after a federal court blocked its implementation in February 2025. However, applications for other income-driven repayment plans and for loan consolidation are available again. We will update this page as more information becomes available.

Saving on a Valuable Education (SAVE) Plan is the federal income-driven repayment (IDR) plan that replaced REPAYE in July 2023. If you were enrolled on the REPAYE Plan at that time, you’ve been automatically enrolled into the SAVE Plan.

The SAVE Plan is essentially a major upgrade to the former REPAYE Plan, as shown in the table below:

SAVE	REPAYE
$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).	Fewer borrowers qualified for a $0 monthly payment because the threshold was set at 150% of the federal poverty guideline.
Your loan balance won’t grow over time if your monthly payment amount is less than the interest accruing.	It was possible for borrowers to see their loan balances grow over time if their monthly payment was insufficient to pay the accrued interest.
Inclusion of your spouse’s income is not required if you file your taxes separately.	Inclusion of your spouse’s income was required
Beginning July 2025, payment amounts are based on 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average for borrowers who have both.	Payment amounts were based on 10% of discretionary income
Beginning July 2025, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments.	Loan forgiveness would only occur after 20 years of monthly qualifying payments for undergraduate loans and 25 years for graduate loans

SAVE vs PAYE

Both SAVE and PAYE are federal income-driven repayment plans not available to private student loan borrowers. New enrollments in PAYE ended in July 2025.

The below table highlights the key differences between SAVE and PAYE:

SAVE	PAYE
Annual adjusted gross income does not determine your eligibility for this IDR plan.	Enrolling into this plan typically required low or moderate income, also known as a partial financial hardship.
You don’t have to pay if your income is below 225% of the federal poverty guideline.	You don’t have to pay if your income is below 150% of the federal poverty guideline.
Beginning July 2025, payment amounts are based on 5% of one’s discretionary income for undergraduate loans, 10% for graduate loans, and a weighted avera.ge for borrowers who have both.	Payment amounts are generally 10% of one’s discretionary income, but never more than the 10-year Standard Repayment Plan amount.
Also beginning July 2025, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments.	Your remaining loan balance is forgiven after 20 years of monthly qualifying payments.
There’s no deadline to enroll and make payments on this plan.	No new enrollments will occur after July 1, 2025, but current enrollees can remain on this IDR plan after that date.

Depending on your original principal balance amount, student loan forgiveness on the SAVE Plan may occur after 10 to 25 years of monthly qualifying payments beginning in July 2025.

If you’re a federal student loan borrower working toward Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining loan balance after 10 years of qualifying payments.

Recommended: Student Loan Forgiveness Programs

💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

What Is the Interest Subsidy?

The SAVE Plan has a permanent interest subsidy, whereas the PAYE Plan offers a temporary interest subsidy to eligible borrowers.

If you’re on the SAVE Plan, 100% of your unpaid accrued interest is not charged if your monthly payment is less than the interest accruing. The effect of this permanent interest subsidy is that your loan balance won’t grow over time if your SAVE Plan monthly payment is less than the interest accruing.

Under the PAYE Plan, the U.S. Department of Education may provide an interest subsidy if your monthly payment is less than the interest accruing. This PAYE Plan interest subsidy is discontinued after the first three years of repayment and only applies to Direct Subsidized Loans and the subsidized portion of Direct Consolidation Loans.

Some borrowers on the PAYE Plan may see their loan balances grow over time. This can happen if you’re not covered by an interest subsidy when making a monthly payment that’s insufficient to pay the accrued interest. (Effective July 1, 2023, your unpaid accrued interest is not capitalized if you switch from PAYE to another repayment plan, fail to recertify your income, or no longer have a partial financial hardship.)

Answers to Common Questions

How do I apply for a federal IDR plan?

You only need to submit one application for any federal income-driven repayment plan and will need to supply financial information. It will take about 10 minutes. The Federal Student Aid Office also will recommend a repayment plan based on your input. Remember that private student loans are not eligible for federal IDR plans.

I want to apply for PAYE. How is partial financial hardship defined?

Unfortunately, there’s no option to apply for PAYE after July 1, 2025.

What if I’m in PAYE and no longer demonstrate hardship?

Your loan payments will stop being based on your income. Instead, your monthly payment will be based on the amount you would pay under the 10-year Standard Repayment Plan. Your maximum required payment in PAYE will never be higher than the 10-year standard payment amount.

What if I forget to recertify my income and family size?

If you’re on the SAVE Plan, failing to recertify your income and family size may switch you to an alternative repayment plan with a larger monthly payment.

If you’re on the PAYE Plan, failing to recertify by the annual deadline may give you a larger monthly payment resembling what you would pay under the Standard Repayment Plan.

Auto-recertification is available beginning in July 2025 if you agree to securely share your tax information with the U.S. Department of Education.

Does a Parent PLUS Loan qualify for SAVE?

No. Federal Parent PLUS Loans are not eligible for the SAVE plan.

Recommended: Types of Federal Student Loans

Income-Driven Repayment Alternatives

One of the alternatives to federal income-driven repayment is student loan refinancing. You can refinance your student loans — private and federal — with a private lender and potentially qualify for a lower interest rate. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

The federal Direct Consolidation Loan program combines federal student loans into a single federal loan, but the interest rate is the weighted average of the original loans’ rates rounded up to the nearest eighth of a percentage point, which means the borrower usually does not save any money. Lengthening the loan term can decrease the monthly payment, but that means you may spend more on total interest.

Federal IDR plans like SAVE offer federal protections and benefits, such as access to the Public Service Loan Forgiveness program. Any loans you refinance with a private lender will not be eligible for PSLF, Teacher Loan Forgiveness, or federal IDR plans. A student loan refinancing calculator can help you determine whether student loan refinancing is right for you.

💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

The Takeaway

The SAVE Plan is generally the most affordable federal student loan repayment plan. It replaced the former REPAYE Plan and offers a permanent interest subsidy, among other perks that you couldn’t get with PAYE.

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

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

SOSL0923004

Oct

2023

31 Ways to Save for Halloween

By Susan Lahey | Budgeting & Goals, relay | Comments Off

While the National Retail Federation is expecting record spending this Halloween of nearly $103 per person, revelers might be planning to focus more on Halloween savings this year. Inflation is scarier than ghosts.

Luckily, creativity is one of the hallmarks of this spooky season, and savings are easy to achieve. Here are 31 ways to do it.

Get Creative with Costumes

Costumes may be the best part of Halloween. You can “be” anyone or anything for one night. But costumes don’t have to be expensive. In fact, with a little creativity you can have a great costume for almost nothing.

1. Rent, Don’t Buy

Sites like Halloweencostumes.com and Costume.com rent theater-level costume styles for a fraction of the purchase price.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

2. Make Your Own

Extend Halloween fun by making your own costume. The internet is full of innovative ideas — homemade costumes that turn the wearer into jellyfish or fairies, or that create illusions, like someone sitting on a flying carpet.

3. Hit the Thrift Store

Thrift stores and surplus stores can not only provide the materials for a costume, they can also give you ideas: buy a wedding dress and become a ghostly bride or purchase a lab coat and become a mad scientist. You also might spot great savings on fall fashions while you’re at it.

4. Swap Costumes with Friends

Swapping costumes with friends is a great way to save money. And your outfit from last year may be someone’s dream costume for this Halloween.

5. Look For Sales

You can shop online at Halloween retailers and regular discount stores that sell costumes. Some may have sales to boost early purchases, or to clear out inventory as Halloween gets closer.

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

Decorate on a Budget

You would think pumpkins would be a super cheap decoration, but that’s not always the case. There are, however, some easy ways to haunt your house magnificently and take advantage of Halloween savings at the same time.

6. Become a Prop Master

There are lots of videos online explaining how to make everything from real-looking spider webs to authentic tombstones and creepy candles. Want to be eco-friendly? You can substitute toxic chemicals and unsustainable materials like Styrofoam with more sustainable materials.

7. Repurpose Last Year’s Decorations

Rework the decorations you used last year to create a whole new look. Give that mummy a hat, or have the witch you made last year hide behind a bush this time. If you’re crafty, a bit of paint or touch of glue can give your decor a whole new look.

8. Hit Garage Sales

Check out local garage sales and estate sales for decorations other people are ready to discard. You can often find some cool vintage treasures!

9. Trade Decorations with Friends

Tired of your old skeleton? You can switch it for a pal’s ghoul or light-up graveyard. You can offer up your old decorations on social media or just have everyone gather and trade like Halloween market.

10. Try the Discount Stores

Super discount stores often have great decorations for almost nothing. Dollar stores, surplus stores, Spirit Halloween stores, and others can provide garlands, Jack o’ Lanterns, skeletons — you name it.

11. Scan Thrift Stores

A thrift store is like a treasure hunt inside a shopping trip. You never know what you’ll find at a thrift shop but you’re sure to find inspiration for decorations!

12. Don’t Forget the Lighting

Lighting changes everything. Put a green or purple bulb in a lamp and a basic room is automatically made spooky, especially if you’re lighting something from below.

13. Make Creepy Shadows

With nothing more than some paper and scissors you can make scary silhouettes for the windows: a werewolf looking in, or a dagger-wielding murderer, for example. Put in front of a flashlight, they can even create some large, scary shadows for a spooky wall.

14. Scary Music Makes Ambiance

The most ordinary scene can feel terrifying when you add scary music. You can look online for options from classical pieces like Dance Macabre to soundtracks from horror movies complete with howling winds, distant church bells, and crows calling. There are even spooky tracks available on streaming services like Spotify.

15. Look for Pumpkin Deals

Most Jack O’ Lantern pumpkins cost less than $10, but if you need more than just one, the pumpkin costs can mount quickly. Some retailers have special offers on pumpkins that can really squash your spending. One way to potentially spot good deals online is to follow retailers on social media.

16. Grow Your Own

It’s too late this year, but you can grow your own pumpkins next year. You may be able to grow other decorations to use for fall, like corn husks and twisted tree branches that can later be made into haunted forests and witches’ brooms.

17. Shop in November

Everything Halloween related goes on deep discount the day after Halloween to make room for the upcoming holidays. Many people take advantage of these closeout sales to save money while also stocking up on decor for the following year. Don’t forget about websites — there are often good deals to be found online.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Low-Cost Ways to Celebrate Halloween

Haunted houses and ghost tours can cost as much as $50 per person, but there are a lot of ways to celebrate Halloween without spending a scary amount of money. Try hosting your own party, where you can save on food by shopping the sales, using coupons, and having potlucks.

18. Look for Coupons

Coupon sites offer discounts on haunted houses and other spooky activities. Just make sure you read the fine print. Some coupons may require you to visit during the week or might only be valid for specific shows.

19. Show a Scary Movie

Hold a movie marathon where your friends and family create the lineup by bringing their favorite scary films. Or tune in the Halloween classics on television. Serve popcorn and inexpensive Halloween candy. And if someone has a projector, you can show it outside and make it that much spookier.

20. Host a Costume Contest

Consider inviting the kids to dress up and compete to create the scariest, funniest, and even most creative costumes using items they already have at home. The prizes don’t need to be expensive, just something from a dollar store.

21. Carve Jack-O’-Lanterns

Have friends bring their own pumpkins and have a jack-o’-lantern carving party. You can even roast the seeds and serve them as a snack.

22. Host a Scary Makeup Party

Have a get-together where you paint your faces with inexpensive makeup to look like werewolves, vampires, and banshees. Watch some online tutorials for inspiration as you get into the Halloween spirit.

23. Tell Ghost Stories

This is a great activity to do in the dark, maybe even around a fire with some s’mores. Have everyone come with a ghost story to share.

24. Have a Seance

Also great to do in the dark near a glowing fire: Use a Ouija board or other tools to speak to the departed. It’s extra fun if one or two people hide out and make ghost noises.

25. Have a Haunted House

You needn’t put on a big production. Simple things can bring a lot of spooky fun like hanging old pictures and telling ghost stories about them while leading participants around darkened rooms. Play scary recordings and have someone hiding behind a few corners to jump out.

26. Check Out Local Haunts

Do you have a house, an old church or another place in town that’s known to be haunted? How about a neighborhood that really goes to town on the decorations? If so, Halloween is the perfect night to go visit.

27. Check Out Local Free Events

Look for local churches, malls, or schools that are putting on free Halloween parties or fall festivals for the community. Consider it ready-made fun.

Save on Treats

Halloween just isn’t Halloween without the candy. But you don’t have to spend a fortune to keep you and your trick-or-treaters happy.

28. Buy in Bulk

Get giant bags of candy from club stores like Costco or Sam’s Club. They can provide you with enough candy for the whole neighborhood — and a party at home.

29. Visit Low-Cost Retailers

Low-cost retailers like Walmart and Target often have special large bags of candy that may be on display in the holiday aisle rather than the regular candy aisle. If you can’t find it, ask for help.

30. Use Coupons

You can look for retailer coupons that give you a few dollars off your candy purchase, or even offer a buy one get one free deal.

31. Focus on the Fun

On Halloween, people are ready to be tricked, to be scared, and to believe the illusions that give them a little thrill of mystery. Instead of worrying about impressing others, focus on having good experiences and creating lasting memories.

The Takeaway

Halloween is about the kind of fear that gives you goosebumps, not sleepless nights. With today’s inflation, and a need to stretch dollars further than before, it might be a lot less scary, in a good way, to focus on your savings goals this year.

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

See exactly how your money comes and goes at a glance.

Photo credit: iStock/Talaj

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

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

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

SORL1023001

Can You Remove Student Loans from Your Credit Report?

What Is a Credit Report?

Take control of your student loans. Ditch student loan debt for good.

Defaulting on Student Loans

Temporary Relief for Borrowers Behind on Payments

How Long Do Student Loans Remain on a Credit Report?

How Do I Dispute a Student Loan on My Credit Report?

1. If You Are Still in School

2. If You Were Approved for Deferment or Forbearance

3. Inaccurate Reporting of Payments

Why Your Student Loans Should Stay on Your Credit Report

When You’re Having Problems Paying Your Student Loans

The Takeaway

FAQ

Is it illegal to remove student loans from a credit report?

How do I get a student loan removed from my credit report?

How can I get rid of student loans legally?

What is the Capital Asset Pricing Model (CAPM)?

CAPM Defined

What Is the CAPM Formula?

Risk-Free Return (Rrf)

The Market Risk Premium (Rm-Rrf)

The Beta (Ba)

CAPM Formula Explained

Advantages to Capital Asset Pricing Model

Problems with the CAPM

Efficient Frontiers and the Capital Asset Pricing Model

CAPM and the Security Market Line (SML)

Practical Value of the CAPM

The Takeaway

FAQ

What are some of the assumptions built into the CAPM model?

What are alternatives to the CAPM?

What is the International Capital Asset Pricing Model (ICAPM)?

Understanding the Different Stock Order Types

Stock Order Types Explained

Market Order

Limit Order

Stop Order

Stop-Limit Order

Trailing Stop Loss Order

Bracket Order (BO)

Timing Instructions

Day Orders

Good ‘Til Canceled (GTC)

Immediate or Cancel (IOC)

Fill-Or-Kill (FOK)

All-Or-None (AON)

Which Order Type Is Best?

The Takeaway

FAQ

What is the safest type of stock order to use?

What is the difference between stop-loss vs stop-limit orders?

What is a standard stop-loss rule?

PAYE vs Repaye vs SAVE: What’s the Difference?

PAYE vs REPAYE: An Overview

SAVE vs REPAYE

SAVE vs PAYE

What Is the Interest Subsidy?

Answers to Common Questions

Income-Driven Repayment Alternatives

The Takeaway

31 Ways to Save for Halloween

Get Creative with Costumes

1. Rent, Don’t Buy

2. Make Your Own

3. Hit the Thrift Store

4. Swap Costumes with Friends

5. Look For Sales

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

Decorate on a Budget

6. Become a Prop Master

7. Repurpose Last Year’s Decorations

8. Hit Garage Sales

9. Trade Decorations with Friends

10. Try the Discount Stores

11. Scan Thrift Stores

12. Don’t Forget the Lighting

13. Make Creepy Shadows

Take control of your student loans.
Ditch student loan debt for good.

Student Loan
Refinancing

Personal
Loans

Online
Investments