Student Loans Archives

Apr

2025

Can You Get A Student Loan with Bad Credit?

By Kayla McCormack | Credit, personal_loan, Student Loans, student_loan | No Comments

It is possible to borrow a student loan with bad credit. Federal student loans, with the exception of Direct PLUS loans, do not require a credit check.

Private loans, on the other hand, generally do review a borrower’s credit history to inform their lending decisions.

Read on for more information on student loans, how credit scores are used in a lender’s decision making process, and how to get a student loan with bad credit.

Key Points

• Federal student loans typically do not require a credit check, except for Direct PLUS loans.

• With private student loans, lenders generally check a borrower’s credit score and history for approval.

• Applicants with bad credit may need a cosigner to secure a private student loan.

• Building credit through responsible financial habits such as paying down debt and making bill payments on time can improve future lending options.

• Refinancing student loans with a stronger credit score could result in lower interest rates and better repayment terms.

Getting a Federal Student Loan

When applying for most federal student loans, the status of your credit is not usually a factor. One exception is if you are in default on an existing federal loan — that may hinder your ability to qualify for more federal funding.

In order to take out federal student loans, you first need to fill out the Free Application for Federal Student Aid (FAFSA®). If you are a dependent student, you will also need your parents to fill out their portion of the FAFSA.

Are you a Dependent Student?

Not sure if you’re a dependent student or not? You very likely are if you are under the age of 24, even if you are financially independent and even if your parents don’t claim you as a dependent on their tax forms any more.

If you’re under the age of 24, there are a few ways you wouldn’t be considered a dependent student including if you are legally emancipated, an orphan, married, an armed services veteran or currently serving active duty, or if you have legal dependents other than a spouse.

Subsidized and Unsubsidized Student Loans

The FAFSA is used to determine your financial aid award, including both Direct Unsubsidized or Subsidized Loans.

Subsidized Federal Loans take financial need into account and the federal government will pay the interest that accrues on these types of loans while the borrower is attending college. So, the principal amount that is initially borrowed will remain the same until after graduation.

Unsubsidized Federal Loans don’t take your financial need into account, and you are responsible for paying any interest that accrues — including while you’re in school and during times of deferment or forbearance.

Another type of federal Direct loan is called the PLUS Loan, and it’s available to parents of students if they want to help fund their children’s college education. It’s also available for graduate/professional students. According to the Department of Education, all Direct PLUS Loan applicants go through a credit check, because a qualification of the loan is that the borrower can’t have an “adverse credit history.”

Getting Private Student Loans

If you find that sources of funding like federal student loans, scholarships, grants, or earnings from work-study will not be enough to fund your education, then private student loans may be another option to consider. Note that private student loans do not come with the same borrower protections afforded to federal loans (such as federal forgiveness programs or income-driven repayment plans or deferment options) and are usually considered after all other options have been reviewed.

When it comes to private student loans, you may be asking yourself, can I get a student loan with bad credit? Private lenders are more likely to rely on credit scores and credit history when determining their lending decisions.

So if you currently have a lower credit score, or not enough credit history, you may want to consider applying with a cosigner who has solid credit history, which can help strengthen the loan application. And if you haven’t really established your own credit history yet, a private lender will also likely want a cosigner for at least two reasons:

• There is scant record to demonstrate how responsibly you would pay back a loan

• About 15% of your FICO® Score is based on the length of your credit history (and 90% of lenders use FICO Score when making lending decisions)

Development of Credit Scores

Credit scores were developed by the three major credit bureaus and the Fair Isaac Corporation (FICO) in the late 1980s and have now been widely adopted by the financial industry. Before the development of such scores, lenders needed to slog through credit reports that were sometimes pages long, and then make lending decisions that, at least in part, were based on these reports. Under that system, it was easier for the biases of lenders to play a role in lending decisions.

With credit scores, information is quickly summarized, and lenders can establish objective requirements about what type of credit is needed before a cosigner is required and/or a loan can be approved.

How Credit Scores Are Used

When applying for a loan, as mentioned previously, about 90% of lenders refer to your FICO Score as a sort of risk “litmus test.”

For example, let’s say you apply for a private student loan. The lenders will review your application, including your credit score, and they can approve it or deny it.

Besides your credit score, lenders will likely look at factors like how many loans you currently have, your payment history, and the amount of time in which you’ve responsibly used credit.

Building Credit Scores

Thirty percent of your FICO Score is based upon how much money you owe. This means that reducing your debt may help build creditworthiness. These are some ways to help pay off debt and potentially strengthen a credit score:

• Make monthly payments on-time.

• Prioritize paying off your credit card balance monthly.

• Consider reducing the interest rate on your debt by consolidating credit card debt into a personal loan, which generally has lower interest rates than credit cards.

• Snowball down the debt. With the snowball method, if you have debt spread across multiple credit cards, you start by paying off the account with the smallest balance while making minimum payments on the rest. Then move to the next smallest bill, paying as much as you can on that one until it’s paid off, and so forth.

• Limit the amount of spending done with a credit card.

Once your credit gets stronger, you may want to consider refinancing any existing student loans you have. With student loan refinancing, you take out a new loan to replace the old loan, ideally with a lower interest rate and better terms.

If you currently have student loans, and you’re wondering if refinancing might be a good option for you, using a student loan refinance calculator can help you determine how much you might save.

Should you refinance your student loans? If you can get better rates and terms with a stronger credit score, it may be worth it. However, it’s important to note that refinancing federal student loans makes them ineligible for federal programs and protections. If you don’t need to use those programs, you may want to explore refinancing.

Recommended: Student Loan Refinancing Guide

The Takeaway

It is possible to get a student loan with bad credit. Aside from Direct PLUS Loans, federal student loans do not require a credit check.

However, private student loans usually do require a credit check. Credit scores and credit history are used to determine a borrower’s creditworthiness and can affect whether an applicant is approved for a loan and the terms and rates they qualify for. Keep in mind that if the rate you get is higher than you hoped for, you can always work on strengthening your credit over time and then consider 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.

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).

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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.

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

SOSLR-Q225-008

Apr

2025

What Is A Fellowship?

By Jamie Cattanach | Student Loans, student_loan | Comments Off

If you’re planning to pursue additional studies after you get your undergraduate degree, a fellowship could allow you to achieve your career goals while also helping you pay for school.

What is a fellowship? And how does it work? Read on to find out about fellowship programs and how they might help bring your total educational costs down.

Key Points

• Fellowships provide funding for advanced education, often requiring work or research in return.

• These programs may cover tuition and living expenses, helping to reduce student debt.

• Fellowships are highly competitive and demand high academic performance.

• Fellowships offer valuable hands-on experience and specialized skills, enhancing career prospects.

• Fellowships are available in different fields of study and may last just a few months or as long as several years.

What Exactly Is A Fellowship?

A fellowship is a program that allows students — usually graduate students — to continue their education while earning money at the same time, most often in exchange for doing work in their field of study. It can help cover at least some of the cost of college.

A fellowship might be as short as a few months or as long as several years; it might be funded for a few thousand dollars or cover the entire cost of your graduate education, including living expenses.

The work involved could be field research, local community work, or teaching undergraduates in your discipline while you pursue higher studies. There’s a lot of variety out there depending on the program.

Fellowships are competitive prizes, and successfully securing one often requires a history of high academic merit and also writing a killer application essay (or several). The idea is that students who are awarded fellowships show potential in their field and have the capacity to become successful professionals later on.

While fellowship monies don’t need to be repaid after you graduate from the program (so long as you adhere to the parameters set out by the organization offering the fellowship), you may be doing some work or service in exchange for the funding.

Recommended: How to Pay for Grad School

Types Of Fellowship Programs

Although there are a large variety of individual fellowships programs, there are three common types you’re apt to run into.

1. Graduate Fellowships

Graduate fellowships help graduate students pursue their education by subsidizing some or all of the costs in exchange for work on-campus.

For instance, a graduate fellowship for a master’s degree in creative writing might come with a tuition waiver as well as a monthly stipend to cover living expenses, an option to purchase affordable healthcare through the school, monies to cover certain educational related travels, and so on. In exchange, the student is generally expected to teach a certain number of beginner-level courses in their field to undergraduate students.

2. Postdoctoral Fellowships

For students who’ve already earned their doctorate degrees, postdoctoral fellowships can open the door to even more education, which can help these scholars become specialized in a very specific aspect of their field.

What is the fellowship definition in this instance, and how does the fellowship work? A postdoctoral fellow might be expected to complete a certain amount of research or, again, teach courses while they continue their studies. In exchange, they might receive funding for their coursework and extracurricular activities like relevant travel.

3. Medical Fellowships

If you’re pursuing a career in the medical field, you may be wondering, what is a fellowship in medicine? For physicians and dentists who’ve already completed medical school and their residency, a medical fellowship can help them continue their training and gain more competency in a specific area of medicine.

Medical fellowships generally come after a doctor has already completed their residency. While fellowships provide an excellent learning experience and often better pay than a residency does, they still pay less than a third of the average full-fledged physician’s salary. To put it in perspective: Primary care medical fellowships pay approximately $75,943 a year on average, while a family medicine physician averages about $273,000 annually.

That means careful budgeting on a medical fellowship is likely to be required — and the same is true with any kind of academic or research fellowship.

What Is A Fellowship Like?

As mentioned above, fellowships don’t generally provide a lot of money for living expenses — your room and board may or may not be included, or you may be offered a flat stipend with which to cover your own cost of living.

Graduate students may be expected to do a lot of work for what feels like a minimal paycheck. But having one’s tuition waived is a big deal that can lead to substantial savings. This is especially true in the long term, when you consider the interest on graduate school loans.

Not only that, graduate students may already have undergraduate loans to worry about as well. And, since one of the basics of student loans is repaying them, that is likely to be top of mind. A fellowship may be a great step toward pursuing the career of your dreams without the additional burden of even more student debt.

One option for grad students to look into regarding their undergraduate loans is deferring them until after school. However, even with deferment, you might want to put some money toward student loans while still in school, to help reduce your payments later on.

Another possible alternative to consider is refinancing student loans, particularly if you could qualify for lower rates or better terms that might help reduce your monthly payments. (Be aware that you may pay more interest over the life of the loan if you lower your payment by extending your loan term.) Refinancing federal loans does mean giving up access to federal programs and protections. But if you don’t need those benefits, refinancing might be an option for you.

There are different options for refinancing student loans, including some specifically for grad students training for specialized careers, such as medical resident refinance. However, refinancing federal loans does mean giving up access to federal programs and protections. If you don’t need those benefits, refinancing might be an option for you.

Recommended: Private Student Loans Guide

Is Applying For A Fellowship Worth It?

Given the amount of work involved and the relatively small amount of money you may earn, is applying for a fellowship worth it in the first place? In the end, only you can make that decision for your own educational and financial future — but here are some pros and cons to consider.

Pros:

• Fellowships offer you the opportunity to gain hands-on experience in your field, which can help you hone your skills and also learn more about whether or not you like the work in the first place.

• Fellowships can help keep you from racking up more student debt, which is particularly attractive if you already have loans to repay.

• Fellowships last only for a short amount of time, but the experience you get by taking one on may help you create a long-lasting and stable career.

Cons:

• While completing a fellowship, you’re likely to work very hard for what feels like not very much of a paycheck.

• The application process requires dedication and work. And fellowships are very competitive: Even with great credentials, you may not get the fellowship.

• Fellowships may have very specific requirements, such as GPA or work hour minimums, and your fellowship may be revoked if you don’t complete the project or adhere to the guidelines.

The Takeaway

A fellowship can provide graduate students with an advanced education and highly specialized skills in their field. A fellowship offers funding in exchange for work to help pay for this schooling, which means that grad students may avoid accumulating more student loan debt. Fellowships are very competitive, however, so it’s wise for those considering one to weigh the pros and cons to make sure it’s the right choice for their situation.

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

FAQ

What does it mean when you get a fellowship?

A fellowship is a funded opportunity for the advanced study of a subject. Fellowships are typically for graduate students who want to pursue advanced academics and learn highly specialized skills in their field, while earning money, or getting a stipend, to help pay for their studies.

Is a fellowship a paid job?

It depends on the type of fellowship. In general, a fellowship allows graduate students to pursue an advanced education while earning money — or receiving a cost of living stipend — to pay for their schooling, typically in exchange for doing work related to their field of study. The work might consist of doing research or teaching, for instance.

How hard is it to get a fellowship?

Fellowships are merit-based and extremely competitive. In order to secure a fellowship, an individual typically needs to have a history of high academic achievement. Students who are awarded fellowships generally must show great potential in their field with the capacity to become successful professionals in the future.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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

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

SOSLR-Q225-014

Apr

2025

5 Tips For Getting the Lowest Rate When Refinancing Student Loans

By Sarah Brooks | Fresh Out of School, Student Loans, student_loan | No Comments

One main reason for refinancing student loans with a private lender is to combine your loans into one new loan with a lower interest rate. If you get a lower interest rate, your monthly student loan payment will go down. You’ll also pay less interest over the life of the loan.

Here, learn more about steps to take to help get a lower interest rate on student loans.

Key Points

• A student loan refinance may help borrowers get a lower interest rate if they qualify and reduce monthly loan payments.

• A strong credit history and a low debt-to-income ratio can help refinancing applicants get a better rate.

• Reducing living expenses and paying down other debt like credit card debt could be beneficial when applying for student loan refinance.

• Providing lenders with a comprehensive employment history and proof of salary increases can be useful.

• Those without a strong credit history may want to consider refinancing with a cosigner for better rates.

Reduce Your Interest on Student Loans

Consolidating multiple student loan balances into one new refinance loan with a low interest rate can be ideal for those looking to reduce the amount they owe in interest and also lower their monthly loan payment. It’s important to note, though, that if you refinance federal student loans, you lose access to federal benefits such as income-driven repayment plans.

Getting approved for student loan refinancing isn’t just a matter of submitting an application. You need a game plan — one that will help you become a strong loan candidate, who’ll qualify for a lower student loan interest rate. Here are five strategies that may help.

5-Point Plan for Getting a Low Interest Rate

1. Check your credit.

If you want to reduce your student loan interest rate through refinancing, the first thing you should do is check your credit score. The stronger your credit profile, the less risky you appear to lenders. If your credit profile is solid — meaning you have a good credit score and a low debt-to-income ratio — lenders should offer you better rates.

If, however, your credit profile isn’t quite where you want it to be, that’s OK. Take a few months to build your credit and reapply for student loan refinancing down the line to see if you qualify for a better rate.

Recommended: Why Your Debt to Income Ratio Matters

2. Take a hard look at your cost of living.

Some cities are more expensive to live in than others. Someone renting an apartment in a small Midwestern town, for example, has lower living expenses than someone who owns a row home in San Francisco. Cost of living ties directly into your debt-to-income ratio, and therefore it matters when you want to get a lower interest rate on student loans.

To some extent, this is out of your hands; your zip code helps lenders determine your cost of living. But anything you can do to pay down debt, especially high-interest credit card debt, and make choices that free up more money — such as renting a smaller place, taking on a roommate, or leasing a cheaper car — can help your case.

3. Give lenders a complete history.

Some student loan refinancing lenders consider things like where you went to school and your position at work when they weigh your application. Provide as much information as you can when it comes to your undergraduate and graduate degrees.

Be sure to also include all relevant work experience. Again, if you can show lenders that you have a solid work history and your income has steadily increased, you will appear less risky. The less riskier you are to lenders, the better your student loan interest rate is likely to be.

If there’s a job offer on the horizon, be sure to submit your offer letter with your application. And if you get a promotion while your application is under review, notify the lender immediately. Finally, if you’re in line for a promotion that will positively affect your paycheck, wait until it happens before you apply.

4. Show all your income.

When lenders ask for income information, they mean all of your income, not just job earnings. List dividends, interest earned, bonuses, and the extra money you make from your side hustle or Airbnb rental property. As long as you can prove these income sources, it will all count toward your debt-to-income ratio and help to lower it. And again, the lower this ratio, the better chances you have at qualifying for a lower student loan refinance rate.

Also, make sure your driver’s license is current and that your student loan statements are all correct. If you’re self-employed, you may want to wait until you’ve filed your taxes to apply for refinancing — it’s one of the easiest ways to prove the previous year’s income.

5. Be flexible.

If you have a number of student loans and you’re not offered the best rate when you apply for refinancing, consider refinancing only a couple of them. You may get a lower interest rate with a smaller refinance balance. You can always apply for the full balance down the road after you’ve received a raise or moved to a less expensive location.

Being flexible also means you might want to think about asking a friend or relative for help if your application isn’t as strong as you’d like. When you refinance your student loans with a cosigner who has a good credit profile and low debt-to-income ratio, you may be able to get a lower rate than if you refinanced on your own.

Refinance Student Loans With SoFi

The stronger you are as a student loan refinancing candidate, the better your chances are of getting a lower student loan refinance rate. To get the lowest rate when refinancing, check your credit, take a close look at your living expenses and debt-to-income ratio, give lenders a complete history of your education and employment, make sure to include all of your income sources in the application, and finally, be flexible, even if that means applying with a cosigner.

Keep in mind, though, that if you choose to refinance your federal student loans with a private lender, you lose access to federal benefits, such as student loan forgiveness and income-driven repayment plans. Make sure you don’t plan on using these benefits now or at any point in the future before deciding to refinance.

If you do think a student loan refinance may be right for you, consider SoFi. SoFi offers competitive rates and does not charge origination fees. It takes just a few minutes to see your rates, and your credit score will not be affected when you prequalify.

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

FAQ

Can you negotiate your student loan interest rate?

Not necessarily. Interest rates are determined by both the market and your credit profile, leaving little room for negotiation. You could, however, present your lowest offer to another lender to see if they will match that.

How can I get a lower interest rate when refinancing my student loans?

Strategies to potentially get a lower interest rate when refinancing student loans include building your credit profile, having a reliable source of income, and making sure your debt-to-income ratio is low.

Is it possible to get lower rates when refinancing student loans?

Yes, it is possible to get a lower interest rate when refinancing student loans. Your student loan interest rate will generally depend on current market rates, your credit profile, and your debt-to-income ratio. A strong credit history and a lower debt-to-income ratio may help you get a lower rate.

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.

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

SOSLR-Q225-007

Apr

2025

A Guide to Summer Internships for College Credit

By SoFi Editors | Debt Payoff, Student Loans, student_loan | No Comments

A good internship can prepare a student for life after college. A few weeks or months spent working in the real world can help build connections and confidence, further develop skills learned in class, and — perhaps most critically — bolster a new graduate’s chances of getting a job.

That may explain why more universities are requiring academic internships for an increasing number of degree programs. These programs aren’t just for doctors, dentists, accountants, and teachers, but also for those seeking careers in sports or hospitality management, communications, technology, the arts, and more.

Key Points

• College internships provide practical experience and enhance job prospects through real-world skills and networking.

• Paid internships help cover expenses and may lead to higher starting salaries and better job opportunities post-graduation.

• The average hourly rate for paid internships is $20.55.

• Unpaid internships can significantly increase student debt due to associated costs and lack of income.

• Weighing costs against benefits of unpaid internships is crucial, considering financial impact, career advancement opportunities, skill development, and networking possibilities.

Internship Stats

In 2024, 67% of graduating seniors said they completed an internship, according to a survey by the National Association of Colleges and Employers (NACE). Participating in an internship can be valuable — for instance, it may help grads land a job faster. A recent analysis by LinkedIn found that college graduates who worked as interns were 23% more likely to start a full-time job within six months of graduation than those who didn’t pursue an internship.

Employers are increasingly using internships to drive hiring. According to research conducted by Business-Higher Education Forum, a national network that connects corporate and higher education leaders, 76% of employers said they offer internships to help attract talent.

If there’s a specific company or industry you have your heart set on, interning can be a good way to get your foot in the door and hopefully receive a job offer down the line.

Recommended: A Guide to Remote Internships

The Cost of College Credit Internships

However, not all college internships come with a paycheck. Approximately 43% of internships are unpaid, according to the NACE survey. That means a substantial number of students are forgoing full-time, part-time, or seasonal employment for college students to take an internship that doesn’t earn them money.

Instead, that unpaid internship could add to their debt, especially if they have to relocate temporarily (maybe to a larger city) and cover moving costs, pay for gas or some other form of transportation, put together a work wardrobe, and pay for food.

Some students who take internships — paid or unpaid — may choose to or are obligated to enroll for course credit. Depending on how many credit hours their internship entails (the average is three but it may be more), they could end up paying hundreds of dollars in tuition.

Of the internships that are unpaid, most are in nonprofit or local or state government sectors. Nearly all paid internship positions are with private and for-profit companies.

Advocacy groups are pushing for more paid internships, especially because low-income students often cannot afford to take on unpaid work, creating barriers to equal opportunity. Also, unpaid internships may result in lower starting salaries after graduation, according to the NACE survey. The organization’s findings show that those with paid internships earn an average starting salary of $68,041, while those with unpaid internships have average starting salaries of $53,125. So if you’re looking for a job that will help pay for your college degree, you may want to consider a paid internship.

How Much Do Paid Internships Pay?

For interns that are getting paid, the average hourly rate is $20.55, according to Indeed. Those wages help pay some expenses, but not all — making an internship an opportunity many students and their parents simply can’t afford or must struggle to pay for.

If you’re thinking, “Well, that’s what student loans are for,” you’re technically correct. Student loans are meant to cover educational expenses. Borrowers can use the money from federal student loans and (possibly) private student loans to pay for the expenses that go along with their academic internship just as they would in a class at school. That could include room and board, travel costs if they have to relocate, transportation, and equipment needed for the internship.

Of course, the debt you take on to get that internship experience could come back to haunt you when you’re out of school and those loans come due. At that point you may want to explore different options that could potentially lower your monthly loan payments, such as income-driven repayment plans or student loan refinancing.

Overall, however, it’s important to weigh the costs of the internship against its benefits, particularly if it’s an unpaid internship. In that case, you might consider doing some research to find companies that are known for offering applicable career skills and that will help you build your resume.

Ask your internship coordinator what tangible benefits you could see. For example, is the internship approved for college credit? Will you get meaningful references? Will there be consequential networking opportunities? How will this internship help you stand out from others hoping to get similar employment?

Before you commit, you also may want to create a financial plan, starting with figuring out where you’ll live during the internship and then working through your budget from there. And you might want to consider asking whether taking a side gig outside your internship is feasible and permitted by the company.

Paying Back the Money You Owe

Before you graduate, you may want to begin educating yourself about the best student loan payback options for your situation, depending on what types of student loans you have.

Look at interest rates and loan terms, and think about whether you would be interested in refinancing your student loans. When you refinance, you trade your old loans for one new loan from a private lender. Ideally, you may be able to get a lower rate and more favorable terms.

One caveat, however, if you have federal student loans: These loans offer protections and benefits like income-driven repayment plans and federal deferment that won’t transfer to a private loan if you refinance. If you think you might need these benefits, refinancing may not be the best option for you.

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

FAQ

Does an internship count as college credit?

With an internship for credit, you earn college credits that count toward your degree. The number of credits an internship is worth can range from one to six, but it’s typically three credits.

To receive the credits, a student must typically usually work a certain number of hours during the internship and meet other guidelines. Consult with your school program or campus career center to make sure you fulfill the necessary requirements.

Is $20 good for an internship?

For a paid internship, $20 an hour is essentially the standard rate. The average hourly rate for a paid internship in the U.S. is $20.55, according to Indeed.

What’s the best way to find a summer internship?

To find a summer internship, check with your degree program or department to see what may be available that can help you earn credits toward your degree or experience in your chosen field. In addition, consult with your college career center, where the staff should be able to help you explore internship options aligned with your major.

SOSLR-Q225-010

Apr

2025

Does It Cost Money to Refinance Student Loans?

By Jacqueline DeMarco | Debt Payoff, Student Loans, student_loan | No Comments

Typically, it does not cost a borrower money to refinance student loans. Most lenders do not charge origination fees or application fees. However, you can end up paying fees if you don’t make your payments on time.

In the right circumstances, refinancing your student loans could help you save both time and money as you work to pay down your student debt, without costing you any money to do so.

Key Points

• Most lenders do not charge application or origination fees for refinancing student loans.

• Refinancing can lower interest rates, simplify repayment, and offer flexible loan terms.

• Borrowers with federal loans who refinance lose access to income-driven repayment, forgiveness programs, and other federal protections.

• Late payment or returned payment fees may apply if loan payments are missed.

• To avoid hidden fees, read the loan terms carefully and consider setting up automatic payments for potential rate discounts.

Student Loan Refinancing Recap

Student loan refinancing is the process of paying off one or more existing student loans with a new loan through a private lender. Depending on the terms of your current loans and your creditworthiness, you may be able to get a lower interest rate or lower monthly payment.

You can typically refinance both federal and private student loans.

Refinancing is different from federal student loan consolidation, which involves combining several eligible federal loans into a Direct Consolidation Loan. While that process can simplify your repayment plan and help you maintain federal loan protections, it typically doesn’t help you save money.

Every situation is different, but with the right refinance loan, you could potentially save money as you pay down your student debt.

That said, there are both benefits and drawbacks of refinancing to consider.

Pros of Student Loan Refinancing

Can Save You Money

If you qualify for a lower interest rate than what you’re currently paying, refinancing your student loans could save you money on interest over the life of the loan. Keep in mind that this includes keeping the loan term the same. If you extend your loan term, you could end up paying more in interest, even with a lower rate.

If you don’t qualify for a lower rate on your own, you may be able to add a cosigner with solid creditworthiness to help improve your chances.

Can Give You More Flexibility

Student loan refinance lenders typically offer a range of repayment terms, allowing you to shorten or lengthen the amount of time you have to pay off your debt.

Simplifies Your Repayment Plan

If you have multiple student loans across more than one servicer or lender, refinancing them all into one new loan can make repayment a little easier.

Cons of Student Loan Refinancing

You’ll Lose Federal Benefits and Protections

If you have federal student loans, refinancing with a private lender will cause you to lose certain benefits and protections, such as access to income-driven repayment plans, federal loan forgiveness programs, and more.

It May Not Save You Money

If your current interest rates are already low, it may be tough to qualify for something even lower. Also, applying for a longer repayment period than what you already have could end up costing you more in interest over the life of the loan.

You May Get Less Help When You’re Struggling

Federal student loans allow you to apply for student loan deferment or forbearance if you’re struggling to make your payments. When you refinance with a private lender, you may not get these same benefits.

Deferment and forbearance options can vary by private lenders. With SoFi, for instance, you may qualify for a deferment if you return to graduate school on a half-time or full-time basis, undergo disability rehabilitation, or serve on active duty in the military.

How Much Does It Cost to Refinance Student Loans?

Refinancing student loans with a private lender typically does not come with any costs to the borrower. Most companies do not charge any fees associated with student loan refinancing. If you are being charged fees (see below), you may want to look elsewhere for your refinance.

Common Fees When Refinancing Your Student Loans

If a lender does charge fees for refinancing, these are some you may run into:

• Application fee: This fee covers the cost of processing the application and is typically due when you submit your application.

• Origination fee: Some lenders charge this fee to help cover the costs of processing your loan and disbursing the funds.

• Late payment fee: Many lenders charge this fee if you miss a student loan payment. Depending on the lender, you may get a grace period between your due date and when the fee is assessed.

• Returned payment fee: If you try to make a payment but don’t have enough money in your checking account to cover it and no overdraft protection, some lenders may charge you a fee for the failed transaction.

In most cases, you won’t have to pay anything up front to refinance your student loans. With SoFi, there are no application fees, no origination fees, no late fees, and no prepayment penalties.

As you’re shopping around, make sure you read the fine print to understand the cost of refinancing student loans with that particular lender.

Serious savings. You could save thousands of dollars
thanks to flexible terms and low fixed or variable rates.

Reducing the Cost of Refinancing Student Loans

Because many student loan refinance lenders don’t charge upfront fees, shopping around with those costs in mind can help you improve your chances of finding a low- or no-cost lender.

Keep in mind, though, that some lenders may charge what are called “hidden fees.”

Instead of showing up in marketing material, these fees are often buried deep in the terms and conditions of the loan and can be tough to find if you’re not looking for them.

Taking the time to thoroughly read the terms and conditions before refinancing could help you avoid unexpected fees down the line.

If you get approved for the new loan, you might consider setting up automatic payments to help avoid missing a payment and getting charged a late fee. Some lenders, including SoFi, offer an interest rate discount to qualified borrowers using autopay.

Then, you might make it a goal to always have a buffer in your checking account or overdraft protection to ensure a payment doesn’t get returned.

Considering SoFi to Avoid Upfront and Hidden Costs

If you’re considering refinancing your student loans, shopping around can take time. When refinancing with SoFi, you don’t have to worry about paying upfront costs or hidden fees.

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

FAQ

Does it cost money to refinance loans?

No, it typically does not cost money to refinance student loans. Most student loan refinance lenders do not charge fees associated with refinancing — including application fees and origination fees. If you are being charged a fee to refinance, that could be a red flag and you may want to look elsewhere.

What is a finance charge on a student loan refinance?

On a student loan refinance, a finance charge is what you pay the lender beyond the principal balance. This would include interest and any fees associated with the loan.

How much does it cost to consolidate student loans?

If you want to consolidate your federal student loans, there is no application fee associated with a federal Direct Consolidation Loan. It does not cost the borrower anything to consolidate federal loans.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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Does It Cost Money to Refinance Student Loans?

Student Loan Refinancing Recap

Pros of Student Loan Refinancing

Can Save You Money

Can Give You More Flexibility

Simplifies Your Repayment Plan

Cons of Student Loan Refinancing

You’ll Lose Federal Benefits and Protections

It May Not Save You Money

You May Get Less Help When You’re Struggling

How Much Does It Cost to Refinance Student Loans?

Common Fees When Refinancing Your Student Loans

Serious savings. You could save thousands of dollars thanks to flexible terms and low fixed or variable rates.

Reducing the Cost of Refinancing Student Loans

Considering SoFi to Avoid Upfront and Hidden Costs

FAQ

Does it cost money to refinance loans?

What is a finance charge on a student loan refinance?

How much does it cost to consolidate student loans?

JOIN THE COMMUNITY

Student Loan Refinancing

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Serious savings. You could save thousands of dollars
thanks to flexible terms and low fixed or variable rates.

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